April HMBS Issuance Remains Steady

The production of new Home Equity Conversion Mortgage-backed securities (HMBS) remained steady in April at just over $567 million, remaining generally consistent with lower issuance levels observed over the course of the past few months. A few highly-seasoned pools bumped up the final figure, though only by single digits. This is according to publicly available GNMA data and private sources compiled by New View Advisors.

“86 pools were issued in April, including about $300 million of new first participation pools,” New View wrote in its commentary accompanying the April data. “For comparison, HMBS issuers sold 120 pools totaling $1.2 billion in April 2018. HMBS float shrinkage will continue as April’s payoffs are almost certain to outweigh new issuance and interest roll-up.”

Live Well Financial, which endured recent difficulties that have culminated with the halting of new loans and employee layoffs, issued 9 HMBS pools in April for a total of approximately $32 million. “Since selling off its HMBS book to RMF last year, Live Well has issued over $160 million in HMBS pools,” New View notes.

The reverse mortgage industry continues to face an era of generally-reduced volume, largely brought about by changes to principal limit factors handed down by the Federal Housing Administration in October of 2017. The drop observed in HMBS issuance between full year 2017 and 2018 totals could mean that the industry will have a difficult time reaching 2018 totals by the end of this year, according to New View.

“For 2019, the new issuance market has settled into Groundhog Day mode, with very similar volume statistics other than the occasional seasoned first participation issue: $300 million in April, $277 million in March, $274 in February, and $304 million in January,” the commentary wrote. “April’s tail pool issuances totaled $221 million, within the range of recent tail issuance.”

Read the full commentary at New View Advisors.

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