HMBS issuance reaches a high point for 2023

HMBS issuance was higher in June, but is still far off from last year's numbers

While the year got off to a rocky start for Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS), issuance in June was at the highest point for 2023. While that’s generally positive, it’s not comparable to the highs from the pandemic.

New HMBS production increased slightly in June, according to Ginnie Mae and private data compiled by New View Advisors, and new HECM-backed securities production reached $588 million, up from $580 million the month prior.

“The HMBS new issue market posted its biggest month of 2023, but once again that’s not saying much,” New View said in its commentary. “Strong tail issuance masked a decline in new loan production.”

The HMBS market is still contending with the Reverse Mortgage Funding (RMF) bankruptcy that occurred late last year. RMF was the largest HMBS issuer of record, and in June, RMF issued no HMBS pools.

The Finance of America Reverse (FAR) and American Advisors Group (AAG) consolidation also continues to have an impact. FAR’s parent company also announced late last year that it had acquired AAG, which further impacted the landscape, New View explained.

“On March 31, [AAG] was purchased by [FAR], continuing the industry’s consolidation, leaving four issuers with approximately 90% total market share,” New View said. “Last month, FAR was the top issuer with $195 million.”

This is a slight issuance reduction from FAR when compared to $200 million from May, according to prior data shared by New View.

Last year was an all-time HMBS issuance high at $14 billion. While this year has seen a steady increase of total HMBS issuance, it’s unlikely to come close to last year’s issuance total. Just over $3 billion has been issued over the past five months, New View said.

Another bright spot for June was first-participation pool production, which reached $384 million, an increase from May ($353 million), April ($379 million), March ($259 million), February ($322 million) and January ($347 million). There is a caveat, however.

“June was very weak by historical standards,” New View said. “[The month in 2023 was] less than one-third of June 2022’s $1.1 billion in new issuance.”

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