Reverse Mortgage Securities Issuance Falls in 2018, Rises Slightly in December

The production of new Home Equity Conversion Mortgage-backed securities (HMBS) saw an annual decline over the full year of 2018, coming in at approximately $9.6 billion compared to 2017’s $10.5 billion, though the December 2018 monthly issuance total saw a slight increase to $619 million. This is according to data from GNMA and private sources compiled and released by New View Advisors.

The rise for December is attributed to “three highly seasoned pools of original collateral,” the data’s accompanying commentary reads. “Without those three issues, December issuance was very similar to November’s weak numbers, which were the lowest issuance level in over four years,” New View says.

With only 95 pools issued in December along with $300 million of new first participation pools issued, New View writes that additional shrinkage in HMBS float “seems likely” for January 2019.

In terms of what’s to be expected over the course of the new year, New View writes, “The various headwinds facing the market, higher interest rates, lower PLFs, etc., will probably reduce volume further in 2019.” Much like their predictions accompanying November’s HMBS issuance numbers, New View details that new realities that come with lower principal limit factors (PLFs) are causing reverse mortgage originators to “face a new era of reduced volume.”

Following up on news of Live Well Financial’s $4 billion HMBS portfolio sale to Reverse Mortgage Funding, LLC (RMF) last month, Live Well was back in the market, issuing approximately $46 million of HMBS in December.

Read the full commentary at New View Advisors.

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