HREMIC issuance ended 2014 at $5.05 billion, with 25 transactions underwritten by 5 different sponsors. Bank of America Merrill Lynch remains the market leader with a 39% market share, issuing $1.96 billion of HREMICs. Life to date, BAML has issued 47% of all HREMICs. RBS was second with 6 issuances totaling $1.46 billion, and Nomura was third with 5 transactions for $856 million.
Issuance in 2014 reached the third highest annual volume after 2012 and 2010. Volume surpassed 2013 totals by just under $100 million but was far off the record year in 2012 when $6 billion was issued. Stifel issued $472 million in 2014, but none in the second half. Credit Suisse is a new HREMIC issuer as of November 2014, with one transaction issued for $295 million.
HREMIC collateral consists of HMBS, which are Ginnie Mae guaranteed pass-through securities. HMBS are backed by pools of participations of HECMs, which are FHA-insured reverse mortgages. This double layer of government guarantee, combined with the relatively high coupon and favorable prepayment patterns of the underlying loans, results in very favorable execution, even when compared to other Ginnie Mae “forward mortgage” securities.
(Note: The following was published by New View Advisors, which compiles rankings from publicly available Ginnie Mae data.)