HMBS Starts Off Strong in 2015

HMBS issuers sold $712 million in new pools during January 2015, the highest total since December 2013. Issuance climbed nearly 10% from December 2014 and slightly exceeded the $711 million total of January 2014. This marks the fourth straight month that issuance has exceeded $600 million. With interest rates still low and financial assessment postponed, we expect this trend to continue.

Tail issuance accounted for over 23% of January’s total dollar amount, and half of the 106 pools issued.

Issuers are benefitting from both the higher PLFs enacted in August 2014 and relatively large borrower draws, as loans originated with utilization caps reach their 13th month, when draw restrictions expire.

Fixed rate issuance comprised only 25% of total HMBS issuance in January 2015, reflecting the typical product mix brought on by FHA’s program changes.
Newly originated loans comprise a large majority of HMBS issuance in any given month, and a very large majority of current production HECM loans are securitized into HMBS. As a result, HMBS issuance is a good barometer of recent HECM production.

Overall Ginnie Mae issuance is down significantly, with $313 billion issued in 2014, compared to just over $417 billion in 2013. (These figures include both forward and reverse, Ginnie Mae I and Ginnie Mae II securities.)

(Note: The following was published by New View Advisors, which compiles rankings from publicly available Ginnie Mae data.)