HMBS Issuer 2015 Full Year League Tables – AAG Still On Top

AAG kept its #1 HMBS Issuer title for all of 2015, with newly rebranded Finance of America Reverse in second place, overtaking RMS who slipped to third. Wells Fargo returned to issuance in 2015, marking its first market participation since 2012, and raising the total number of HMBS issuers to an all-time high of 14. AAG issued $1.84 billion of securities for a 19.5% market share, Finance of America issued $1.61 billion for a 17.0% market share, and RMS issued $1.47 billion for a 15.5% market share. RMF and Liberty rounded out the Top-5 issuers with $1.40 billion and $1.02 billion, 14.8% and 10.8%, respectively.

The Top-5 issuers accounted for approximately 78% of all issuance, down from last quarter’s 83%. The drop is due mostly to Wells Fargo’s significant tail issuance in 2015, all of which occurred in just two months, October and November, but accounted for 5.9% of total annual market share.

HMBS Issuers sold a total of $9.5 billion in 2015, 44% more than 2014’s $6.6 billion. The all-time record for annual HMBS issuance is 2010’s $10.7 billion.

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HREMIC issuance for all of 2015 was just over $9.5 billion, easily surpassing 2014’s $5 billion of issuance and the previous full year record of $6 billion set in 2012. There were 33 transactions underwritten by four sponsors, Nomura, Bank of America Merrill Lynch, Barclays, and Credit Suisse. Nomura remains the #1 issuer for the year, with $3.4 billion, Bank of America Merrill Lynch was second with $2.9 billion, and Barclays pushed ahead to third with 6 issuances totaling $1.8 billion. Credit Suisse rounded out the group with $1.4 billion issued for a 9% market share. Life-to-date BAML has issued 42% of all HREMICs, Barclays 17%, and Nomura 14%.

Approximately 64% of outstanding HMBS securities have been resecuritized into HREMICs, up from 60% at the end of the third quarter. A stronger bid for the Interest-Only HREMIC classes emerged this year. The HREMIC structure, which allows issuers to create bond classes such as these “IO” securities, is increasingly the most profitable option.

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.

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