HREMIC Issuance 2017Q3: 100.3% Market Share

HREMIC issuance for the first nine months of 2017 was $7.31 billion, about 5% behind 2016’s first nine months’ issuance total of $7.68 billion. Third quarter volume was $1.87 billion, off 26% from 2017’s second quarter issuance of $2.53 billion.

There were 19 transactions underwritten by three sponsors, Nomura, Citigroup, and Bank of America Merrill Lynch. Nomura remains the #1 issuer with $3.6 billion. Citigroup leapfrogged ahead to second with $2.0 billion, and Bank America Merrill Lynch was third with $1.6 billion. Life-to-date BAML has issued $19.4 billion of all HREMICs for a 37.6% market share, and Nomura has issued $13.8 billion for a 26.8% market share.

For the nine months ended September 30, 2017, more HREMICs ($7.31 billion) than HMBS ($7.29 billion) were issued, suggesting the vast majority of HMBS now find their way into HREMIC securitization. The stronger and broader bid for the Interest-Only HREMIC class that emerged in 2016 has made the HREMIC structure the most profitable option for broker dealers.

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.






(Editor’s note: The following article was published with permission from New View Advisors, which compiled these rankings from publicly available Ginnie Mae data.)