HMBS issuers continued their torrid pace to start the New Year. February saw again nearly $1.4 billion in new HMBS issuance, almost setting a record for new original loan pools for the fifth month in row. Refinancing activity continues to be strong.
HMBS issuance totaled $13.2 billion for 2021, 22% more than the previous record set in 2010, with $10.8 billion issued. With two months in the books, HMBS issuance is on a pace to beat that in 2022.
February’s production of original new loan pools totaled $1.12 billion, just shy of January’s record $1.18 billion, and consistent with December’s $1.14 billion, November’s $1.08 billion and October’s $1.07 billion. Approximately $693 million in original new loan pools were issued a year ago, in February 2021.
98 pools were issued in February: 53 first-participation or original pools, and 45 tail pools. Original pools are those HMBS pools backed by first participations in previously uncertificated HECM loans. Tail HMBS issuances are HMBS pools consisting of subsequent participations. Tails are not from new loans, but they do represent new amounts lent. Tail HMBS issuance is essential for HMBS issuers to finance their monthly advances, such as borrower draws and FHA mortgage insurance premiums. Last month’s tail pool issuances totaled $245 million, at the high end the typical range.
(Editor’s note: The following article was republished with permission from New View Advisors, which compiled this data from publicly available Ginnie Mae data as well as private sources.)