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Ranking Reverse Mortgage-Backed Securities Issuance

NewView Advisors, LLC, a financial services firm based in New York, has released a new look at the state of HECM mortgage-backed securities for the first quarter of 2018. HECM is the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage reverse mortgage program, which allows homeowners to withdraw some of the equity in their home. These HECM loans can also be pooled into HECM mortgage-backed securities (HMBS) within the Ginnie Mae II MBS program.

The year’s first quarter saw the issuance of $2.97 billion of HMBS, which amounts to 28 percent of calendar 2017’s entire yearly issuance. However, NewView’s report warns that this number may be misleading. “Unless highly seasoned HMBS becomes the norm,” states the report, “expect much lower volume for the remainder of 2018 due to the new PLF curves in effect since October.” HMBS issuance volume for 2017 totaled $10.5 billion. The record was set in 2010 at $10.7 billion.

NewView also ranked the top 10 issuers of HMBS for Q1 2018, with Reverse Mortgage Funding (RMF) topping the list with 42 pools and an original aggregate amount of nearly $1.1 billion. That total gave RMF a 36.4 percent market share for the quarter.

Coming in second was American Advisors Group’s $587.2 million and 19.8 percent market share. Finance of America Reverse held the third spot with $452.6 million and a 15.26 percent market share, followed by Ocwen Loan Servicing in fourth with $222.8 million and a 7.51 percent market share. Live Well Financial rounds out the top five with $209.4 million in issuance and a 7.06 percent market share.

NewView reports that the top five HMBS issuers accounted for 86 percent of total issuance in Q1. That’s an increase of 6 percent over Q4 2017. HMBS issuance during Q4 2017 totaled nearly $3.3 billion.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has over 17 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. Wharton and his family currently reside in Arlington, Texas. He can be reached at David.Wharton@thefivestar.com.

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