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Securitized FHA loans for seniors ebb as private products grow

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New securitizations backed by Home Equity Conversion Mortgages fell 14% in 2019 as interest in originating proprietary products increased, according to New View Advisors’ analysis of public and private data.

Issuance of HECM mortgage-backed securities fell to $8.26 billion during the year from $9.58 billion in 2018, and the top five issuers accounted for more than 89% the market’s dollar volume.

American Advisors Group remained the top HMBS issuer with 24% market share, followed by Longbridge Financial. Longbridge’s market share was 21%. Reverse Mortgage Funding, which assumed some of the issuance from Live Well Financial’s bankruptcy, was the third largest HMBS issuer in 2019. RMF’s market share was 18%.

New View also noted in a separate report issued late last week that outside of the HECM market, the dollar volume of private reverse mortgages produced rose to the point where these loans make up 25% of new origination. Jumbo loans accounted for the majority of the new products, the consultancy noted.

The HECMs that the Federal Housing Administration insures have long dominated the market for reverse mortgages and the financial crisis discouraged the origination of proprietary products for several years.

However, a growing number of lenders have added private reverse mortgages to their product lines in the past year or so, and the FHA has generally been tightening its parameters for the HECM program because it puts more of a financial strain on its insurance fund than the traditional mortgages it insures.

Reverse mortgages are specialized home equity products accessible only to seniors.

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Mortgages RMBS Home equity loans HELOCs
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