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62 | M REPORT SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T HMBS Issuance in August Hits $859 Million With COVID-19 impacting so many, one expert suggests, "The responsible use of home equity may be an option to help mitigate certain market risks." A ugust's issuance level for Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) consisted of 80 pools totaling $859 million, according to data released by New View Advisors LLC. Year-to-date, there has been $6.7 billion in HMBS issuance, which puts the sector within range of surpassing not only the 2019 total of $8.3 billion but also 2018's $9.6 billion total and 2017's $10.5 billion total. "August production of original new loan pools was about $666 million, down slight- ly from July's $691 million, but nonetheless impressive compared to $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, and a mere $390 million in August 2019," said New View Advisors in a statement. "Last month's tail pool issuances totaled $193 million, again below the typical $200-$250 million range." New View Advisors credited several fac- tors for the increased vibrancy of the reverse mortgage sector: a recovered capital market, low interest rates, lower default rates, and renewed lending by private lenders that temporarily halted operations at the start of the COVID-19 pandemic. As a result, new production of HMBS is now exceeding its long-term average range of $500 million to $600 million. However, the company added that this robust performance "may soon be challenged by economic conditions and the transition out of LIBOR." The question of the pandemic's impact on senior housing wealth has yet to be determined. The most recent data released by the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index determined that homeown- ers 62 and older saw their housing wealth grow by 1.6% or $120 billion in the first quarter of this year to a record $7.54 trillion from the fourth quarter of 2019. "COVID-19 has impacted millions of families and their retirement portfolios, and a new study from the Center for Retirement Research at Boston College indicates that market shocks are a growing concern for many families whose retirement assets are in 401(k)s," said NRMLA President Steve Irwin when the first quarter data was announced. "The responsible use of home equity may be an option to help mitigate certain market risks and help seniors stay financially secure during future market disruptions." The Housing Market's 'V-Shaped Recovery' While the pace of economic growth has slowed, recent data points to a continued recovery. F annie Mae's latest Economic & Housing Outlook reported that the GSE's economics team expects Q 3 real gross domestic product (GDP) to grow at an annualized pace of 30.4%. This represents an increase from Fan- nie's August forecast of 27.2%. For the full year of 2020, the report projects a 2.6% contraction—repre- senting an improvement over last month's forecast of a 3.1% decline. "While the pace of economic growth has clearly slowed relative to May and June, recent data point to a continued recovery," Fannie reported. "Real personal consumption expenditures (PCE) posted the third straight month of gains in July, rising 1.6%, though this represented a deceleration from 5.7% in June." Fannie Mae's previous forecast anticipated that the July gain in PCE would be followed by an August pause in August "as the enhanced unemployment benefits expired, before growth resumed later in the year." However, this latest Economic & Housing Outlook finds that "recent data suggest continued growth in con- sumer spending over the month. Auto sales, an early indicator of PCE, posted another solid gain in August, rising 4.5%, and credit and debit card transactions data points to increasing spending as well." "Recent measures of capital goods shipments and construction activity also suggest that business and housing investment will grow at a faster pace in the third quar- ter than we previously forecast," Fannie Mae reported. "This expected stronger growth in Q 3 indicates a smaller remain- ing recovery gap." Combined with an "updated assumption" that no additional stimulus legislation will be passed prior to the elections, Fannie Mae said it "downgraded its GDP growth estimate for the fourth quarter to 6.2% annualized from our prior forecast of 8.7%." The report predicted that, into 2021, "behavioral adaptations to the coronavirus will be a factor," limiting the future pace of recovery in some sectors (such as hospitality, travel, and other industries affected by social distancing). The report proceeded to outline ways in which the housing data over the past month continued to "show a strong V-shape rebound, helping drive the broader economy." Data and analysis showed that risks to the forecast "remain elevated." Fannie Mae reported that, "As of this writing, COVID-19 cases in the U.S. continue to trend down- ward, though they are rising again in much of Europe and could spike here as well. Furthermore, if and when vaccines become widely available and utilized will likely affect the path of future consumer behavior. Additionally, uncertainty surrounding fiscal and other policies remains high as the election approaches." The study further details an- ticipated risks related to the labor market, housing supply, as well as refinance and mortgage rates. HMBS Issuance in August Hits $859 Million With COVID-19 impacting so many, one expert suggests, "The responsible use of home equity may be an option to help mitigate certain market risks." A ugust's issuance level for Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) consisted of 80 pools totaling $859 million, according to data released by New View Advisors LLC. Year-to-date, there has been $6.7 billion in HMBS issuance, which puts the sector within range of surpassing not only the 2019 total of $8.3 billion but also 2018's $9.6 billion total and 2017's $10.5 billion total. "August production of original new loan pools was about $666 million, down slight- ly from July's $691 million, but nonetheless impressive compared to $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, and a mere $390 million in August 2019," said New View Advisors in a statement. "Last month's tail pool issuances totaled $193 million, again below the typical $200-$250 million range." New View Advisors credited several fac- tors for the increased vibrancy of the reverse mortgage sector: a recovered capital market, low interest rates, lower default rates, and renewed lending by private lenders that temporarily halted operations at the start of the COVID-19 pandemic. As a result, new production of HMBS is now exceeding its long-term average range of $500 million to $600 million. However, the company added that this robust performance "may soon be challenged by economic conditions and the transition out of LIBOR." The question of the pandemic's impact on senior housing wealth has yet to be determined. The most recent data released by the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index determined that homeown- ers 62 and older saw their housing wealth grow by 1.6% or $120 billion in the first quarter of this year to a record $7.54 trillion from the fourth quarter of 2019. "COVID-19 has impacted millions of families and their retirement portfolios, and a new study from the Center for Retirement Research at Boston College indicates that market shocks are a growing concern for many families whose retirement assets are in 401(k)s," said NRMLA President Steve Irwin when the first quarter data was announced. "The responsible use of home equity may be an option to help mitigate certain market risks and help seniors stay financially secure during future market disruptions."