Advertisement
Homeowners want sophisticated loan products, survey says
Ginnie Mae mortgage backed security may lower cost of HECMsMortgagePress.comGinnie Mae HECM MBS
Ginnie Mae is creating a Home Equity Conversion Mortgage (HECM)
mortgage backed security (MBS). The HECM MBS will allow approved
issuers to securitize and sell their Federal Housing Administration
(FHA) insured HECM loans in the form of a Ginnie Mae MBS. HECMs are
commonly referred to as reverse mortgages and are designed to allow
older homeowners to convert the equity in their homes to monthly
streams of income or lines of credit.
"The Ginnie Mae HECM MBS is an extension of our existing mission
to expand access to affordable housing opportunities in America,"
said Robert M. Couch, president of Ginnie Mae. "Home values have
grown significantly over the years, and reverse mortgages are a
good way for many seniors to stay in their homes, maintain
ownership and access an additional stream of income to enhance
their retirement."
The Ginnie Mae HECM MBS will provide the mortgage-backed
securities marketplace with a Full Faith and Credit vehicle for the
securitization of HECMs. The HECM MBS will increase liquidity by
providing capital market funding sources to primary market HECM
lenders, broadening distribution channels for HECM loans and
expanding the investor base for the HECM product.
The increased competition among lenders should result in
expanded product offerings and reduced costs to borrowers. The
Ginnie Mae guaranty allows mortgage lenders to obtain better
pricing for their mortgage loans in the secondary market.
"The HECM program is clearly a key growth area for FHA. We're
working hard to ensure that we keep pace with the needs of our low
to moderate income borrowers, making programmatic changes to keep
up with the times," said Federal Housing Commissioner Brian D.
Montgomery. "Ginnie Mae's securitization of HECMs will help us keep
pace."
Under the Ginnie Mae structure, approved issuers will have the
flexibility to pool HECM loan draws and securitize the balance
through a Ginnie Mae security. The HECM MBS will be a new class of
Ginnie Mae security under the umbrella of the Ginnie Mae II custom
program. The HECM MBS will be an accrual class, pass through
security. Accordingly, the HECM MBS will not have a payment
schedule. Rather, it will accrue interest on the securitized
principal until such time as payoffs are received. The HECM MBS can
be sold to investors as a stand alone security or be used as
collateral for a Ginnie Mae Real Estate Mortgage Investment
Conduit.
For more information, visit www.ginniemae.gov.
About the author