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Ginnie Mae reaches milestone in development of HECM MBS

National Mortgage Professional
Mar 24, 2014

Ginnie Mae reaches milestone in development of HECM MBS MortgagePress.comHome Equity Conversion Mortgage

Ginnie Mae released program requirements and reporting specifications for its new Federal Housing Administration (FHA)-insured Home Equity Conversion Mortgage (HECM) mortgage-backed security (MBS). The HECM Mortgage-Backed Securities (HMBS) Reference Guide is intended to provide new and existing issuers with a comprehensive overview of Ginnie Mae's HMBS program.

"The availability of the guide marks an important stage in the development of the first program allowing issuers to securitize HECMs in a vehicle backed by the full faith and credit of the United States government," said Michael J. Frenz, executive vice president of Ginnie Mae. "The HECM Mortgage-Backed Securities Reference Guide will be an essential source of information for issuers preparing to participate in the HMBS program."

The guide provides issuers with information about the program rules and requirements for securitizing FHA-insured HECM loans with Ginnie Mae. Furthermore, the guide provides detailed issuer pooling and reporting specifications. The guide is an operational guide intended to inform issuers about Ginnie Mae's requirements, anticipated process flow for HMBS pool origination and ongoing HMBS administration and accounting. In addition, this document provides descriptive information about the files, records and data elements that are required to be transmitted monthly to Ginnie Mae.

Select program requirements include:

• All Ginnie Mae issuers in good standing will be eligible to request approval to participate in the HMBS program;
• A Ginnie Mae HMBS pool must have a minimum of three participants with an outstanding balance totaling a minimum of $1 million; and
• Issuers will have to meet the minimum net worth requirement of $500,000.

Ginnie Mae worked closely with industry partners during the development process to outline the business requirements necessary to support Ginnie Mae's HECM securitization program.

"We applaud Ginnie Mae's efforts to develop a product that will meet the needs of our growing population of seniors, along with reverse mortgage originators and investors," said John Robbins, chairman of the Mortgage Bankers Association. "MBA staff and members were glad to be able to offer our expertise as we worked closely with Ginnie Mae to refine and vet the requirements for an MBS backed by HECMs. The securitization of HECMs is a clear example of a successful effort to pioneer a much needed new product."

"We will continue to work to make reverse mortgage products more easily available to those seniors who want them," said Peter Bell, executive director of the National Reverse Mortgage Lenders Association. "Ginnie Mae is well positioned to help increase the liquidity of reverse mortgages, which of course ultimately benefits consumers."

The HMBS can be sold to investors as a standalone security, or be used as collateral for a Ginnie Mae Real Estate Mortgage Investment Conduit. The HMBS will be a new class of the Ginnie Mae II Custom MBS program and will be structured as an accrual class pass-through security. Issuers are required to pass through payments to investors as loan payoffs occur. Like all Ginnie Mae securities, the HMBS will carry the Ginnie Mae guaranty that is backed by the full faith and credit of the United States government.

Ginnie Mae will publish final program guidelines and a revision of the Ginnie Mae MBS Guide shortly. The updated Ginnie Mae MBS Guide will also include an HMBS Accounting Manual.

For more information, visit www.ginniemae.com.