Generation Mortgage announced to its brokers that is in the process of working out the details in order to offer a competitive fixed rate HECM utilizing Ginnie Mae’s HECM MBS product.
Currently the product is available to a select group of brokers in order to fulfill its commitments to Ginnie Mae, but they plan to open it up widely mid to late June said a company statement.
Companies like MetLife and Generation are able to offer extremely competitive fixed products using Ginne Mae’s HMBS product due to investor interest from Wall Street. Rate sheets that I’ve seen show rates are almost 1% better (lower) when compared to lenders delivering fixed rate products to Fannie Mae.
However, Ginnie Mae’s pricing advantage comes with some additional risks to lenders. “The biggest concern is that Ginne Mae requires the loan to be repurchased out of the fund when it hits 98%, and if the loan is in default for taxes or insurance, HUD won’t take it,” said Sherry Apanay, Senior VP of Generation Mortgage.
This creates a problem for non-bank reverse lenders who don’t have the ability to hold the loan on its balance sheet until it pays off. Sources tell RMD that there continues to be discussions between potential issuers and Ginne Mae officials to see if there is a way to restructure the program to ensure non-bank lenders can compete.