A key source of reverse mortgage securitizations, the Government National Mortgage Association, a.k.a. Ginnie Mae, has told prospective issuers that it is performing a “comprehensive review of the risks associated with the HMBS (HECM MBS) program both to issuers and Ginnie Mae, in order to evaluate possible changes to the program.”
The 42-year-old HUD agency notes further that it expects to “complete our comprehensive review, and announce any resulting changes within the next two to three months.” Until then, Ginnie has suspended approvals of any HMBS issuers until this process is complete. The trigger for the suspension, according to Robert Fishman, chief risk officer, Ginnie Mae, were recent FHA program changes and the unprecedented growth of government backing for mortgage lending generally in the past two years.
The FHA has revised upward net worth and liquid asset requirements for all its approved lenders, including those who originate HECMs. “That’s my starting point,” Fishman tells RMD. “It will be the focus of my review.” He added that suspension is only “fair to those applying, that rather than approving [them] and then changing the rules a few months later.” Four lenders are “in the pipeline” awaiting approval to securitize reverse mortgage loans, he said.
Fishman, who joined Ginnie last September after 15 years in a variety of positions with Freddie Mac, said upon review, he either will be “comfortable” with existing requirements or “change them and make issuers aware of that.”
There are currently 10 approved HMBS issuers; among those 6 are active, according to Ginnie; total HMBS issuances to date total approximately $13 billion and are running at about $1 billion in new issuances each month.
Ginnie Mae evaluates issuer applicants based upon numerous factors including financial health, industry experience, and proficiency as a government loan originator and servicer, along with knowledge of mortgage securitization programs and procedures.
Written by Neil Morse