More than six months after suspending the approval of new HMBS issuers, Ginnie Mae President Ted Tozer announced it will lift the moratorium in December during a speech at the National Reverse Mortgage Lenders Association’s annual conference in New Orleans.
While the announcement was welcome news, Tozer failed to bring the most important piece of information, the new net worth requirements.
Earlier during the conference, Michael Nardacci, Director of Ginnie Mae, said the agency plans to release the details by year end.
“We really are taking our time to get it right, please bear with us as we try to get this correct,” Nardacci said. “In terms of the HMBS market, it’s very expensive and issuers need to be very well capitalized to serve the product.”
Ginnie Mae is the only source of liquidity for reverse mortgage lenders after Fannie Mae announced it would no longer purchase reverse mortgages (HECM) in October. While the HMBS program has grown from $1.357 billion in 2008 to $8.538 billion in 2009, overall, the product is “under 2% of what GNMA does” said Nardacci.
There are currently 10 approved HMBS issuers but others like Urban Financial – backed by Knight Capital Group – have been very public about their desire to get approved. Industry sources tell RMD the new net worth requirements will be raised dramatically, north of $10 million to ensure issuers can meet draw requirements.