Ginnie Mae Changes HMBS Policy on Life Estates, Net Worth Requirement Update

The Government National Mortgage Association (Ginnie Mae) announced new certification requirements for the HMBS program that allow pooling of reverse mortgages related to life estates.

According the policy guidance, the document custodian must verify that the promissory note is executed by the holder of the life estate and the security instrument is executed by the holder of the life estate and any future interests.  In addition, the intervening assignments must reflect such mortgagors and the title insurance lists such mortgagors as holding title.

Last year, Ginnie Mae President Ted Tozer said it would lift the moratorium on new HMBS issuers by the end of 2010, but as of Tuesday, there has been no official announcement.  One source inside the agency told RMD the requirements — which are expected to be north of $10 million — should be out by the end of the week if not earlier.


Despite the moratorium and only 10 active HMBS issuers, the market continues to grow as issuance of reverse mortgages backed by the HECM program reached $11.793 billion during FY 2010, up 131.24% from FY 2009.  Even with the increase, the HMBS program is under 2% of its total business said Michael Nardacci, Director of Ginnie Mae, during the National Reverse Mortgage Lenders Association Conference in New Orleans last year.

Chart: GNMA FY Volume


GNMA FY Volume

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  • Our view of our portion of the mortgage industry should be that of a small pond, next to a small lake. Our myopic view of the reverse mortgage industry should be that of a pond filled with many small fish and a few very large ones.

  • To the best of my recollection, this should not create any new underwriting/closing/funding/purchase conditions for properties held in a life estate. The lenders that we have closed life estate HECMs were already requiring the holder of the life estate to sign the security instruments..

    • You know, Bill, the article says that the security instrument should be executed by the holder of the life estate and “any future interests.” Couldn’t that cause some problems? Who knows who will hold the future interest at the time the current life estate holder passes away.

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