The Government National Mortgage Association (GNMA), also known as Ginnie Mae, announced on Thursday that mortgage securities backed by Home Equity Conversion Mortgages (HECMs) can now make use of a new “platinum” securities execution: the Home Equity Conversion Mortgages Backed Security (HMBS) Platinum securitization channel.
This option, “eases the administrative costs of holding multiple (and typically smaller) HMBS securities and, in doing so, enhances the liquidity of the overall market for Ginnie Mae HMBS,” the announcement release reads. This new option is the latest addition to a modernization initiative aimed at Ginnie Mae’s Platinum securities program, in place since 2017 to add functionality that is investor-focused.
“Today, investors can create Platinum products using fixed-rate MBS (15- and 30-year mortgages); Weighted Average Coupon (WAC) Adjustable Rate Mortgage (ARM) and Jumbo Only Fixed mortgages,” the release read.
Market adoption rates for modernized Platinum products have been strengthening since their introduction, with fiscal year 2017 production of Platinum securities with fixed-rate collateral sitting at $7.88 billion. After the implementation of modernization and automation inside the new MyGinnieMae portal, volume grew to over $20 billion the following fiscal year.
“Making it simpler for investors to manage their portfolio of Ginnie Mae MBS and HMBS, while enhancing the liquidity of their Ginnie Mae investments, supports our mission to foster a strong secondary mortgage market for government mortgage loans,” said John Daugherty, SVP of the office of securities operations in the press release. “[It will help] borrowers across the U.S, obtain the lowest mortgage rates an efficient market can offer.”
Investors in Ginnie Mae MBS were described as the, “source of capital for homeownership” in the United States by John Getchis, SVP of the office of capital markets.
“Platinum HMBS securities give security dealers and institutional investors another choice when deploying their capital, and another way to support the secondary mortgage market,” Getchis said in the release.
Continued modernization of Ginnie Mae’s technology and business processes is a primary initiative of the agency’s strategic strategy, and more of its modernization goals will be discussed at the Ginnie Mae Summit this coming June in Washington, D.C.