Ginnie Mae issued a statement on on December 28 regarding its seizure of bankrupt lender Reverse Mortgage Funding (RMF)’s servicing operation. The statement reiterated Ginnie Mae’s dedication to the Home Equity Conversion Mortgage (HECM) program and assured borrowers that payments have not been impacted by the move.
“The recent acquisition of Ginnie Mae [HECM-backed Securities] (HMBS) servicing from Reverse Mortgage Funding LLC was accomplished without negatively impacting borrowers,” Ginnie Mae President Alanna McCargo said in the statement. “Borrowers received a notification about the transfer of servicing as required by law. The transfer should be seamless for borrowers and does not change or amend borrower payment schedules or rights under their mortgages.”
McCargo also noted in the statement that borrowers can expect to receive payments consistent with the terms of their loan as expected.
“Ginnie Mae continues to work in coordination with FHA and the entire HECM industry to ensure stability and liquidity for the programs in the future,” McCargo said.
In the statement, McCargo also reiterated Ginnie Mae’s commitment to the HECM program and the availability of securities for investors.
“Ginnie Mae supports the broad availability of HECMs through our [HMBS] program,” she said. “Any HMBS issuance under our program continues to have the full faith and credit guaranty of the United States Government, including the guaranty of timely payments of principal and interest to bondholders.”
RMD reached out for additional comment from Ginnie Mae but was referred to the prior statement.
Ginnie Mae assumed control of RMF’s servicing portfolio on December 20, 2022.
“On December 20, 2022, RMF notified the United States Bankruptcy Court for the District of Delaware that Ginnie Mae would be taking over all loans in GNMA HMBS pools,” an RMF spokesperson said in a statement. “RMF’s borrowers and investors should not experience any noticeable changes as a result of the transition. We continue to achieve outcomes that minimize impact to borrowers with this portfolio and will continue to do the same for the rest of the Company’s loan portfolio as well.”
The motion was approved in court on December 20 and ends RMF’s Ginnie Mae servicing rights.
Coupled with an asset seizure by Fannie Mae, the RMF bankruptcy could pose further challenges for the reverse mortgage industry — which has already endured steep volume losses and reduced issuance of HECM-backed Securities (HMBS).