Fannie Mae announced that effective September 1, 2009, they will discontinue offering commitments to purchase CMT-indexed HECMs. The government sponsored entity will continue to offer commitments to purchase monthly adjustable rate LIBOR based HECMs and fixed rate HECMs.
According to the announcement, FNMA’s decision to discontinue CMT based reverse mortgages is intended to help standardize and simplify HECM product offerings, build liquidity for the product, and encourage a market shift toward securitization.
Most originators that I’ve spoken to are closing almost all LIBOR based products because the pricing is so much better. A quick look at today’s rate sheets show LIBOR based HECM’s are priced about .50% better in rate compared to CMT based products.
Lenders will be able to obtain pricing and commitments for CMT based HECMs in eCommitting until August 31, 2009.