At this years Mortgage Bankers Association in Boston, Ted B. Foster, Senior VP of Ginnie Mae presented on the new HMBS. The presentation gives the best overview of the product for people in the industry that I’ve seen. Foster lists the key features of the HMBS:
- Collateralized by HECM loans.
- Weighted Average Coupon (WAC) accrual pass-through bond.
- Securitization of funded balances. An individual HECM loan can be securitized in multiple HMBS as they are funded over time.
- Does not require external funding sources for future borrower draws.
- Underlying collateral must have the same index and reset dates.
I learned more about the product from these 17 slides than all the other documentation I’ve read. If you have any interest in GNMA’s reverse mortgage product definitely take a look.