exciting development
Wong explained that he and his colleagues at Waterfall were pleased to see Ginnie Mae lay out new details for the proposed product.
“I think from our perspective, this is an event that we, like most industry players, are very excited to hear,” he said. “I think the industry has responded quite positively to this. Ginnie Mae has demonstrated a real commitment to reverse mortgage products through its HECM-backed securities program.
Wong explained that Waterfall has been involved in the HECM space for more than a decade. One factor that stands out in the new term sheet, he said, is that Ginnie Mae appears to be focused on improving the structure of the HMBS market.
“[Ginnie Mae has] We are very transparent about how securities support issuers and investors,” he said. “From my perspective, Waterfall has certainly seen firsthand how proactive Ginnie Mae and the FHA have been on this, especially in reverse mortgage financing (RMF)”.
This also coincides with changes to the HECM plan. federal housing administration (FHA), including adjustments designed to improve the customer service experience.
“The most obvious is the alignment with the ultimate goal of providing financial solutions to consumers, especially older homeowners,” Huang said. “There is strong collaborative energy within DC and the industry, driven by National Reverse Mortgage Association (NRMLA), which has been a leader in efforts to create these changes.
Huang added that the simplicity of the scheme is a noteworthy factor as it is an “extension of a scheme that the market is already familiar with and will significantly improve the liquidity of this government scheme”, he said.
The lasting impact of lender failure
The failure of RMF in late 2022 was a seismic event for the reverse mortgage industry, adding stress to various stakeholders including lenders, creditors and bond buyers.
“[That incident] It’s really stress testing a lot of the existing liquidity mechanisms, whether it’s securitization programs or rating agencies, and how they view the product,” Huang said.
But the takeaway from this, he added, is that addressing these challenges requires a joint effort, and further involvement from FHA and Ginnie Mae should help boost overall market confidence.
“I really think so [HMBS 2.0] May increase investment and liquidity in the reverse mortgage market,” he said. “For example, I strongly believe this now allows lenders to really focus on the originator. Financing counterparties and balance sheet participants can be more constructive about growth, putting capital where it needs to be to grow the business.
Wong said he is also watching with interest the addition of forward mortgage players to expand its product portfolio to include reverse mortgages.
“As a statement about the housing finance ecosystem in general, you’re definitely seeing newer non-bank lenders transitioning away from traditional 30-year fixed-rate mortgages to now also offering reverse mortgages,” he said. “Out of all For these reasons, liquidity is extremely important because now it allows everyone’s energy to no longer be focused on the liquidity of the product that is guaranteed by the government, but instead hopefully focused on the growth of the business.”
Stay tuned for more content from Leo Wong on the topic of HMBS 2.0.
