this National Reverse Mortgage Association (NRMLA) and Mortgage Bankers Association (MBA) has applied to Ginnie Mae Acting President Sam Valverde offers their thoughts and perspectives on the state-owned company’s proposed supplemental Home Equity Conversion Mortgage (HECM)-backed securities (HMBS) program.
The scheme, dubbed “HMBS 2.0” by industry players, was initially announced to be under development earlier this year. A term sheet detailing its proposed terms was released in late June, followed by a 30-day comment period. A Ginnie Mae official previously said house lineThe Reverse Mortgage Daily (RMD) said they look forward to absorbing industry feedback on the proposal.
The letter largely praises Ginnie Mae for developing the plan to deal with the liquidity crunch caused by U.S. bank failures in late 2022. reverse mortgage financing (RMF), a top 10 lender and leading issuer of HMBS. According to a copy of the letter obtained by RMD, trade groups told Valverde they hoped the submissions would “further strengthen and clarify key terms and provisions of HMBS 2.0”.
Recommendations outlined in the letter include implementing a 100% maximum pool participation rate and a 5% risk retention requirement. The associations said this further aligns the new program with the provisions of existing HMBS programs, and the 5% risk retention requirement also aligns it with the provisions of the Dodd-Frank Act for non-agency securitizations, the letter explains. consistent.
NRMLA and MBA also requested that the definition of “participation” in the Ginnie Mae mortgage-backed securities (MBS) guidance be updated to increase transparency and align with U.S. Department of Housing and Urban Development (HUD) HECM Loan Agreement Sample.
The letter also seeks to adjust mining pool certification requirements to “address legal and operational considerations,” MBA said. This better addresses the unique properties of HMBS 2.0 than the existing HMBS program, especially since HMBS 2.0 pools cannot be assigned to a HUD.
Commenting on its outlook for the new scheme, MBA said: “If implemented, the proposed scheme could alleviate liquidity constraints for HMBS issuers by facilitating the re-pooling of active and non-active acquisitions into a new bespoke single issuer pool.” “HMBS 2.0 will allow for the pooling of HECMs with unpaid principal balances (UPB) not less than 98% and not more than 148% of the Maximum Claim Amount (MCA).”
MBA recommends that its members continue to provide perspectives on proposed projects.
“As Ginnie Mae determines its next steps, MBA encourages HMBS issuers to continue to share their feedback on the structure of the HMBS 2.0 program,” MBA wrote in a promotional update released Monday. “This collaboration is important in developing a plan to enhance issuer liquidity. A plan that also protects taxpayers is critical.”
The letter follows NRMLA chairman Steve Irwin previously telling RMD that the association’s HMBS issuer members were contributing to the requested input and that he expressed a lot of optimism about the company’s proposals.
“We know how limited their resources are at Ginnie Mae, and I think that speaks volumes about their dedication to the mission of the HECM program and how important it is, not just to HUD but to Ginnie Mae,” Owen said last month.
Ginnie Mae has detailed multiple times over the past few years that its resources are strained by taking on the former RMF service portfolio. Although Ginnie Mae does not issue any pools of funds from it, it remains one of the largest portfolios in the HMBS scheme. The intensity of the details of the HMBS plan requires Genie to beef up its staffing to handle the portfolio and request additional funding from Congress in the next fiscal year.
The request was recently approved by a Senate committee, but it remains to be seen how far both chambers of Congress will go.
