Ginnie Issues 1st HECM MBS

Ginnie Mae has announced the issuance of its first Home Equity Conversion Mortgage mortgage-backed security, a $116 million transaction that is the first-ever government-guaranteed MBS collateralized by Federal Housing Administration-insured reverse mortgages.The so-called HMBS offers "the only full-faith-and-credit vehicle and the only standardized structure" for securitizing FHA-insured HECM loans, Ginnie Mae said. HMBS issuers will be able to securitize all HECM loan draws, mortgage insurance premiums, and servicing and guarantee fees and then pass through payments to investors as homeowners pay off the loan. "Currently, reverse mortgage originators generally get a premium on the initial loan draw and are reimbursed by the investor dollar-for-dollar on subsequent draws," said Thomas R. Weakland, acting executive vice president of Ginnie Mae. "The ability to securitize successive draws means the originator can obtain market pricing on the entire loan amount -- not just the initial draw. That's a key value of the HMBS to lenders."