Panelist: Reverses Ripe for Securitization

The increasing number of reverse mortgage originations make this product ripe for securitization, a panelist said at a session on Ginnie Mae Home Equity Conversion Mortgage mortgage-backed securities at the Mortgage Bankers Association annual convention in Boston.Arthur Axelson, a partner with Reed Smith LLP, added that the security will "revolutionize" the Federal Housing Administration's HECM loan. Craig Corn, president of BNY Mortgage Co., said the Ginnie Mae program would increase liquidity for the product as well as increase the number of secondary-market investors. "It is an incredible opportunity, but with that opportunity comes risks," he added. Theodore Foster, Ginnie Mae's senior vice president, said the agency is launching the new product because its charge is to support government-insured products. There is dramatic growth in the number of HECM originations, but no standardized secondary-market take-out for the product, he said. Among Ginnie Mae's goals is to increase availability of HECMs and to create a secondary market for them so lenders can offer more products.