Beginning Oct. 1,
The move is expected to reduce liquidity pressures on
"Our goal is to improve Issuer liquidity and strengthen this important program for America's seniors," said Ginnie Mae President Alanna McCargo in a press release.
"Ginnie Mae's HMBS program changes will enable Issuers continuous access to capital market sources of funding to securitize HMBS participations throughout the month," she said. HECMs are offered through the Federal Housing Administration and provide older homeowners access to their accrued equity.
Liquidity risks related to HECM and similar reverse-loan programs came under heightened scrutiny at the beginning of this year following the November 2022 bankruptcy of Reverse Mortgage Funding, previously one of the leading originators of the product. Following RMF's shutdown, Urban Institute issued a report this year
Once new regulations are introduced in October, issuers will be bound by additional requirements when it comes to pooling more than a single participation from a HECM. Each securitized participation must be in sequential order and only one per HECM will be permitted in a securitization pool. Prior pools including other participations on the loan must also be issued before a new securitization can be issued.
Additional pooled participations coming from disbursements occurring after the first of the month will owe interest for the entire 30-day period to security holders as well.
The failure of Reverse Mortgage Funding initially led Ginnie Mae