NRMLA, MBA submit HMBS 2.0 comments to Ginnie Mae
The National Association of Reverse Mortgage Lenders (NRMLA) and the Association of Mortgage Bankers (MBA) have submitted a joint letter to Ginny Mae Acting President Sam Valverde, who outlined their thoughts and perspectives on the government-owned company’s proposed Supplemental Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) program.
That program, dubbed “HMBS 2.0” by industry participants, was initially announced as being in development early this year. A term sheet containing the proposed provisions was released in late June, followed by a 30-day comment period. A Ginnie Mae official said this earlier HousingWire‘s Reverse Mortgage Daily (RMD) that they were looking forward to industry feedback on the proposal.
The letter largely praised Ginnie Mae for developing this program in response to the liquidity crisis resulting from the failure of financing in late 2022. Reverse Mortgage Financing (RMF), a top 10 lender and a leading HMBS issuer. The trade groups told Valverde they hoped the submitted comments could “hopefully further strengthen and clarify the key terms and provisions” of HMBS 2.0, according to a copy of the letter obtained by RMD.
The recommendations in the letter include the implementation of a maximum pool participation of 100% with a risk retention requirement of 5%. The associations say this further aligns the new program with the provisions of the existing HMBS program, while a 5% risk retention requirement would also align it with the provisions of the Dodd-Frank Act for non-agency securitizations, the letter said.
NRMLA and MBA also requested that the definition of “participation” in the Ginnie Mae Mortgage-Backed Securities (MBS) Guide be updated for transparency and to align with the U.S. Department of Housing and Urban Development (HUD)’s HECM Model Loan Agreement.
The letter also seeks to amend pool certification requirements to “address legal and operational considerations,” the MBA said. This could better address the unique features of HMBS 2.0 compared to the existing HMBS program, especially since HMBS 2.0 pools cannot be assigned to HUD.
“If implemented, the proposed program could alleviate liquidity constraints for HMBS issuers by facilitating the repooling of active and inactive buyouts into new customized pools of individual issuers,” MBA said of its view on the new program. “HMBS 2.0 enables the pooling of HECMs with an outstanding unpaid principal balance (UPB) of not less than 98 percent and not more than 148 percent of the Maximum Claim Amount (MCA).”
MBA advised its members to continue offering perspectives on the proposed program.
“MBA encourages HMBS issuers to continue sharing their feedback on the structure of the HMBS 2.0 program as Ginnie Mae determines next steps,” MBA wrote in a advocacy update issued on Monday. “This joint effort is essential in creating a program that strengthens issuer liquidity while protecting the interests of taxpayers.”
In the lead-up to the letter, NRMLA President Steve Irwin previously told RMD that the association’s HMBS issuer members contributed to the requested comments, and he expressed great optimism about the company’s proposal.
“We know how limited their resources are at Ginnie Mae, and I think this speaks volumes about their commitment to the mission of the HECM program and its importance not only to HUD but to Ginnie Mae,” Irwin said last month .
Ginnie Mae has indicated several times in recent years that its resources are being strained by the acquisition of the former RMF service portfolio. It remains one of the largest portfolios in the HMBS program, despite Ginnie Mae not issuing any pools there. The detail intensity of the HMBS program has forced Ginnie to expand her workforce to manage the portfolio and request additional resources from Congress in the next fiscal year.
That request was recently approved by a Senate committee, but it remains to be seen how far it will go in both houses of Congress.
