Ginnie Mae announced today that it would start securitizing reverse mortgages by creating the Home Equity Conversion Mortgage MBS (HECM MBS). The announcement was made at press conference hosted by the Agency.
Reverse mortgages offer homeowners the chance to convert the equity in their homes to monthly lines of credit. With this mortgage, homeowners above 62 years old could receive payments in a lump sum, attain a line of credit or monthly payment. The loan only becomes due when the last borrower moves out, dies or sells the home.
In this light, Ginnie Mae has said that number of reverse mortgages issued by the U.S. has risen by 73% from 2005 to 2006.
Officials from the Mortgage Bankers Association expressed their support for the move. "Thousands of older Americans have learned the advantages of the reverse mortgage," said MBA Senior Vice President of Government Affairs Kurt Pfotenhauer, who represented the MBA at the press event. "We believe that securitizing these loans, in addition to other reforms to the program like increasing the loan limit and dropping the volume cap on HECM loans, will provide tremendous benefits for seniors."
Pfotenhauer added that the announcement shows the extraordinary leadership of Ginnie Mae President Rob Couch and Federal Housing Authority Assistant Secretary for Housing-Federal Housing Commissioner Brian Montgomery because even if they were just in their respective positions for a short time, they have made clear that they want to see the two agencies "pioneer new products and serve communities in need," Pftenhauer said.