WASHINGTON, D.C. — Today, Ginnie Mae announced the finalized term sheet for its Home Equity Conversion Mortgage (HECM) Mortgage-Backed Securities (HMBS) 2.0 program. The finalization follows an extensive stakeholder engagement process and public comments received after the June 2024 release of the proposed HMBS 2.0 term sheet.
“The finalized HMBS 2.0 term sheet demonstrates Ginnie Mae’s commitment to providing innovative solutions for the reverse mortgage industry,” said Acting President Sam Valverde. “This program will facilitate much-needed liquidity for Issuers while improving the stability of the government-backed reverse mortgage market. As my final major initiative at Ginnie Mae, I am proud to see the critical policy work completed.”
The HMBS 2.0 program addresses liquidity challenges when HECM loans are bought out of traditional HMBS pools but cannot be immediately assigned to the Federal Housing Administration because of incomplete documentation or unresolved borrower defaults. The program introduces revised pooling options that provide Issuers with durable liquidity solutions while maintaining protections for taxpayers.
Key features of the finalized term sheet include:
- Defining HECM collateral criteria and Issuer eligibility requirements.
- Extending the Mandatory Buyout threshold to 150% of the Maximum Claim Amount.
- Capping pooling participation at 95% to incentivize Issuers to mitigate risks to taxpayers.
- Allowing securitization of certain loan advances, including those related to due and payable loans.
- Revising pool certification requirements to account for foreclosure or legal documentation challenges while incorporating alternative property valuation methods.
- Adjusting the Maximum Adjusted Property Value Ratio (MAPVR):
- 70% MAPVR for HECM loans bought out before the program’s implementation.
- 60% MAPVR for other HECM loans.
- MAPVR determined at the time of pooling will remain valid for subsequent participations.
- Specifying HMBS 2.0 pool types to provide clarity and alignment with program requirements.
These provisions aim to stabilize the reverse mortgage sector by addressing Issuers’ liquidity needs while preserving long-term market integrity. With the policy work completed, Ginnie Mae is now focused on program implementation and is working closely with vendors and contractors to establish a comprehensive work schedule and completion timeline.
About Ginnie Mae
Ginnie Mae is a wholly government-owned corporation that attracts global capital into the housing finance system to support homeownership for veterans and millions of homeowners nationwide. Ginnie Mae’s mortgage-backed securities (MBS) programs directly support housing finance programs administered by the Federal Housing Administration, the U.S. Department of Veterans Affairs, the U.S. Department of Housing and Urban Development’s Office of Public and Indian Housing, and the U.S. Department of Agriculture’s Rural Housing Service. Ginnie Mae securities are the only MBS backed by the explicit full faith and credit of the U.S. Government.
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