Acting Ginnie Mae president comments on ’HMBS 2.0’

Ginnie Mae, which manages the government-guaranteed portfolio of forward and reverse mortgage-backed securities (MBS), announced this week at a National Reverse Mortgage Lenders Association (NRMLA) event that it will release initial details of its forthcoming Home Equity Conversion Mortgage-backed Securities (HMBS) product as soon as next month.

RMD submitted a request for comment to Ginnie Mae shortly thereafter, and on Friday received a response from Sam Valverde, the company’s acting president and the speaker at the NRMLA event.

When asked to offer additional details about the product that industry participants refer to as “HMBS 2.0,” Valverde reiterated the company’s commitment to the reverse mortgage market in light of recent liquidity challenges and its management of the portfolio of a former lender.

“Ginnie Mae remains committed to stabilizing the government reverse mortgage market,” Valverde told RMD. “Our development of a new HMBS program is intended to ease liquidity pressures and help ensure that our Issuers have access to reliable and cost-effective capital markets funding.” 

At the NRMLA event, Valverde revealed that the company is developing policy and implementation plans for the impending product, with plans to roll out a term sheet that will include a 30-day public comment period that is expected soon. He added that he expects the product will launch by the end of this year, but said it could potentially come sooner.

Ginnie Mae has been in active communication with the reverse mortgage industry on HMBS issues and associated liquidity concerns since it became more heavily involved in 2022. Valverde added that the company is aiming to continue that posture as HMBS 2.0 develops further.

“We look forward to hearing from the industry and key stakeholders on the term sheet that we will release next month,” he said. “Timing of program implementation will depend on feedback we receive, but Ginnie Mae will continue to prioritize [the] development [of] this program.”

HMBS 2.0 has a lot of eyes on it, both inside and outside of the reverse mortgage industry. In a recent letter to Ginnie Mae over its handling of the issuer status of a bankrupt lender, Sen. Mike Braun (R-Ind.) sought extensive information on the development of HMBS 2.0.

These included details like the analyses that suggested the need for a new product in the space; the associated goals, risks and expected outcomes that could stem from such a product; how it would impact loans already being serviced by the Federal Housing Administration and Ginnie Mae; and the costs associated with establishing it.

The product was even mentioned in a recent investor update by Finance of America (FOA), which suggested that HMBS 2.0 would be able to benefit the company.

“HMBS 2.0 may allow FOA to collapse ~$630 million of securitized buyout [unpaid principal balance (UPB)] and reissue these as [Ginnie Mae] securitizations, improving liquidity and freeing operating capital,” the company said.

Ginnie Mae announced the development of the product in January. It will enable the acquisition of loans from an HMBS pool above the existing 98% maximum claim amount (MCA) requirement, according to an initial announcement.

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