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Ginnie Mae Guarantees First Home Equity Conversion Mortgage Mortgage-Backed Security
Issuance is First Security Backed by FHA Home Equity Conversion Mortgage Loans
Washington, DC - The Government National Mortgage Association (Ginnie Mae) announced the first issuance of its new Home Equity Conversion Mortgage (HECM) Mortgage-Backed Security (HMBS). The $116 million issuance is the first-ever government-guaranteed mortgage-backed security collateralized by Federal Housing Administration (FHA) insured reverse mortgages (HECM).
Reverse mortgages allow homeowners aged 62 and over to convert home equity into cash while living at home for as long as they wish. Borrowers continue to own their homes, and do not need to make any monthly payments. Instead, they can choose to receive the funds as a lump sum, line of credit, or monthly payment. The loan comes due only when the last borrower moves out, dies, or sells the home.
"This is an important milestone in the developing reverse mortgage market," said Thomas R. Weakland, Acting Executive Vice President of Ginnie Mae. "We believe that the HMBS, like the very first MBS guaranteed by Ginnie Mae in 1970, will spur secondary market growth and increase liquidity. This will drive down the cost of borrowing for older Americans."
The Ginnie Mae HMBS provides the mortgage-backed securities marketplace with the only full faith and credit vehicle and the only standardized structure for the securitization of FHA-insured HECM loans. The HMBS security simplifies the current structure of reverse mortgage securitizations and maximizes value for reverse mortgage lenders and borrowers.
For the rest of this article please visit www.hud.gov.
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