Ginnie Mae has announced [1] an All-Participants Memorandum (APM), 23-04 [2], which reduces the required minimum size for all Home Equity Conversion Mortgage-Backed Securities [3] (HMBS) pool types from $1,000,000 to $250,000.
The rapid rise of interest rates and the current economic climate is creating liquidity pressure for HMBS Issuers obligated to fund borrower draws and make timely payments to HMBS investors under Ginnie Mae’s [4] Guaranty Agreement. Ginnie Mae is reducing the minimum HMBS pool size to relieve this pressure and decrease the amount of time Issuers must carry balances between the HECM loan origination disbursement and HMBS securitization.
In conjunction with the APM, Ginnie Mae is revising its MBS Guide, Chapter 35, Part 7 §D to incorporate the reduction in minimum pool size. These changes are applicable for April 1, 2023 issuances and thereafter. Each pool must still contain a minimum of three participations, each related to a distinct HECM loan in accordance with Ginnie Mae MBS Guide, Chapter 35, Part 7 §E. Additionally, all HMBS pool types are eligible for Ginnie Mae’s Platinum Certificate program, which allows the aggregation of small pools.
“Ginnie Mae is responsive to the market conditions our counterparties face in the reverse mortgage segment. This step allows quicker path to HMBS securitization and supports issuer liquidity,” said Ginnie Mae President Alanna McCargo [5].