MBA Responds to FHA, Ginnie Mae Request Regarding HECM, HECM Mortgage-Backed Securities

MBA responded to FHA and Ginnie Mae’s request for input on how to modernize and strengthen the Home Equity Conversion Mortgage and HECM Mortgage-Backed Securities programs to better serve senior homeowners and support market liquidity.

The MBA letter urges FHA and Ginnie to address undue lender burdens and program features that present obstacles to borrower access and interest in order to reinvigorate the HECM and HMBS programs’ ability to meet their intended policy goals.

Specifically, MBA recommend that FHA and Ginnie Mae should:

• Create a new HMBS security that would allow all HECMs at 98% of their Maximum Claim Amount to be re-securitized;

• Allow existing private servicers to continue servicing loans after assignment to FHA (post-98% buyout);

• Restructure the upfront and ongoing HECM Mortgage Insurance Premiums to calculate premiums based on the actual amount drawn;

• Broadly adjust principal limit factors to a borrower’s risk profile;

• Modernize the collateral risk assessment process;

• Restructure Life Expectancy Set-Aside requirements to apply only to borrowers who are at high risk of default; and,

• Cultivate a robust HECM counseling process.