Ginnie Mae has launched a new securitization channel for reverse mortgage-backed securities.
Now, investors in the HECM mortgage-backed securities, or HMBS, market can participate in Ginnie’s new Platinum HMBS program, which reduces the administrative costs of holding multiple and smaller HMBS securities.
The Platinum program will allow broker-dealers to combine HMBS, including tail issuance, into new, larger securities for investors.
This may help enhance liquidity for the HMBS market because it could attract investors –like institutional investors, for example – whose minimum size requirements previously prevented them from participating in the HMBS market.
And more liquidity would certainly be welcome.
In the last several months, as reverse mortgage origination volume has fallen, the HMBS market has seen issuance sink.
In the first quarter of 2019, issuers brought just under $1.7 billion to market, according to New View Advisors. This is a 44% decline from last year and the lowest total in five years.
Michael McCully, partner at New View, said the Platinum program is a welcome addition.
“We’re glad to see Ginnie Mae has launched Platinum for HMBS,” McCully said. “In addition to improved administrative efficiency, the program can increase liquidity by pooling existing securities into new HMBS for investors that might not otherwise participate in our market."
HMBS is just the latest market to see the addition of a Platinum program, which was first developed by Ginnie Mae in 2017. Investors active in the securitization of fixed-rate MBS, weighted average coupon, adjustable-rate Mortgages and jumbo-only fixed mortgages can participate in Platinum programs.
“Today’s announcement is another important step on the path to continually modernize operations at Ginnie Mae to benefit MBS investors and Issuers,” said John Daugherty, SVP of Ginnie Mae’s Office of Securities Operations.
“Making it simpler for investors to manage their portfolio of Ginnie Mae MBS and HMBS, while enhancing the liquidity of their Ginnie Mae investments, supports our mission to foster a strong secondary mortgage market for government mortgage loans, helping borrowers across the U.S, obtain the lowest mortgage rates an efficient market can offer,” Daugherty added.
John Getchis, SVP of Ginnie’s Office of Capital Markets also weighed in.
“Platinum HMBS securities give security dealers and institutional investors another choice when deploying their capital, and another way to support the secondary mortgage market,” Getchis said.