Home Equity Conversion Mortgage-Backed Security
In addition to traditional mortgages, Ginnie Mae’s expanding Home Equity Conversion Mortgage (HECM) securities program provides capital and liquidity for Federal Housing Administration (FHA)-insured reverse mortgages, an essential financial solution for a growing number of senior citizens. HECM loans can be pooled into HECM mortgage-backed securities (HMBS) within the Ginnie Mae II MBS program. They also can serve as collateral for Real Estate Mortgage Investment Conduits (REMIC) backed by HMBS (H-REMICs).
With continued investor interest in HECM-backed securities, significant efforts have been made to support market demand for reverse mortgages. The unpaid principal balance of HMBS climbed to $44.6 billion in FY 2013, and the number of participations (the funded portions of HECM loans that have been securitized) increased to 4,384,935.
Demand in the structured market for HMBS remains strong; 32 H-REMIC transactions were issued in FY 2013, up from 25 in FY 2012. The structure and support that Ginnie Mae has brought to this market has increased its liquidity, which translates into better execution on the securities and, ultimately, lower costs for the growing population of senior citizens.
Unlike other entities, Ginnie Mae does not originate or invest in mortgage loans directly. Rather, Ginnie Mae is the guarantor of securities issued by approved lenders who participate in our programs.