"Under current rules, Ginnie Mae requires lenders to buy a HECM loan out of an HMBS pool once its outstanding principal balance reaches 98% of the maximum claim amount (MCA). The MBA is advocating for a new HMBS security that would allow all HECMs at 98% of the MCA to be resecuritized. The association argues that this change would stimulate investor demand and increase guaranty fee revenue."
"Separately, the trade group proposes a program to allow private servicers to continue servicing loans after assignment to the FHA once the 98% MCA threshold is met. This would relieve FHA of servicing losses and operational burdens. Seniors would also avoid the confusion and complexity of servicing transfers. Private servicers would retain servicing fee revenue throughout the life of the loan, strengthening their business models, the MBA stated."
"Industry experts have zeroed in on two pressing issues: mortgage insurance and liquidity constraints, which the MBA letter addresses. The demand for HECM loans remains strong among seniors. However, overall HECM loan volume has not increased due to overly burdensome aspects of the loan process and the steep upfront costs associated with the loan. These factors discourage many potential borrowers as they evaluate whether a HECM is suitable for their needs, the MBA stated in a letter dated Nov. 26."
Ginnie Mae currently requires lenders to buy a HECM loan out of an HMBS pool once its outstanding principal balance reaches 98% of the maximum claim amount (MCA). A new HMBS security that would allow all HECMs at 98% of the MCA to be resecuritized is proposed to stimulate investor demand and increase guaranty fee revenue. A program to allow private servicers to continue servicing loans after assignment to FHA once the 98% MCA threshold is met would reduce FHA servicing losses and operational burdens, preserve servicing fee revenue for private servicers, and reduce borrower confusion from servicing transfers. The current upfront MIP of 2% of a home's value is widely considered excessive, and an alternative basis for the upfront MIP is proposed.
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