Ginnie Mae’s Policy Shift Applauded by Industry Veteran Ted Tozer

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In a challenging climate for reverse mortgage markets, Ted Tozer, former president of Ginnie Mae, believes that a recent policy change by the government agency is a step in the right direction. The alteration in question pertains to Home Equity Conversion Mortgage (HECM)—backed Securities (HMBS).

Tozer, who serves as a nonresident fellow at the Housing Finance Policy Center at the Urban Institute, has previously expressed concerns about back-end issues affecting the reverse mortgage sector. While this policy change may not be a panacea, he views it as a positive move.

Ginnie Mae has introduced a policy allowing for the securitization of multiple participations related to a particular HECM within a single issuance month. This change aims to enhance issuer liquidity, bolstering the HMBS program’s sustainability.

Tozer cited the failure of Reverse Mortgage Funding (RMF) as a catalyst for this policy shift.

Under previous policies, lenders who extended loans to issuers for draws found themselves unsecured before their funds could be placed into an HMBS tailpiece. The new policy enables lenders to create the tailpiece throughout the month, reducing their exposure to risk.

This change is expected to make lenders more comfortable providing funds to HMBS issuers, addressing back-end issues that have plagued the industry. While it represents a “baby step,” Tozer believes it signifies Ginnie Mae’s commitment to supporting the HMBS program and the wider industry.

By implementing this change, Ginnie Mae aims to ensure more stable funding for borrower draws and premiums, ultimately strengthening the HMBS program. This action underscores the agency’s dedication to supporting the industry and its issuers.

Please note that the views expressed by Ted Tozer in this article do not necessarily reflect those of Reverse Mortgage Tribune and its staff.

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