Ginnie Mae’s Program to Securitize Government Insured
Home Equity Conversion Mortgages
Table of Contents
– Tab A: Program Overview
– Tab B: Home Equity Conversion Mortgage (HECM)
– Tab C: Home Equity Conversion Mortgage Backed
– Tab D: HECM Real Estate Mortgage Investment
– Tab E: Market Opportunity
Tab A: Program Overview
Ginnie Mae’s Mission
• Ginnie Mae’s mission is to support affordable
housing in the United States by providing an
efficient government-guaranteed secondary
market vehicle linking the global capital markets
to American homebuyers.
• Deepen and broaden the availability of HECM
lending from multiple lenders.
• Reduce borrowing costs.
• Create a broad secondary market for HECM loans.
Tab B: HECM Loans
• FHA insured
• Allows elderly homeowners to convert equity in their
homes into cash.
• No monthly, scheduled payments. Payments are made after
a maturity event occurs.
– Death of the borrower
– Failure to occupy the property for 12 consecutive months
– Sale of the property
• Line of credit mortgages dominate current production
– adjustable rate
– monthly reset
– Average draw at origination is 60% of MCA
• Competition driving HECM margins down
– HECM 100: interest rate equal to the CMT plus a 100 bps margin.
• Majority of HECM loans terminate or are assigned to
HUD within 7 years.
64% of all production has taken place in the past three years.
329,501 loans have been endorsed since 1990.*
– Over 175,000 loans were still active as of September 2006.**
– Aggregate outstanding balance of $18.1 billion.**
• 25 – 30% growth in HECM originations projected
– Increasing rate of baby boomers entering retirement
– Estimated 35 million people over age 65 by 2010, and 50 million by 2020***
– 80% homeownership rate for this population during these periods
* Source: National Reverse Mortgage Lenders Association. FY07 figures are through the first 10 months.