Ginnie Mae HECM MBS Now Official

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October 7, 2007

Ginnie Mae HECM MBS Now Official,

One of the big culprits pointed to in the current mortgage fiasco is the rapid growth of mortgage “securitization”. This term refers to the practice of bundling lots of individual mortgages into investment securities for sale to investors throughout the world. The big benefit of securitization is that a larger pool of investors is attracted meaning more money can be raised for additional loans while, at the same time, investor competition (and GNMA guarantees) help keep interest costs down.

But when traditional mortgages are securitized, it seems that banks and other lenders tend to pay less attention to the underlying credit worthiness of the frontline borrowers than they do when mortgage loans are held in their own loan portfolio. In the rush to generate fees and maintain loan production, too many lenders lost sight of the simple fact the system ultimately depends on the ability of the borrower to make their monthly loan payments.

It seems ironic, then, that just as securitization of traditional mortgages undergoes close scrutiny, the Government National Mortgage Association (Ginnie Mae) unveils a new program aimed at expanding the securitization of HECM reverse mortgages. (more…)

Full post here Reverse Mortgage Information