WASHINGTON, DC (October 17, 2006) — The Mortgage Bankers Association (MBA) participated in a press conference today hosted by Ginnie Mae to announce its intention to create a Home Equity Conversion Mortgage Mortgage-Backed Security (HECM MBS).  Senior Vice President of Government Affairs Kurt Pfotenhauer, representing MBA at the event, issued the following statement.

“Thousands of older Americans have learned the advantages of the reverse mortgage.  We believe that securitizing these loans, in addition to other reforms to the program like increasing the loan limit and dropping the volume cap on HECM loans, will provide tremendous benefits for seniors.

Today’s announcement is a testament to the extraordinary leadership of Rob Couch and Brian Montgomery.  They have been in their positions at Ginnie Mae and FHA respectively for a short time but they have made clear to all of us that they want to see the two agencies do what the government does best – pioneer new products and serve communities in need.  It is not often that we see government move at the speed of business, but today is a shining example.

MBA also appreciates the role of Fannie Mae, the primary investor to date in HECMs, which has used its portfolio to fund HECMs during the early stages of the program.

There are over 20 million Americans over the age of 62 who own their homes.   Their equity was estimated in 2000 at approximately $2.5 trillion.  As homes have increased in value and life spans have grown longer, many people are looking at their home as a resource to help finance their later years.  That is where the Home Equity Conversion Mortgage, or reverse mortgage, can help.

MBA has been lobbying to eliminate the statutory cap on HECMs and to increase the eligible loan size to the conforming loan limit.  Our advocacy effort is one way we can augment the efforts of FHA and Ginnie Mae to develop HECMs as a financing option for our seniors.  We think legislation will be passed in November to remove the cap on the HECM program and we are hopeful about increasing the eligible loan size.  The result will be more funds available for seniors through the reverse mortgage option.

We all know homeowners over the age of 62 who could use additional cash for living expenses, health care or to satisfy a life-long dream.  Ginnie Mae, with its extensive experience in the market for mortgage-backed securities, is well positioned to help increase the liquidity of reverse mortgages, which of course ultimately benefits consumers.

FHA began insuring HECMs in 1990, closing a grand total of 157 of these loans.  It is hard to argue with the success of the product.  In the first half of 2006, FHA guaranteed over 55,000 HECM loans.  As the number of reverse mortgages continues to grow, the lending community will be able to draw more data and experience underwriting the loans, streamlining the process and making the product better for consumers.

With reverse mortgage products entering their seventeenth year, the number of loans outstanding and the performance history now available, the time is right for securitization.  MBA looks forward to continuing its long tradition of cooperative work with Ginnie Mae, FHA and others to make these reverse mortgage products more easily available to those seniors who want them.”  

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.