The average contract interest rate for 30-year fixed-rate mortgages increased to 6.33 percent from 6.27 percent, with points increasing to 1.15 from 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. 

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.01 percent from 5.90 percent, with points decreasing to 1.08 from 1.11 (including the origination fee) for 80 percent LTV loans. 

The average contract interest rate for one-year adjustable-rate mortgages (ARMs) increased to 5.94 percent from 5.88 percent, with points increasing to 0.86 from 0.85 (including the origination fee) for 80 percent LTV loans.

The Market Composite Index fell to 585.8, a decrease of 2.2 percent on a seasonally adjusted basis from 599.1 one week earlier. On an unadjusted basis, the Index decreased 2.3 percent compared with the previous week and was down 11.4 percent compared with the same week one year earlier. The four-week moving average for the seasonally-adjusted Market Index is down 0.4 percent to 596.3 from 598.8. 

The seasonally-adjusted Refinance Index decreased by 5.3 percent to 1758.2 from 1857.0 the previous week. The four-week moving average is up 0.1 percent to 1815.9 from 1813.5. The refinance share of mortgage activity decreased to 45 percent of total applications from 46.4 percent the previous week. The ARM share of activity decreased to 26.5 percent of total applications from 26.9 percent the previous week.

The seasonally adjusted Purchase Index increased by 0.4 percent to 384.7 from 383.3 one week earlier. The four-week moving average decreased 0.8 percent to 387.1 from 390.4.

Other seasonally adjusted index activity includes the Conventional Index, which decreased by 2.2 percent to 868.7 from 888.0 the previous week; and the Government Index, which decreased 2.8 percent to 114.2 from 117.5 the previous week.

The survey covers 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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However, without changes, customers could be less likely to adopt wire as a replacement for checks, even for payments that would benefit from wire's immediacy and finality, the report cautioned.

“Business-to-Business Wire Transfer Payments: Customer Preferences and Opportunities for Financial Institutions,” also found that institutions are willing to pay more for payments that include remittance information, since this information would streamline their accounts payable and receivable operations.

"This research breaks new ground by identifying what corporations would like to see in their wire payments to make their internal processes more efficient and less costly, and confirms that corporations are willing to pay more to have remittance information included with wire payments," said Hank Farrar, senior vice president of CHIPS for The Clearing House Payments Co. "The research shows that wire transfer volume can grow significantly, but only if all parties in the wire transfer process work together now."

According to the study, respondents said that more than 80 percent of their payments (by volume) are still made by check. One of the challenges companies face is that most accounting and bank-provided cash management systems do not work together, making process automation and straight-though-processing of wire transfer payments difficult to achieve.

A consensus exists among users of wire payments that there is a need to create a common standard for sending and receiving remittance information with the payment, the findings said. Ninety-four percent of respondents said it is "valuable" to include remittance information with the wire payment; 65 percent said it is "very valuable.”

The study also found that 58 percent of respondents said they are willing to pay an additional amount for wires that include remittance information. On average, respondents indicated that they'd be willing to pay $1.67 additional for payments that include remittance information. Thirty-two percent of respondents are willing to pay at least an additional $3..

The Clearing House and the Federal Reserve Banks conducted the research from February through August.
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Lowrie to Join The Prieston Group

A 29-year veteran of the mortgage banking industry, Lowrie is currently president and CEO of RML Investments Inc., a consulting firm serving the financial services industry. She previously headed up Gateway Funding Diversified Mortgage Co. as its president and founder.

Prior to founding Gateway, Lowrie’s previous responsibilities had trained her in a variety of senior management positions handling loan origination, processing, underwriting, operations, secondary marketing and federal and regulatory compliance.

Lowrie, whose term as MBA chairman ends next week at the association's Annual Convention & Expo in Chicago, has been active in MBA for more than a dozen years. She became MBA's first woman chairman in 2005.

The Prieston Group also added Jon Daurio to its staff. He will focus on institutional sales and strategic enterprise planning and serve as liaison to the TPG affiliated legal group.

Daurio is one of the co-founders of Encore Credit Corp., a national wholesale residential mortgage banker, and its parent ECC Capital Corp., a mortgage real estate investment trust. He served in various executive roles at Encore, ECC and its retail lending platform, including executive vice president, chief administrative officer and general counsel.

In 2001, he co-founded Park Place Capital Corp., a special services company that included a scratch and dent business. He also served as president, CEO and a director of Loan Funding Corporation of America, a national retail residential mortgage banker, and founded and managed the operations of Financing USA, the consumer direct lending division of Long Beach Mortgage Co. He served both Long Beach Mortgage Co. and its predecessor (known today as Ameriquest) as senior vice president and corporate counsel.

MortgageHub Hires Demster, Whitson
MortgageHub, Conshohocken, Pa., hired David Demster as president of the mortgage products division and Mike Whitson as senior partner in the services division. 

Demster, a 25-year industry veteran, is responsible for overseeing and managing the company’s mortgage technology products, including the company’s web-based wholesale, correspondent and retail lending systems; its product, pricing and decisioning engines; and the company’s warehouse lending solution, among others.

Prior to joining MortgageHub, Demster served as vice president of the mortgage business unit of Fair Isaac Corp. Before that, his positions included leadership roles with London Bridge Group, CheckFree Corp., SSI and Fannie Mae. 

Whitson will manage and develop the company’s service offerings, with a focus on strategy consulting and contracting services for the mortgage industry. His background includes positions as general partner/strategic operations planner for telecommunications consulting firm Canopy Partners, and vice president of information technologies and customer support for WSNET. Prior to these positions, Whitson worked for several organizations, including Stearman Technology Group, Global Interactive, Resnet Communications and Lodgenet Entertainment. 

Encomia Taps Krieger, Bowers
Encomia, Houston, named Andrew Krieger as chief operating officer and Paula Bowers as business development consultant.

Krieger is responsible for planning and directing all aspects of the company’s organizational policies, objectives and initiatives, including sales and marketing. He will establish short- and long-term financial and operational goals as well as lead the direction of Encomia’s continued growth.

Krieger’s experience includes his role as vice president of channel marketing and business development at Cerritos, Calif.-based Memorex. He also served as director of marketing and key accounts at Northridge, Calif.-based Harman Multimedia and also held several management level positions at Compaq Computer Corp.

Bowers will be responsible for expanding the company’s presence in the warehouse lending and custodial markets. She brings more than 16 years of experience in sales, management and customer relationship development, including more than nine years at Amherst, N.Y.-based MBMS Inc. She also served as customer relationship manager and senior applications specialist for MBMS. She has worked for Amherst-based CompuSource Systems Inc., Niagara Falls, N.Y.-based GLCC Federal Credit Union and Pitts-Med Federal Credit Union.

First American Appoints Schlesinger
First American Title Insurance Co., Santa Ana, Calif., announced that its Lenders Advantage Division named Thomas Schlesinger as senior vice president and director of national settlement services operations. This role is in addition to his position as vice president for First American Title Insurance Co.

An industry veteran with 30 years of title industry experience, Schlesinger joined First American in 1997 as a consultant in the Oakland, Calif., office of First American Title Guaranty Co. Six months later, he was named vice president of customer relations. In July 1998, he was promoted to assistant vice president and Northern California division manager for First American Title Insurance Co.’s Lenders Advantage Division, and vice president in September. 1999. Schlesinger was also recently named senior vice president and chief operating officer for Lenders Advantage’s Western region.

In addition to his new role as the operational executive and point-of-contact for one of the division’s largest customers, Schlesinger will continue to oversee Lenders Advantage’s operations in California, Utah, Nevada, Arizona and Texas, as well as Oregon and Washington, in which the division has plans to expand.

Resolve Technology Appoints Rubinstein
Resolve Technology, Boston, appointed David Rubinstein as chief operating officer. He will oversee all aspects of Resolve’s customer service, operations and financial functions.

Rubinstein has 25 years of software and services experience. Prior to Resolve he was COO with Invoke Solutions Inc. where he was responsible for the turnaround and re-engineering of Invoke’s software service for direct and channel customers. Previously he was senior vice president of global service operations for Parametric Technology Corp.

Maimone Joins Valocity
Valocity, Memphis, Tenn., named Mark Maimone senior vice president and director of business development. He will lead the company’s strategic sales and marketing growth initiatives. 

Maimone has more than 25 years of experience in sales and management. Previously, he was a vice president of sales at Premier Appraisals in Alpharetta, Ga., which was acquired by LandAmerica OneStop.

FDIC Appoints Goodman, Spitler
The Federal Deposit Insurance Corp. appointed Alice Goodman as deputy to the chairman and Eric Spitler as director of the Office of Legislative Affairs.

Goodman will serve as principal advisor to Chairman Sheila Bair on all policy issues facing the FDIC. She has been serving as acting chief of staff since June. An 18-year veteran of the FDIC, she was most recently director of OLA, a position she held since October 1992. She previously served as deputy director and legislative advisor in OLA. Before joining the FDIC in 1988, Goodman was on the staff of the House Banking Committee for nearly 10 years.

Spitler will oversee the office that serves as the FDIC’s liaison with Congress. He is a 15-year FDIC veteran and most recently served as deputy director of OLA, a position he held since 1994. In 1998 and 1999, he served as special assistant to the chairman. He joined the FDIC in 1991 as a legislative attorney and advisor in OLA.

Sperry Van Ness Appoints Sheriff, Promotes Shaffer
Sperry Van Ness, Irvine, Calif., appointed Fred Sheriff as senior vice president/regional manager, responsible for the growth and development of the firm’s Southern California leasing and user services business that serves the commercial real estate needs of office, industrial and retail landlords and tenants. 

Sheriff has more than 30 years of extensive commercial real estate brokerage experience in management, marketing, operations and direct production at national, regional, and local levels.  Prior to joining Sperry Van Ness, Sheriff served as senior vice president and director of brokerage services with a large commercial brokerage organization in Los Angeles County.  He began his real estate career with Coldwell Banker (now CB Richard Ellis) where he spent 18 years in various management positions.

Sperry Van Ness also promoted Shane Shafer to vice president for its Irvine office.  Shafer will continue to lead a team of investment advisors specializing in the sale of multifamily properties in Orange County.

With more than seven years of commercial real estate experience, Shafer has closed more than $500 million in multifamily transactions.  He is one of Sperry Van Ness' Top 20 National Brokers.
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Through ComplianceAnalyzer Plus, each eligible loan is integrated with AssureCert’s warranty protection coverage. This warranty protection is scalable at the loan level up to $250,000 per loan and is transferable from the lender to the secondary market investor. AssureCert's warranty plans also provide ComplianceAnalyzer Plus users and their investors with a five-year extended protection term that is backed by an AM Best A- (Excellent) or better-rated insurer.

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The Prieston Group, Novato, Calif., has established a national law firm focused exclusively on serving the needs of the mortgage banking industry. The American Mortgage Law Group (American MLG) will serve clients across the country and the globe. The firm will work with TPG to recover monies on behalf of its clients, and will also serve companies who are not clients of TPG whether their concerns are fraud-related or otherwise.

TPG had previously worked with Santa Rosa, Calif.-based Lanahan & Reilley for its loss mitigation efforts on behalf of clients, and continues to maintain counsel relationships with the firm. All future Lanahan & Reilley work that is related to mortgage banking will be referred to American MLG. With the opening of this new firm, the focus shifts from a strong regional law firm to a firm with a national presence and the ability to handle cases across the country through relationships with local counsel in hot spot areas for mortgage fraud.

American MLG was founded by Arthur Prieston, who is also founder of The Prieston Group.

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Martopia, Chicago, a marketing and public relations agency in the mortgage and financial services industry, announced launch of a new one-to-one marketing program called Leveli. The new service uses the technology to help financial services companies interact with prospects on a personalized basis.

Leveli is built on software as a service (SAAS), using an integrated mix of personalized direct mail and e-mail. The service drives prospects to a personalized URL (PURL), which features information and offers specifically targeted to the prospect and delivers two-way personalized dialog with prospects, measurable ROI tracking and real-time sales intelligence gathering.

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eLynx Ltd., Cincinnati, a portfolio company of American Capital Strategies Ltd., and a provider of Web services for lenders and insurance companies, and Goodmail Systems Inc., Mountain View, Calif., announced a partnership to automatically include CertifiedEmail functionality in the eLynx e-services platform including electronic document delivery, electronic signature and integrated paper fulfillment.

Currently working with 17 of the top 20 U.S. lenders within a customer base of more than 500 clients, eLynx's e-services platform uses e-mail to deliver links to Web sites where consumers can securely obtain their mortgage and insurance documents in a paperless manner. Goodmail provides accredited volume e-mail senders with the CertifiedEmail technology imprinting outgoing e-mail messages with cryptographically secure tokens that are recognized by participating mailbox providers such as AOL and Yahoo! When such mailbox providers receive CertifiedEmail, they automatically route messages to the server-level inbox, past content and volume filters, rendering links and images active by default. 

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Gallagher Financial Systems Inc., Brentwood, Tenn., announced release of NetOxygen Migrator, a change management platform.

NetOxygen Migrator, part of GFS’ Enterprise Manager suite of .NET tools, allows administrators to respond to their customers’ unique needs. For example, administrators, with proper security and using NetOxygen’s tools, can respond to market demands by adding or modifying new products, pricing and workflow processing rules.
 
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Advectis Inc., Atlanta, a provider of electronic mortgage document collaboration services, announced that three companies have selected BlitzDocs Collaboration Suite for electronic document submission, image-based underwriting and electronic loan delivery: Wisconsin-based GN Mortgage, Massachusetts-based East West Mortgage and California-based Wholesale Lending Online.

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XSell LLC, Jacksonville, Fla., a provider of customer retention and cross-sell services to the financial services industry, announced a partnership with Houston-based TeleVoice, a provider of automated voice response systems, to offer the XSell Customer Service Marketing platform to its IVR (interactive voice response) customers.

With this partnership, TeleVoice can offer its financial institution clients a platform that provides them with the ability to target inbound callers for retention and cross-sell opportunities when they initiate contact with the institution through the IVR. The XSell Customer Service Marketing platform enables creation and presentation of personalized and customized product offers based on the characteristics and attributes of both the customer and product offers and can be easily integrated with a number of IVR platforms.

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VisionCore, Irvine, Calif., a wholly owned business unit of CoreLogic, Sacramento, Calif., a provider of mortgage risk assessment and fraud prevention services, announced the launch of its next-generation mortgage suite. The company’s offerings connect the retail, wholesale and correspondent lending community through the use of advanced customer portals, automated underwriting, pricing and third party risk and approval tools. 

The VisionCore suite integrates loan submission, loan product and pricing selection, automated underwriting and broker sign-up and management in one Web-based portal. The portal can be customized and enables collaboration through a variety of online tools.
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The deal was highly visible in the New York City media since last July when it was put up for bid by MetLife. Peter Cooper Village and Stuyvesant Town properties together make up the largest apartment complex in Manhattan, totaling over 11,000 units, spread across 80acres.

MetLife expects an after-tax gain of $3 billion in the fourth quarter, when closing is expected. The company said it received bids from multiple parties.

"MetLife put it out in the market in July and the auction process started in September," said Gerald Magpily, news producer at The Deal LLC, New York. "They finalized the last 12 bidders over the past two weeks."

But Magpily said the serious contenders included real estate investment trusts (REITs) and local real estate families in New York City. Reports from Globe St. com said the final bidders included Vornado Realty, ING, Apollo and Related. 

One group of bidders included New York City councilman Dan Garodnick (D) of the 4th district—a lifelong resident of Peter Cooper Village—who presented a "tenant bid." Garodnick led an undisclosed consortium that, according to the New York Sun, had the support of Sens. Hillary Clinton, D-N.Y.,  and Charles Schumer, D-N.Y.,  as well as City Council speaker Christine Quinn (D). Magpily said the bid was in the $4.5 billionrange.

"They wanted to keep the complex as affordable housing as opposed to the other bids which wanted to maintain the trend of keeping the development going toward luxury housing," Magpily said.

The properties, located on First Avenue between 14th and 23rd Streets in Manhattan, were built in the late 1940's by MetLife and encompass 11,232 apartments. Tishman Speyer now will be managing partner of the joint venture with BlackRock Realty.

"These are the two biggest real estate players in the industry," Magpily said. "I think the trend is that they are going to try to convert...to a condo and sell it at market rate or gradually accelerate the trend of destabilizing the apartments and gradually making improvements so that those apartments considered rent stabilized would continue to make improvements...accelerate the processing...and rent them out at market rate. Most of the apartments are pretty big for New York City standards."

Jerry Speyer, president and CEO of Tishman Speyer, said Tishman Speyer and BlackRock are committed to working closely with residents, elected officials and community leaders on the future of this New York community.

"The thousands of tenants in rent-stabilized apartments are completely protected by the existing system," Speyer said. "No one should be concerned about a sudden or dramatic shift in this neighborhood's make-up, character or charm."
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As the seniors housing market became more competitive in the past 18 months, surveys and statistics continue to show baby boomers have no plans to retire and fade away.

A fall 2006 Seniors Housing report from Marcus & Millichap, Encino, Calif., said independent living facilities (ILFs) in the second quarter had the highest median occupancy rate, 96.8 percent, for the four sectors of seniors housing. The report also said assisted living (AL) facility revenues rose faster than any other seniors housing property type, including Skilled Nursing Care Facilities and Dementia Care Facilities.

“Independent living and assisted living markets have been the most popular in terms of the number of investments and the amount of reduction in cap rates,” said Christian Wolford, market analyst of research services at Marcus & Millichap Research Services in Phoenix.

However, a survey from the Research Institute for Housing America (RIHA) that will be released next week at the Mortgage Bankers Association's 93rd Annual Convention in Chicago, said baby boomers will be healthier for a lengthier time than their predecessors. 

As baby boomers get older, industry participants start to ponder the demand for seniors housing in the future.

“There are two ways to look at it,” Wolford said, noting that care is done in stages. He said demand could slow for seniors housing based on healthier boomers, but assisted living facilities and independent living facilities could also remain in demand.

“Because people are staying healthier longer, they may not be going into nursing care quite as soon, but they may require other help on a limited basis. Therefore, for independent living facilities and assisted living facilities, demand for that type of care could be on the increase in the coming years,” Wolford said.

Occupancy for ILFs was up 30 percent in the second quarter with the highest gains in Houston, San Francisco and Tampa with the strongest revenue gains in San Diego and Boston.

Median monthly revenue per unit for ILFs was up 4.8 percent to $2,170 per unit overall, but nearly 43 percent below AL facilities, which rose 5.8 percent for the year to $3,100.

Occupancy improvement for AL facilities was greatest in Detroit, Cleveland and Houston with the strongest revenue gains in Kansas City, Philadelphia and Phoenix.

NAR reported that most baby boomers would want to retire in the Sunbelt region with 42 percent of respondents wanting to retire in the South, 32 percent in the West, 15 percent in the Midwest and 12 percent in the Northeast.

As cap rates hold in the low 8 percent range for ILFs, possibly below 8 percent for AL facilities, but ILF and AL construction remains limited, according to Marcus & Millichap. Total new units of ILFs under construction stood at 7,570, nearly unchanged from the second quarter of 2005, and 3,280 new AL facility units added 1.9 percent to the current inventory, down 2.8 percent from the prior year.

Skilled-Nursing Care Facilities made a comeback in the second quarter based on profitable Medicare reimbursement, low construction and solid gains in occupancy revenue, particularly in San Diego, San Francisco and Portland, according to Marcus & Millichap. The firm expects the property sector to capture a larger share seniors housing activity in the coming year.

Meanwhile, investment activity remains minimal for Dementia Care Facilities with few options for buyers, according to the Marcus & Millichap report.

Jeffrey Davis, chairman of Chicago-based seniors housing lender Cambridge Realty Capital Companies, said short-term rates will soon begin to drop and the inverted yield curve that has existed will "diminish" if the Federal Reserve Board does not increase short-term rates.

“It remains to be seen what impact this will have on long-term rates, which already have retreated dramatically, from 5.4 percent in July to 4.7 percent in early October. But the outlook for senior housing/healthcare borrowers is clearly more upbeat than it’s been in recent months,” Davis said. “Our advice to borrowers remains the same. Borrowing costs for senior housing/healthcare properties that do not have a lot of variable costs need to be fixed. Variable rate short-term financing should solely be reserved for properties that have not yet stabilized."
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Ken Griggs, executive vice president at NBS, arranged $6.75 million in financing with Genworth for 205 Airport Way Business Park and arranged $6.25 million for 148th Airport Way Industrial.

205 Airport Way Business Park consists of buildings 4, 5 and 6 totaling 165,794 square feet or 58,777 square feet, 53,017 square feet and 54,000 square feet, respectively. All three buildings were completed in 2000, and they access I-205 and Airport Way East Interchange. Neighboring properties include Marriott Courtyard Hotels and Shilo Inn. The architecture uses extensive glass lines making it a “high image center,” NBS said.

148th Airport Way Industrial, totaling 187,020 square feet, was built in 1997 and consists of 26-foot clear heights, skylights and insulated roofs. The properties at 148th Industrial have frontage and direct access to Airport Way and are about 1.5 miles from both I-205 and I-84, both major arterials through the area.

Blake Hering Jr., vice president, and Benjamin Johnson, finance officer at NBS arranged an $8.75 million deal with Sunchase Apartments, at 240 units, through Principal Global Investors, on behalf of Jamboree Investors Sunchase LLC.
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The reports rank lenders by dollar volume, details the number and dollar volume of mortgage originations and provides overall, purchase and refinance origination data. 
 
According to the national-level report, Countrywide Financial Corp., Calabasas, Calif., originated more than $222.8 billion in single-family loans in 2005, 7.9 percent of the U.S. mortgage market ($2.817 trillion) based on dollar volume. Rounding out the top five originators in 2005 were Wells Fargo ($197.1 billion, 7.0 percent), Washington Mutual ($118.3 billion, 4.2 percent), Bank of America ($85.8 billion, 3.0 percent) and Chase Manhattan Mortgage Corp. ($72.5 billion, 2.6 percent). 

The Lender Market Share reports are based on mortgage lending transactions at more than 8,800 financial institutions covered by the Home Mortgage Disclosure Act (HMDA) in metropolitan statistical areas throughout the nation. Covering nearly 15 million first-lien loans, the HMDA data provide a comprehensive source of mortgage originations. 

Special rates through November 1: purchase the complete HMDA Summary Report for 2005 (newly released) $750 Member rate/$1,000 Nonmember rate. To view the report list and download an order form, visit http://www.mortgagebankers.org/ResearchandForecasts/ProductsandSurveys/DataOnDemandServiceProductList.htm.
For further information, please call (202) 557-2830 or (202) 557-2951 (Monday-Friday, 9:00 a.m.-5:00 p.m., EDT).
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The Ginnie Mae HECM MBS would allow approved issuers to securitize and sell FHA-insured home equity conversion mortgage loans, also known as reverse mortgages, in the form of a Ginnie Mae MBS. Ginnie Mae President Rob Couch, CMB, a former MBA chairman, said the Ginnie Mae MBS would provide the mortgage-backed securities marketplace with a “full faith and credit vehicle” for securitization of HECMs, which in turn should increase liquidity by providing capital market funding sources to primary market HECM lenders, broadening distribution channels for HECM loans and expanding the investor base for HECM products.

“Home values have grown significantly over the years, and reverse mortgages are a good way for many seniors to stay in their homes, maintain ownership and access an additional stream of income to enhance their retirement, Couch said at a news conference yesterday at the National Press Club in Washington, D.C.

MBA Senior Vice President of Government Affairs Kurt Pfotenhauer, who participated in the news conference, said MBA endorses the HECM MBS program. “Thousands of older Americans have learned the advantages of the reverse mortgage,” he said. “The growth has been dramatic in the past half-decade. We believe that securitizing these loans, in addition to other reforms to the program like increasing the conforming loan limit and dropping the cap on HECM loans, will provide tremendous benefits for seniors.”

More than 20 million Americans over age 62 own their homes, with a combined equity estimated in 2000 at more than $2.5 trillion. The number of Americans between ages 65 and 85 is expected to soar in the coming decades, from the current 34 million to more than 70 million by 2030. As homes have increased in value and life spans have grown longer, many people are looking at their homes as a resource to help finance their later years, which spurred development of HECMs, which are now offered in all 50 states.

Peter Bell, president of the National Reverse Mortgage Lenders Association, said reverse mortgages offer a “tremendous opportunity” for seniors.

“This is another step forward in the maturation of the reverse mortgage product,” Bell said. “We’ve seen volume for the HECM product and other reverse mortgage products grow substantially over the past five, six years. Ginnie Mae’s efforts to enter the market will help drive down costs. In the end, with a reverse mortgage, the lower the interest rate, the larger the benefit to borrowers in the end.”

FHA began issuing HECMs in 1990, closing 157 loans that year. Over the years, the program has grown by more than 70 percent, to where FHA guaranteed more than 55,000 HECM loans in the first half of 2006.

“The HECM program is clearly a key growth area for FHA,” said FHA Commissioner Brian Montgomery. “We’re working hard to ensure that we keep pace with the needs of our low- and moderate-income borrowers, making programmatic changes to keep up with the times. Ginnie Mae’s securitization of HECMs will help us keep pace.”

Under the Ginnie Mae proposal, approved issuers would have the flexibility to pool HECM loan draws and securitize the balance through a Ginnie Mae security. The HECM MBS would be a new class of Ginnie Mae security under the umbrella of Ginnie Mae II Custom Program.

The HECM MBS would be an accrual-class pass-through security, Couch said. It would not have a payment schedule; rather, it would accrue interest on the securitized principle until such time as payoffs are received. The product could be sold to investors as a stand-alone security or be used as collateral for a Ginnie Mae Real Estate Mortgage Investment Conduit (REMIC).

“It is hard to argue with the success of the product,” Pfotenhauer said. “As the number of reverse mortgages continues to grow, the lending community will able to draw more data and experience underwriting the loans, streamlining the process and making the product better for consumers. 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."

“With reverse mortgage products entering their 17th year, the number of loans outstanding and the performance history now available, the time is right for securitization,” Pfotenhauer said. “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.” 

Couch said he hoped to introduce the first HECM MBS during fiscal 2007. He said there is “a lot of systems work” that has to be done within Ginnie Mae and with its partners.
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