The “Exit Effect”

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That is the supply of approved Ginnie Mae issuers of HECM Mortgage Backed Securities or HMBSs. Today we are only supported by 18 issuers with only about one quarter actively issuing HMBS.

Speaking of issuers the process of becoming one is not for the feint of heart. They must have $5 million dollars plus and an additional 1% of the aggregate amount of their outstanding principal balances. In addition they must have liquid assets that exceed the net worth requirement by 20%. Few companies have such flush balance sheets which makes issuers an elite group.



James E. Veale, CPA, MBT October 8, 2012 at 11:34 am

Our present endorsement levels are not indicative or a growing or even stagnant market. On the other hand, they are putting pressure on Ginnie Mae HECM issuers either.

With fiscal 2013 looking like another poor endorsement year, there is time for the issuers to catch up to endorsement activity. Will fiscal 2014 be the year we see endorsement levels once again above 73,000? We have a long way to go before then. This is no time to panic, just more drop in volume over time as we hit our proverbial floor.

Enjoy San Antonio!!!

Richard Booth CMB October 8, 2012 at 11:42 am

Great article on the exit effect of the large national lenders leaving a void in the RM market and agree with your points that the high capital requirements are scaring many new entrants.

However, in my opinion, the financial requirements are only a small part of the problem. It is the uncertainty with the new lending regulations flowing out of the Dodd-Frank legislation and the CFPB.

We desperately need more lenders. However, I do not think we will see many new players enter the market.and until issues such as QM, the Disparate Rule, et al are settled.

James E. Veale, CPA, MBT October 8, 2012 at 1:28 pm

Mr. Booth,

Is it more lenders, more HMBS Ginnie Mae issuers, or more of both? I am not so sure the QM rules are that scary since HECMs are FHA insured.


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