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Ginnie Mae Closes Door on Fixed Rate Variants
Two months ago we covered the spate of new HECM products offering borrowers a fixed interest rate upfront and in many cases a fixed rate for future withdrawals. There was a rush to market by a handful of lenders to offer fixed rate variant products which still fell within the guidelines of the federally insured reverse mortgage or HECM program. While FHA has not directly addressed these new products Ginnie Mae has.
Ginnie Mae is a corporation owned by the federal government within the confines of Housing and Urban Development (HUD). The purpose of Ginne Mae is to bring money into the housing and lending market through the issuance of mortgage backed securities (MBS). These securities pool several mortgages into as asset backed security secured by mortgage loan performance and guaranteed by the federal government, primarily FHA or the Federal Housing Administration.
Ginnie Mae’s decision, at least on paper, is not so much rooted in these new products potential risk to FHA’s insurance fund but rather the risk that servicers may…
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