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Understanding Ginnie Mae Reverse Mortgage H-REMICs: Its Programs and Cashflow Analysis

In: Encyclopedia of Finance

Author

Listed:
  • C. H. Ted Hong

    (Beyondbond, Inc)

  • George H. Lee

    (Beyondbond, Inc)

Abstract

A reverse mortgage is a financial product that allows a senior homeowner to access their home equity. In contrast to a traditional or conventional “forward” mortgage, a reverse mortgage allows the borrower to draw on the equity in the home and only repay the loan when they vacate the house. This allows a borrower with few liquid assets but a lot of accumulated home equity to access trapped cash. The FHA’s reverse mortgage program referred to as the Home Equity Conversion (HECM) program was established in 1989, though Ginnie Mae mortgage-backed securities backed by HECM’s (HMBS) were issued for investors and the first Ginnie Mae H-REMIC (CMO) backed by multiple HMBS pools was not issued until 2009. The methods and parameters used to compute yields with varying LIBOR assumptions for CMO tranches backed by reverse mortgages differs from those for traditional mortgages.

Suggested Citation

  • C. H. Ted Hong & George H. Lee, 2022. "Understanding Ginnie Mae Reverse Mortgage H-REMICs: Its Programs and Cashflow Analysis," Springer Books, in: Cheng-Few Lee & Alice C. Lee (ed.), Encyclopedia of Finance, edition 0, chapter 59, pages 1373-1395, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-91231-4_59
    DOI: 10.1007/978-3-030-91231-4_59
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    Keywords

    HECM; HMBS; H-REMIC; Reverse mortgage;
    All these keywords.

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