Ginnie Mae Adds Depth to Reverse Mortgage Market.(United States. Government National Mortgage Association)

Washington -- Ginnie Mae is on track to securitize its first pool of FHA-insured reverse mortgages in September that would allow lender/issuers to sell the federally guaranteed mortgage-backed securities to Wall Street dealers and other investors.

Federal Housing Administration reverse mortgages are known as Home Equity Conversion Mortgages and they don't create any cash flow for investors until the senior moves or dies.

So Ginnie executives expect the Wall Street houses will place the HECM securities in real estate mortgage investment conduits with other mortgage products.

"We think it is going to improve pricing for consumers and help originators find an efficient secondary market execution," Ginnie president Robert Couch told a Mortgage Bankers Association government housing finance conference last week.

The Ginnie HECM structure will allow reverse mortgage lenders to securitize lump-sum payouts as well as monthly draws in pools as small as $1 million.

During the life a $100,000 HECM loan, the initial $60,000 lump-sum payment to the borrower would be placed in one MBS, while $1,000 monthly payments and other advances made by the lender/servicer could be bundled and placed in second and third mortgage-backed securities.

"It is a fairly simple structure for investors," Mr. Couch said in an interview. The complexity comes with the servicing because one reverse mortgage could have participations in multiple securities.