Private Reverse Mortgage LendersReverse private mortgage lenders
Florida judges rule borrowers will not be able to RESPA private right to institute lawsuit
The court, however, decided that none of the borrower's receivables gave rise to a private right of appeal under RESPA, and moreover, the Borrower could not "Bootstrap Section 626.916 by any other plea". In addition, the court found that the borrower's attorney was not able to assist the court to "support the proposal that the borrower's RESPA entitlement could be based on a Florida statue that did not have a private right of use.
As regards the borrower's claims of unlawful intervention in the insurer, the court found that the entitlement did not prove that the insurer "intentionally or unjustifiably" intervened in its relations with the mortgage bank.
Reverse mortgage markets continue to be a very much bargained area.
Reverse mortgage markets continue to be a very much bargained area. Nevertheless, attendees believe that the FHA Home Equity Conversion Mortgage (HECM) program, which is likely to start growing over the next few years, could provide the basis for further securitizations. Since the older generations are ageing, reverse mortgage loans are likely to become increasingly popular.
In particular, mortgage loans are a means for older people to access capital in their houses, similar to home loans. "Barclays Capital's asset allocation is likely to rise in the near term, given the fast growth in HECM lending," noted Barclays Capital asset allocation researchers in a recent update. "The first private reverse mortgage security operation in the US, known as SASCO 1999-RM1, was concluded by Lehman in 1999.
However, after the onset of the sub-prime mortgage squeeze, the private reverse mortgage business almost came to a standstill. As a result, Ginnie Mae HECM mortgage-backed Securities known as HMBS are available as the only type of reverse mortgage securitisation. The new HMBS issue of around USD 5 billion between 2006 and 2009 is a very different story from that of the past.
Recent securitizations are backed by reverse mortgage backed securities, most of which have static interest rates, as distinct from the variable-rate mortgages that prevailed years ago. "Lately, there has been great interest in the cash flow profile of the firm due to increased interest rates," said Matt Brodin, Interactive Data Corporation? direction and revenue manager for Interactive Data.
Some of the older programs had some uncertainties about the interest piece drawings; they [investors] did not seem happy to invest. "Interactive Data last months added the possibility to provide GNMA HMBS reports on a day-to-day basis at a set time. HMBS is also a plus for HMBS shareholders as the reverse mortgage is backed by the US Department of Housing and Urban Development (HUD) and Ginnie Mae.
According to Mark Hecker, Interactive Data's Evaluated Services Sr. Director, the company has seen some of its customers become increasingly interested in HECM shares as some of the biggest organizations are HECM founders. The Bank of America, MetLife and Wells Fargo are among the lenders of reverse mortgage loans. Although a genuine secondar y will only emerge when domestic stocks rise again, an effective securitization front would be welcome news not only for issuers but also for issuers.
According to a borrower, there are lucrative pool assets in this investment category that are to be securitized. "We definitely saw that the secondar y markets developed more in the last year or so, but it's still a relatively small business," says a loananlyst. "Could take off more if you see more reverse mortgage issues.
Margins on HMBS could also be a gain for some people. One big distinction is that they don't have the interest rates exposure of mortgage -backed securities on a recurring basis, so they have much better cash flow characteristics," the loan researcher says. In general, reverse MBS have an expected lifespan of five to seven years.
Since some of the most genuine purchasers of HMBS assets are not on the open markets, some are wondering whether there is enough genuine interest in the asset. According to the analyst, several traders have purchased the shares and have not been able to resell them on the current one. "Many HECMs will be securitized in MBS this year, but the issue is how big the overall will be.