Ginnie Mae last week released its 2023 annual report, including performance information about its Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) program.

The data included an updated tabulation of the top 10 HMBS issuers in the program, as well as some information about the seizure of the Reverse Mortgage Funding (RMF) servicing portfolio after that lender declared bankruptcy.

In the annual report itself, Ginnie Mae President Alanna McCargo’s accompanying comments directly mention the RMF situation and the necessity for the government-owned corporation to step in to provide stability to the reverse mortgage industry’s liquidity.

“During the first quarter of Fiscal Year 2023, while conventional mortgage lenders and issuers experienced liquidity constraints, the increased pressures on the reverse mortgage sector resulted in the bankruptcy of a large issuer and Ginnie Mae’s seizure of its reverse MBS portfolio,” McCargo said.

The actual seizure took place in December 2022, roughly one month after RMF’s bankruptcy declaration, and also resulted in RMF’s extinguishment from the HMBS issuer program. At the time, both Ginnie Mae and representatives of RMF’s estate emphasized that the transition should be “seamless” for borrowers, and McCargo said that goal was accomplished.

“Ginnie Mae executed a seamless transition as it expanded its essential business functions and the associated financial obligations to manage this portfolio,” she said in the report. “Our dedicated team proactively used all available tools to bring stability to the market and ensure seniors were able to access their home equity, showing the industry that Ginnie Mae stands by its Guaranty.”

The assumption of the portfolio, however, strained Ginnie Mae’s existing resources. This led the company to formally request additional financial and staffing resources from Congress earlier this year, and the company is still seeking those resources.

“[Ginnie Mae] did see increases in our FY 2024 budget, and both the House and Senate in their full-year markups supported those,” McCargo told RMD in an exclusive interview this past fall. “Unfortunately, the [continuing resolution] that we’re currently operating under keeps us flat, so it really does slow down our ability to do the hiring and planning that we want and need to do.”

In November, the U.S. Department of Housing and Urban Development (HUD) Office of the Inspector General (OIG) stated that the HMBS portfolio poses a “significant risk” to Ginnie Mae in 2024, largely due to the sensitivity of HECM loans to interest rates. The HUD OIG had also announced earlier that it was opening an inquiry into the extinguishment of RMF from the HMBS program.

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