On December 13, 2024, the Mortgage Bankers Association (MBA) proposed a new mortgage securitization product to Ginnie Mae, aimed at enhancing private capital liquidity during economic stress. This proposal, detailed in a comprehensive white paper, cites Ginnie Mae's HMBS 2.0 as a 'logistical template' for the new product. MBA president Bob Broeksmit emphasized that the proposed Early Buyout (EBO) security would differ from typical Ginnie Mae securities by not utilizing a modified pass-through structure. The HMBS 2.0 program, launched earlier in 2024, allows for the acquisition of loans above the 98% maximum claim amount to address liquidity issues in the reverse mortgage sector. This new EBO securitization is designed to allow the purchase of nonperforming loans from traditional Ginnie Mae mortgage-backed securities pools, which could help alleviate liquidity pressures faced by independent mortgage banks (IMBs), who represent over 85% of Ginnie Mae issuance.
Despite the potential benefits, the implementation of this new securitization product may encounter delays due to a freeze on new policies by federal agencies, pending the inauguration of President-elect Donald Trump. New View Advisors' Joe Kelly noted that while the MBA's proposal shares objectives with HMBS 2.0, it faces challenges due to differences in collateral types. The MBA anticipates a small but viable trading volume for the new product, primarily driven by warehouse lenders. This initiative reflects a proactive approach to enhance the resilience of the mortgage market amidst ongoing economic challenges, as liquidity remains a critical concern for many lenders and borrowers alike [5590e24f].