Ginnie Mae President Alanna McCargo discussed the reverse mortgage business environment, challenges that come with managing a government-owned corporation, assuming the servicing portfolio of Reverse Mortgage Funding (RMF) and ways that reverse mortgage products have evolved over the years in an exclusive interview with RMD.
The interview was conducted during the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting and Expo in Nashville. McCargo also delved into other topics, including reverse mortgage intersections she’s had throughout her career, what she wants the reverse mortgage industry to understand most about Ginnie Mae’s commitment to the reverse mortgage program, and how much work is being done on the product for the investor side.
Here is the third and final part of RMD’s exclusive interview with McCargo.
Chris Clow/RMD: You’ve been around the reverse mortgage business for a long time. How vital is the government’s sponsorship to the business from your vantage point?
Alanna McCargo: It’s just been interesting from my seat. I’ve been around the reverse mortgage space [for a long time]. I was just having a conversation with someone [I knew] when I was back at Fannie Mae, and they were aggressively getting out of this business for reasons and risks that are well-documented.
But it’s a fully government-supported program, and I think the government guarantee and insurance matter deeply in this space. I think there’s a lot of work still to do, but it’s come a long way. And it’s serving a population that, again, is growing and seeing insecurity in this space is something that we’re laser-focused on. That’s why this is so important given the demographic demand that we see coming down the pike, and challenges like inflation and retirement realities.
Clow: Our audience consists of industry professionals at various levels, from loan originators to brokers, underwriters on up to the C-level, as well as other officials in government. Is there anything I haven’t asked you that you would like to address to people involved in the industry regarding Ginnie Mae’s posture with HECM HMBS?
McCargo: Obviously I’m at NRMLA, and a lot of our issuers are here. At Ginnie Mae, we serve issuers, but we also have a whole investor side of the house that we have to pay a lot of attention to. Investors are buying our mortgage-backed securities and creating that opportunity for scale and capital to be put back into the system. So, it’s very supportive, and it’s very important for our business.
I think the only thing I haven’t really touched on much today at all — but I think is worth mentioning — is the work we’re doing on the investor side to make it clear to investors what the social impact of Ginnie Mae mortgage-backed securities is. We recently launched changes to our single-family mortgage-backed securities prospectus, and have added language that allows investors to understand or deem Ginnie Mae securities as social impact investment, or social bonds.
Clow: Do HECM-backed securities factor into that?
McCargo: The HECM MBS program is really, inherently social, in that it’s supporting seniors that are trying to age in place. So, we feel like it’s very deeply social and very core to our charter and our mission, and has a lot of value and benefit to investors. So there’s a lot of opportunity, I think, in the future for the market, we just need to see more of the product get originated.
As things stabilize, I would just note that we just put out our social impact and sustainability framework, and it’s core to our mission, the [environmental and social governance (ESG)] work we’re doing. It’s a little bit of a different spin on ESG than maybe what people are typically hearing about, but global Investors have made it clear they are demanding that they see and understand the disclosure and data for both our environmental and social pieces of our bond.
So, I just think it’s important to point people to that. We’ve put out a new framework, it’s all on our website. Folks can check it out there, but I only bring it up in this context because one, I think it’s important for folks to understand how critical in the capital markets and with investors Ginnie Mae’s program is, and how in-demand social impact collateral is.
Reverse mortgages and the work that we’re doing for seniors is a crucial part of that in the future as well. So, it all ties together in a way that makes sense to us and has really been a focus for us. So we’re focused on this on both sides, not just issuers, but also investors. And putting those things together is where the magic happens, to be honest.
