Reverse Mortgage/HECM Financing and Securitization

The use of FHA-insured Home Equity Conversion Mortgages (“HECMs”) and non-HECM reverse mortgages has expanded significantly recently.  Hunton Andrews Kurth LLP represents underwriters, issuers, warehouse lending providers, owners and servicers in securitizations, financings and transfers of portfolios and servicing of such asset.  We first advised our clients in this area over 10 years ago with one of the first HECM securitizations, and we remain extremely active in the space today, with whole loan purchases, securitizations and servicing transfers involving HECMs (performing and early buyout loans) and other reverse mortgages.

Hunton Andrews Kurth LLP attorneys are active in representing initial purchasers in the structuring and offering of novel securitizations, both rated and unrated, of HECMs that are either in default or otherwise no longer eligible for inclusion in Ginnie Mae sponsored HECM mortgage-backed securitizations (“HMBS”) and REO properties obtained in foreclosures and other settlements of defaulted HECMs.  We provide advice with respect to the deal structure (including bankruptcy and tax/REMIC implications of the same) and the marketing of the offered securities.  We also advise our clients regarding applicable FHA and HUD guidelines and requirements applicable the ownership and servicing of HECMs.  In addition, we represent repurchase participants and lenders in early buy-out facilities to provide financing to owners of HECMs and REO properties acquired from HMBS.  We have worked closely with lenders, borrowers, sellers, servicers, custodians and other participants in order to coordinate the successful closing of such facilities as well as the ongoing boarding or takeouts of collateral from the same.  We represent buyers and sellers in portfolio sales of HECMS and non-HECM reverse mortgages, as well owners and servicers in connection with servicing transfers with respect to HECMs and non-HECM reverse mortgages.  In addition, we act as program counsel to Ginnie Mae in connection with multiclass securities transactions, which includes issuance of government-guaranteed REMIC securities backed by HMBS.

In connection with our representations in the various types of transactions described above, our bankruptcy team is integral in providing advice with respect to innovative structures and solutions to minimize insolvency-related risk relating to true sale and non-consolidation treatment of securitizations and safe harbor treatment for repurchase facilities.  In addition, our structured finance tax practice provides comprehensive tax advice with respect to structuring transactions in order to minimize US withholding and FIRPTA tax risks in a way that meets the business needs and economics for each transaction.