To cast aside any doubts and guarantee the rate of transactions in conjunction with borrower relief and loss mitigation extended by the federal mortgage programs won’t dilute market confidence in its securities, Ginnie Mae announced a pair of temporary borrower relief options—the Federal Housing Administration’s (FHA) National Emergency Standalone Partial Claim and USDA’s Mortgage Recovery Advance.
Neither requires loans to be bought out of pools in the event the terms of the loan won’t call for modification.
The pooling of eligibility restrictions while providing for appropriate and essential buyout transactions, which had already been in place, is being implemented by Ginnie Mae to ensure loan activity with borrower and Mortgage Backed Security (MBS) program interests.
Three new terms: “Re-performing Loan”, “Timely Payment”, and “Delinquent” are being incorporated to define the new pooling eligibility requirements and guarantee they’re not unnecessarily restrictive.
“Re-performing Loan” refers to a mortgage loan no more than 30 days delinquent and previously bought out from a pool or loan package backing a Ginnie Mae MBS. Additionally, the same rate and terms as the rate and terms linked with such a loan on the date it was previously securitized in a Ginnie Mae MBS are retained.
“Delinquent”, meantime, is a mortgage loan with full monthly payment due but unpaid; the reason notwithstanding, including loans in forbearance that aren’t treated as delinquent for the purposes of other credit or servicing. A “Timely Payment” is complete monthly mortgage payment a borrower makes no more than 30 calendar days from its scheduled due date
Significantly, any Re-performing Loan entered into any type of forbearance—no matter the duration—on or following March 1, 2020, and bought out on or by July 1, 2020, reflected in the servicing system of the insurer of record, doesn’t qualify as collateral for Ginnie Mae securities backed by existing pool types. Meanwhile, Re-performing Loans will be eligible collateral for securities backed by C RG pools. Ginnie Mae deployed the new pool type to secure the Re-performing Loans this memorandum impacts with the following caveats:
- timely payments have been made by the borrower for the six months immediately preceding the issuance with the MBS and
- the date of issue of the MBS is a minimum of 210 days from later date the loan was delinquent
An “All Participants” Memorandum, which will detail updates to these temporary restrictions, will be issued by Ginnie Mae. These restrictions apply to Re-performing Loans. Modified Loans, which are mortgage loans that have undergone a rate and/or term modification in conjunction with a duly executed loan modification agreement, aren’t impacted. If they satisfy other MBS Guide and Guaranty Agreement requirements, they still can be re-pooled, restriction-free.
Earlier in the year, the issuance of mortgage-backed securities totaling $55.21 billion was announced by Ginnie Mae. It also provides financing for more than 211,000 homeowners and renters.
Ginnie Mae’s total outstanding principal balance for loans was $2.14 trillion, a $2.05 trillion spike from March of last year.
“The Ginnie Mae MBS program is working for America’s families, facilitating an average of $55 billion in mortgage capital in each of the past eight months,” said Ginnie Mae Principal EVP Seth Appleton. That consistency, he continued “illustrates the reliability of our technology infrastructure—especially as our staff and that of many of our business partners rely on remote connectivity to keep money flowing to our nation’s mortgage borrowers.”