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Ginnie Mae To Begin Accepting Digital Collateral



Ginnie Mae announced Thursday a major step in modernizing its platform, allowing so-called “digital collateral” or electronic promissory notes and other loan files as collateral in its securities.

Issuers may apply to participate in the early phase of the Digital Collateral Program [1], and approved e-Issuers will be able to securitize government-backed mortgages with digital collateral.

Each e-Issuer will be given eMortgage Issuance Authority for a limited number of eMortgage loans, regardless of loan size, according to the announcement from Ginnie Mae.

Ginnie Mae will begin reviewing applications on July 20, and interested parties may continue to apply through August 15.

“This announcement is a major step for Ginnie Mae following two years of collaboration with industry stakeholders to develop the right set of policies that will lead to the successful implementation of Digital Collateral in the government-backed industry segment,” said Seth Appleton, Principal EVP at Ginnie Mae.

“Moreover, this is an important milestone that was recommended in the HUD ‘Housing Finance Reform Plan,’” he added.

The Housing Finance Reform Plan [2] was issued by HUD in September 2019 and includes reforms to Ginnie Mae’s securitization platform and to the integrity of Ginnie Mae securities.

“GNMA should develop and implement the policies, technology and operational capabilities necessary to accept digital promissory notes (eNotes) and other digitized loan files as acceptable collateral for its securities,” states the reform plan.

Accepting digital collateral will “enable issuers to enhance efficiency, risk management and customer experience,” HUD stated in its plan.

The plan also called for Ginnie Mae to “strengthen its risk management analytics;” “implement enforcement, recovery and resolution reforms to protect taxpayers;” and “fully modernize platform access, data standards, collection, and storage.”

There are no costs to participate in the Digital Collateral Program, Ginnie Mae said, and interested issuers must submit their application to dcpa@hud.gov [3] before August 15.