In an attempt to strengthen and safeguard the mortgage-backed securities market, Ginnie Mae [1]released a new All Participants Memorandum [2] (APM 18-07) with guidelines and steps the agency will undertake to evaluate the credit strength of new Issuers, implements new notification requirements for issuers engaged in certain subservicer advance or servicing income agreements. The APM 18-07 also codifies the company’s ability to impose additional financial or operational requirements on program participants when warranted by market conditions.
“These enhancements add to the factors Ginnie Mae will consider as we keep pace with an evolving mortgage market, protect taxpayers, and ensure that important differences in risk among issuers and servicers are properly accounted for,” said Michael Bright Ginnie Mae EVP and COO. “Our goal continues to be the assurance of a safe and sound program as well as a healthy mortgage-backed security.”
Per the APM 18-07, in order to monitor risks, the agency will require servicers to notify Ginnie Mae if any arrangements are made to finance Ginnie MSRs. The memorandum also modifies application requirements for new issuers so that applicants who would immediately appear on Ginnie Mae’s internal financial conditions watchlist are not approved as Ginnie Mae issuers.
Additionally, APM 18-07 clarifies Ginnie Mae’s authority to require supplemental financial or operating requirements before certain issuers are granted additional commitment authority.
There are nearly 400 approved issuers of Ginnie Mae MBS. As of Sept. 30, more than $2.008 trillion of Ginnie Mae MBS were outstanding, comprised of more than 11 million loans.