In a bid to further protect veterans from predatory lending, Ginnie Mae, a government corporation that attracts global capital into the housing finance system to support homeownership for veterans and low- to moderate-income homeowners, recently issued an All Participants Memorandum (APM). The APM announced the implementation of changes to pooling eligibility requirements for Department of Veteran Affairs' (VA) insured or guaranteed mortgages under the "Loan Seasoning for Ginnie Mae Mortgage-Backed Securities," provision. These changes affect security issuances on or after June 1, 2018, but do not otherwise affect the guarantee or composition of MBS issued before that date.
Under the APM, a refinance loan insured or guaranteed by the VA is eligible for the lender's securities only if the note date of the refinance loan must be on or after:
- The date is 210 days after the date on which the first monthly payment was made on the mortgage being refinanced;
- Or the date on which six full monthly payments have been made on the mortgage being refinanced.
Refinances that do not meet the condition defined in the APM are ineligible for inclusion in any new pool or loan package in the Ginnie Mae I or Ginnie Mae II MBS Program, including refinances that closed prior to the date of this announcement.
Ginnie Mae is engaging with issuers to implement a cure for pools that have been submitted with non-compliant loans. The lender expects that the law will be effective in helping curb abuses that have been identified in connection with certain refinance programs utilized by veterans.