Ginnie Mae Further Streamlines Advanced Loan Modifications

On Friday afternoon, Ginnie Mae issued a new memorandum (APM 22-01) stating that they are streamlining its documentation requirements for servicers participating in the Federal Housing Administration’s (FHA) Advanced Loan Modification program (ALM). 

The memo does away with the requirement for recordation and title insurance in some cases. 

The new policy supports the current Administration’s “goal of assisting homeowners impacted by the pandemic get on the road to economic recovery” by creating a more efficient process so servicers can help more homeowners transition from forbearance to permanent modification. 

This change comes after the expansion of digital signature usage on documents in November, and the expansion of MBS pools of extended-term mortgages—consisting of mortgages of up to 480 months—in December. 

“In order to fully stabilize the economy, issuers need as many tools as possible to help homeowners recover from the pandemic’s economic effects,” said Ginnie Mae President, Alanna McCargo. “This policy gives issuers clear guidance on how to move forward to help tens of thousands of FHA homeowners coming out of forbearance benefit from the FHA Advance Loan Modification.” 

According to the memo, under the new streamlined policy the issuer is required to provide the following documentation to the document custodian: 

1. Original fully executed loan modification agreement, signed by all borrowers, and in recordable form. 
2. If the issuer determines recordation is necessary to maintain an enforceable first lien position, or if the loan modification agreement contains assignments of leases or rents provisions, the modification must be recorded for final certification. 
3. If the modification is recorded, the Issuer must also comply with the title insurance requirements in Chapter 24, Part 2, §A(2), as well as obtain the necessary title policy or endorsement, and subordination(s) as indicated on title. 
4. The modified loan file must clearly identify for the document custodian that it is an ALM. 

Document custodians will not be required to verify that the ALM is recorded, unless the loan modification agreement contains provisions for assignment of leases or rents, or title insurance is present. However, if the ALM loan modification agreement is recorded, title insurance that meets the requirements of Chapter 24, Section 2 is required. 

The streamlined documentation requirements for ALM loans will sunset with June 1, 2023 pool issuances. ALMs in pool issuances on or after July 1, 2023, must meet Ginnie Mae’s standard requirements for recording and title insurance.