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Ginnie Mae Unveils Initiatives Designed to Help Adapt to Changes

wall-st-and-govRepresentatives from the U.S. Department of Housing and Urban Development (HUD) and Ginnie Mae convened at the second annual Ginnie Mae Summit on September 22 to discuss initiatives and programs designed to create a healthy housing market.

HUD secretary Julián Castro delivered the keynote address, and Ginnie Mae president Ted Tozer announced his organization's planned initiatives to meet the needs of a housing finance industry that is constantly evolving and a mortgage market that is ever-changing.

"The retreat of traditional depository banks from mortgage lending and servicing is transforming the housing industry," Tozer said. "In fact, 60 percent of our top ten issuers are non-depository institutions, this presents a variety of complex challenges for the industry."

Tozer's announcements indicate that Ginnie Mae is changing its policies and procedures as part of an ongoing effort to adapt to changes in the housing industry, preserve the integrity of its mortgage-backed securities (MBS) program, reduce risk, and better manage resources.

"Ginnie Mae’s primary goal has been, and always will be, to protect and preserve the utility, relevance and remarkably successful track record of the Ginnie Mae MBS program," Tozer said. "The agency’s pioneering role in the creation of a securities market for mortgage loans, its continued ability to refine the program as necessary to maintain its unblemished record of profitable operation over decades of market change and disruption is a testament to the power of a well-conceived and executed government effort to support the healthy functioning of a sizable and critical private sector function."

Ginnie Mae plans to announce the following:

  • A paper titled "An Era of Transformation" that explains how Ginnie Mae is approaching the challenges put forth to the mortgage lending industry as a result of the financial crises of 2007-08. The paper includes Ginnie Mae's corporate focus broken down into five strategic views.
  • The company's net worth and liquidity requirements are being finalized. More information will be made available at the Mortgage Bankers Association Annual Convention in October.
  • The purpose of enhancements made to Ginnie Mae's Acknowledgement Agreement is to expand liquidity. The changes will allow issuers to use mortgage servicing rights (MSRs) as collateral and therefore reduce Ginnie Mae's risk.
  • In response to the large percentage of Ginnie Mae's resources that go toward ensuring that issuers are compliant (even issuers that have not issued securities), Ginnie Mae plans to issue a Dormant Issuer Policy that requires issuers to actively participate within an 18-month time frame. The purpose of the policy is to ensure better utilization of Ginnie Mae's resources. The first evaluation will be January 1, 2015.
  • Ginnie Mae and the Federal Home Loan Bank of Chicago (FHLBC) are working together on pilot program designed to allow smaller financial institutions to access the secondary market. FHLBC can now issue Ginnie Mae-guaranteed securities, which it is expected to begin doing in November 2014.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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