Tuesday, April 19, 2011

Ginnie Mae Update

The Government National Mortgage Association (Ginnie Mae), which provides a guaranty on mortgage-backed securities (MBS) consisting of loans insured by the Federal Housing Administration or backed by Veterans Affairs, has announced a new policy regarding the pooling of past-due loans.


For single-family securities with an issue date of June 1, 2011, and after, servicers can no longer package loans into securities backed by Ginnie Mae that are delinquent by more than the monthly installment of principal and interest that is due on the issue date.

Prior to this new policy, servicers could pool delinquent loans – even mortgages more than 60 days late – into securities backed by the government agency. The agency says the new requirements will ensure loans within its bonds are of high quality and will continue to perform well over time.

In addition, effective September 1, Ginnie Mae will require issuers to provide additional information on loans submitted for collateralization.

GinnieNET will collect the information on the import file layout or on the paper form of the schedule of pooled mortgages.

Issuers must supply up to eight new data elements on single-family forward mortgages, which include:

combined loan-to-value (LTV) ratio percent

total debt expense ratio percent

refinance type

last paid installment due date

pre-modification first installment due date

pre-modification original principal balance amount

pre-modification interest rate percent

pre-modification loan maturity date

The government agency says the new requirements will give the industry “more relevant information” while supporting its commitment to provide greater transparency on the underlying collateral of Ginnie Mae securities.

Ginnie Mae says its securities are the only MBS to carry the full faith and credit guaranty of the United States government, which means that even in difficult times an investment in Ginnie Mae MBS is one of the safest an investor can make.