Ginnie In Brief
|Fiscal Year 2020 Surges to Second Highest First-time Homebuyer level in Five Years|
|by Ginnie Mae | 11/19/2020|
For the fourth time in five years, Ginnie Mae and its insuring and guaranteeing partners have financed homeownership for more than 900,000 first-time homebuyers. Fiscal year 2020 was the second highest total in five years at 965,115, coming just short of the 2017 high-point of 975,340 and significantly higher than the 888,437 initial buyers in 2019.
Ginnie Mae attracts capital for mortgage lending facilitated by four government programs: the Federal Housing Administration (FHA); the Veterans Administration (VA), the Rural Housing Service within the U.S. Department of Agriculture (USDA) and lending under the Public Indian Housing (PIH) program within the Department of Housing and Urban Development.
Measured by total loans within Ginnie Mae MBS, FHA was the most frequently used program by first-time buyers in FY 2020 with more than 636,000 mortgages. That is followed by the VA program at 228,148, USDA at 99,220 and PIH at 1,531.
However, as a percentage of each underlying agency’s program, 72 percent of all USDA loans went to first-time homeowners, followed by USDA and PIH each at 44 percent and VA at 19 percent.
|Multifamily MBS volume sets record|
|by Ginnie Mae | 8/21/2020|
The Ginnie Mae multifamily mortgage-backed securities (MBS) program is breaking records. Although most of the attention in the mortgage market is on single-family loan volume as mortgage rates achieve historic lows, owners of properties financed through Ginnie Mae multifamily MBS also are taking advantage of record-low rates to refinance their loans and strengthen their portfolios.
Production figures in the first 9 months of FY 2020 have already surpassed FY 2019 totals, with issuance of Ginnie Mae multifamily MBS hitting $23.1 billion between October 2019 and June 2020 compared to $18.4 billion for all of FY 2019.
While low mortgage rates are essential to this trend, owners can take advantage of low rates because of products in the market that meet their needs. For example, in times of economic uncertainty, the FHA product of long term, fixed rate financing becomes more attractive to borrowers, lenders, and investors.
In addition, multifamily Issuers continue to find value across Ginnie Mae’s products that help them reduce the rate on mortgages within Ginnie Mae MBS. Ginnie Mae Issuers utilizing the Interest Rate Reduction product have seen an average interest rate decrease of approximately 69 bps.
The Ginnie Mae Multifamily MBS Program currently relies on 54 Issuers to service 14,692 pools with $126.3 billion in UPB. Most of these Issuers have enjoyed a longstanding relationship with Ginnie Mae and have helped grow UPB from $39.4 billion in December 2008 to $126.3 billion in June 2020, a 223% increase.
Growth in the program over the last 12 years has been critical to facilitating the construction and renovation of Multifamily housing such as apartment buildings, hospitals, nursing homes, and assisted-living facilities. Today, 28 of 54 Issuers service more than $1 billion in UPB, including 6 Issuers that service more than $5 billion in UPB.
|The Next Step for MyGinnieMae|
|by Ginnie Mae | 7/29/2020|
When Ginnie Mae published the Ginnie Mae 2020 policy and program white paper two years ago, the agency delivered a modernization roadmap that included waypoints for how it would create a stronger, more efficient and more secure technology platform to conduct business with MBS program participants. A key point of that roadmap was the MyGinnieMae (MGM) Portal, a robust online interface that would keep pace with evolving technologies in use by Issuers, servicers, document custodians and other participants in the government mortgage market.
Ginnie Mae piloted MGM in 2019 by inviting select Multifamily, HECM and Single-Family Issuers, and Document Custodians. This early phase allowed Ginnie Mae to work through the natural hiccups that occur when new technology is introduced into a process that becomes nearly second nature to customers. The pilot phase included focus groups with users, and Ginnie Mae incorporated their feedback and recommendations into the portal’s next and larger phase. How to organize and define functional roles within the portal was just one of the suggestions that bubbled up during the pilot phase.
The broader onboarding phase launched in January 2020, led by a Modernization outreach call, enhanced by Reporting and Feedback System eNotifications, and eventually MyGinnieMae messages. The first step began with equipping Organization Administrators (formerly known as Security Officers and Enrollment Administrators) with the knowledge they needed to assign the proper functional roles to their staff who will work within the Portal. Assigning these roles was critical because everything from issuance of mortgage-backed securities, pool certification, pool transfers to managing of Master Agreements is done within the Portal.
We knew that we had to engage customers in multiple ways to ensure that we connected with the right staff at our customers’ organizations. To do this, we utilized a “more is better” approach with our communications. Communications included emails from the Ginnie Mae Customer Experience Group (CXG) to Organization Administrators inviting them to create an MGM account, and notes from Ginnie Mae Account Executives to their customers. We also conducted on-site outreach during the 2019 Ginnie Mae Summit, giving Issuers and other customers the chance to ask questions about the general MGM adoption strategy scheduled for the beginning of 2020.
Those communications provided a schedule for upcoming training events on how to use the Portal. The series of online training events were designed for each type of organization that would use MGM. We began our first online training with Multifamily Issuers, progressing to single-family Issuers with large portfolios, then HECM Issuers, followed by smaller single-family Issuers and finishing with Document Custodians. More than one dozen online training sessions were held via Webex and Zoom, producing more than 24 hours of recorded training material, all of which is available from Ginniemae.gov, and the Ginnie Mae YouTube channel.
Archiving training videos gives customers who bring on new staff on-demand access to the information they will need to learn how to do business with Ginnie Mae, saving the customer time and cost.
We anticipate that all users of Ginnie Mae business applications will complete transition to the MyGinnieMae Portal by late-summer. Meanwhile, it’s important that organization administrators ensure that their users have been assigned the appropriate functional roles in the Portal by the implementation date. Assigning functional roles and being trained on how to use MGM is critical because the ability to use legacy credentials to access Ginnie Mae systems will expire. Without appropriate MGM credentials, customers will not be able to do business with Ginnie Mae.
Organization Administrators that require assistance may contact Ginnie Mae Customer Support at 1-833-GNMA HELP / 1-833-466-2435 or firstname.lastname@example.org. For general inquiries regarding MyGinnieMae onboarding, training, and resources, contact the Ginnie Mae Customer Experience Group at email@example.com.
|Ginnie Mae's Path to Accepting Digital Mortgages|
|by Michael R. Drayne | 7/16/2020|
In 2018, Ginnie Mae published a strategic agenda that previewed the development of its Digital Collateral Program, whereby Ginnie Mae would begin accepting electronic promissory notes and other digital loan documents as collateral by the year 2020. When we first began working towards this goal, the road was long, but the mission was clear and the path well-paved. Borrower demands for a more convenient and transparent closing experience are ever-growing, Issuers are eager to transition away from traditional wet-ink paper closings, and the technology necessary to support digital mortgage closings is readily available.
As the provider of the largest source of capital for veteran and low-to-moderate income homebuyers, Ginnie Mae has given careful and thoughtful consideration to the planning and deployment of its Digital Collateral Program. We recognize that policy and infrastructure changes this impactful require the input and support of all mortgage industry stakeholders – including borrowers, taxpayers, Issuers, document custodians, investors, technology providers, as well as partner federal insuring agencies and regulators. We made a concerted effort to reach out to all industry stakeholders to assess their needs, learn from their experiences, and leverage those experiences to make the Digital Collateral Program as successful as possible.
True to the promises made in 2018, Ginnie Mae has published APM 20-10, announcing the launch of its Digital Collateral Program. The program will provide numerous benefits to the industry as we inch closer to a fully mature digital mortgage ecosystem. Lenders can reduce operational costs, mitigate risks, and provide their borrowers with a better closing experience. Turn times at all stages of the loan production process can be reduced, manual validations can be automated, data quality can improve, and overall risk can be mitigated as the chain of collateral custody is inherently more accessible and verifiable. Lastly, with nationwide social distancing measures in place due to COVID-19, reducing or eliminating physical interactions during the mortgage closing, loan delivery, and pool certification processes are imperatives that can be addressed through the implementation of digital mortgage solutions.
Thank you to everyone who provided input to Ginnie Mae on the Digital Collateral Program – whether it is was through industry roundtables, conferences, information sharing sessions, or feedback provided to the Ginnie Mae eGuide RFI. Your support has directly led to this milestone event in Ginnie Mae’s history and we are grateful for it. In turn, we look forward to supporting Issuers and document custodians as they apply to participate in this initial phase of the Digital Collateral Program. For more information
|Ginnie Mae Outlines Temporary Pooling Restrictions|
|by Michael R. Drayne | 6/29/2020|
Today Ginnie Mae published APM20-07, which announces changes to our policy concerning the re-pooling of certain loans that have been bought out of pools. These changes were driven by the borrower relief and loss mitigation policies implemented by the insuring and guaranteeing agencies (HUD, VA, and USDA) in response to the COVID-19 national emergency, and our analysis of how those policies might affect the performance of Ginnie Mae securities and the future price of credit under the federal mortgage programs.-07, which announces changes to our policy concerning the re-pooling of certain loans that have been bought out of pools. These changes were driven by the borrower relief and loss mitigation policies implemented by the insuring and guaranteeing agencies (HUD, VA, and USDA) in response to the COVID-19 national emergency, and our analysis of how those policies might affect the performance of Ginnie Mae securities and the future price of credit under the federal mortgage programs.
At the heart of this is the issuer’s option to buy a loan out of a pool after 90 days of delinquency. The buyout option exists because – in contrast to the Government Sponsored Enterprises – Ginnie Mae is not the issuer of the pools it guarantees, and does not utilize its own balance sheet to manage delinquencies (in the normal course). The buyout option therefore gives an issuer the ability to have some control over its exposure to the scheduled principal and interest pass-through requirement that applies to loans in pools, as well as to Ginnie Mae’s delinquency thresholds, from which Ginnie Mae has also provided relief to issuers as part of our response to the national emergency.
As with refinances, buyouts can cause an economic loss for security holders when mortgage-backed securities trade at premium prices. As a general matter, the risk of such losses is a normal consequence of investing in this asset class. What Ginnie Mae guards against in particular, however, are scenarios where liquidations (and losses) occur as the result of unanticipated events or gaps in government policy – the risk being that a commensurate loss of confidence in the security on the part of investors would translate into lower security prices and ultimately a higher cost for the homeowners the program is intended to serve.
A combination of circumstances arising out of COVID-19 presents a high risk of triggering buyout activity that could undermine the integrity of the MBS program, namely transactions in which resolution of a delinquency is known to come from an agency insurance or guaranty payment that does not require a buyout – but where a buyout is executed anyway solely to allow the issuer to capture premium security pricing.
Ideally, Ginnie Mae would prohibit only those types of buyouts. But in practice, it is impossible to identify those types of buyouts as they happen; buyouts can occur at different times and are driven by a variety of considerations. Care must be taken, in protecting against transactions that could be harmful to the program, to impinge as little as possible on the ability to buy out loans in the manner the program terms are intended to facilitate.
For this reason, Ginnie Mae’s approach to the unique COVID-19 circumstances is to leave the buyout rules unaltered and instead place restrictions on the ability to re-pool certain re-performing mortgages previously bought out of pools. This should lessen the economic incentives to strategically buy out loans in a way that may be harmful to the integrity of the MBS program (as more fully detailed in APM 20-07), while still maintaining an avenue to redeliver loans into securities guaranteed by Ginnie Mae.
While we recognize that this approach may not be fully satisfactory to any of the constituencies that are affected by buyout and re-pooling transactions, we believe that it represents a reasonable and appropriate balancing of the interests at stake and maintains the focus appropriately on the loss mitigation activities that will help affected homeowners.