Ginnie Mae II
What are Ginnie Mae II Mortgage-Backed Securities?
The Ginnie Mae II MBS program was introduced in 1983 in response to the changing demands of the secondary mortgage marketplace.
Ginnie Mae II MBS are modified pass-through mortgage-backed securities for which registered holders receive an aggregate principal and interest payment from a central paying agent.
Ginnie Mae II MBS have become useful tools for "pipeline" management for our issuers. They also provide additional flexibility and liquidity. For example, Ginnie Mae II securities permit greater flexibility with respect to loan characteristics: coupon rates on the underlying mortgages can vary between 25 and 75 basis points above the interest rate on the pool for pools issued on or after July 1, 2003 and between 50 and 150 basis points for pools issued before July 1, 2003. Multiple-issuer as well as single-issuer pools are permitted under the program.
The Ginnie Mae II MBS also allows small issuers who do not meet the dollar requirements of the Ginnie Mae I MBS program to participate in the secondary mortgage market. In addition, the Ginnie Mae II MBS permits the securitization of adjustable rate mortgages (ARMs).
The Ginnie Mae II MBS have a central paying and transfer agent that collects payments from all issuers and makes one consolidated payment, on the 20th of each month, to each security holder.
An issuer may participate in the Ginnie Mae II MBS either by issuing custom, single-issuer pools or through participation in the issuance of multiple-issuer pools. A custom pool has a single-issuer that originates and administers the entire pool.
A multiple issuer pool typically combines loans with similar characteristics. The resulting pool backs a single MBS issue and each participant is responsible for administering the mortgage loans that it contributes to the pool. The securitization provisions are set forth in detail in the Ginnie Mae MBS Guide.
Ginnie Mae II Key Program Provisions
There are five programs within Ginnie Mae II, each representing a different type of mortgage. Under each type, both the custom pool and multiple issuer pool approaches are permissible. Any one pool must consist of only one of the following mortgage types:
Single-family level-payment mortgages (FHA, VA, or RD loans)
Single-family graduated payment mortgages (FHA or VA)
Single-family growing equity mortgages (FHA or VA)
Manufactured home loans (FHA or VA)
Single-family adjustable rate mortgages (FHA or VA)