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Bulletins

2017-020: Inclusion of HECM MBS REMIC Pass-Through Securities (“HREMICs”) as Trust Assets in the Ginnie Mae Multiclass Securities Program
Published Date: 3/28/2017 12:00 AM
To all participants in Ginnie Mae Multiclass Securities program, effective for transactions settling on May 30, 2017 and thereafter, Ginnie Mae is permitting the inclusion of previously issued HREMIC Securities as Trust Assets in Ginnie Mae HREMIC transactions, subject to the restrictions noted herein. Ginnie Mae reserves the right to disapprove a proposed transaction in its sole and absolute discretion.


Initiating a Transaction

If a Sponsor intends to propose a structure that includes previously issued HREMIC Securities, the Sponsor must inquire with Ginnie Mae by telephone no later than the Transaction Initiation Date for Re-HREMIC structures. The Transaction Initiation Date for Re-HREMIC structures shall be the date that is the Final Structure Date of the month immediately preceding the month when the Sponsor expects to settle such transaction. For example, if the Sponsor intends to propose a transaction that would settle on May 30, 2017, then the Sponsor must submit a proposed structure to Ginnie Mae no later than the Transaction Initiation Date of April 13, 2017.

On or prior to the Transaction Initiation Date, the proposed structure that is submitted to Ginnie Mae should include a written description of the Preliminary Securities Structure (including, but not limited to the identification of the type(s) of underlying securities, the paydown rules, applicable definitions, and notional rules).

Final Securities Structure

No later than the Final Structure Date for the transaction, the Sponsor must disclose all previously issued HREMIC Securities that will be included in the new HREMIC transaction, the final pay-down rules, applicable definitions, and notional rules.

All final HMBS pool information for inclusion in each transactions’ OCS exhibits must be provided by 5 p.m. New York time, five Business Days prior to the Print Date.

Restrictions on Collateral Data and Volume

The Trustee for the proposed transaction must be the same entity that serves as Trustee in the underlying transaction in which the previously issued HREMIC Securities were issued.

A transaction may include a maximum of four underlying HREMIC classes.

Restrictions on Structural Complexity

Until further notice, previously issued Re-HREMIC classes are not permitted to be used as underlying certificates in Re-HREMIC transactions.

Further, previously issued HREMIC Securities that are permitted as Trust Assets in a new HREMIC Series must have the following characteristics:

  1. Fixed Rate (or HWAC) Classes (or their related Interest Only Classes) collateralized by HMBS pools of fixed rate HECMs, or
  2. One-Month LIBOR Floating Rate Classes (or their related Interest Only Classes) collateralized by HMBS pools of monthly adjustable rate HECMs that adjust based on One-Month LIBOR, or
  3. One-Month LIBOR Floating Rate Classes (or their related Interest Only Classes) collateralized by HMBS pools of fixed rate HECMs, or
  4. One-Year LIBOR Floating Rate Classes (or their related Interest Only Classes) collateralized by HMBS pools of annual adjustable rate HECMS that adjust based on One-Year LIBOR, or
  5. CMT Floating Rate Classes (or their related Interest Only Classes) collateralized by HMBS pools of monthly or annual adjustable rate HECMs that adjust based on CMT.
  6. The related floating rate Re-HREMIC Securities to be issued in the new HREMIC Series must adjust with the same index as the related underlying previously issued HREMIC Securities.

A Sponsor interested in developing a structure with characteristics other than those noted above should contact Ginnie Mae prior to the Transaction Initiation Date to determine whether these restrictions have been removed.

Please call Ginnie Mae’s Office of Capital Markets at (202) 475-7820 with any questions or comments regarding this announcement.

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