|3/7/2019 - APM 19-02|
Ginnie Mae requires Issuers to engage in practices that are consistent with its mission and the integrity of the Mortgage-Backed Securities (MBS) Program. The amount of net servicing income generated by each Issuer portfolio is a key factor impacting that Issuer’s ability to remit scheduled payments to security holders. Currently, Issuers can create Ginnie Mae pools or loan packages that yield servicing spreads ranging from 19 to 69 basis points (bps). Issuer pooling practices that result in overall portfolios with servicing spreads that fall on the lower end of the possible range may not generate sufficient amounts of servicing income to withstand periods of financial stress, and therefore may have an adverse impact on the stability of the MBS Program. As part of a series of counterparty risk management policy updates, Ginnie Mae is implementing the following requirement:
New Minimum Portfolio Servicing Spread Requirement
Effective March 1, 2020 (Effective Date), Issuers will be required to have, and maintain at all times, a weighted average servicing spread of at least 25 bps for their Ginnie Mae portfolio comprised of forward, fixed-rate, Single-Family loans (Minimum Portfolio Servicing Spread). Please note that this general requirement applies at the portfolio level, not at the pool or loan package level. Issuers may continue to create Ginnie Mae pools and loan packages that yield servicing spreads within the ranges permissible under Section 24-2(A)(1)(c) of the MBS Guide so long as the Issuer’s overall portfolio servicing spread does not fall below the required minimum. For reference, the average servicing spread of all Single-Family Ginnie Mae ll pools and loan packages is approximately 36.7 bps. If weighted by unpaid principal balance, the average servicing spread of the same is approximately 35 bps.
Effect on Transactions that Pledge or Encumber Servicing Income
Subject to the limitations outlined in Chapter 21 of the MBS Guide, Issuers may continue to execute transactions that pledge or otherwise encumber their Servicing Income or servicing rights. Any amount of Servicing Income or servicing rights that is pledged or encumbered in accordance with Chapter 21 of this Guide will not be excluded from the computation of the Minimum Portfolio Servicing Spread required by this Subsection 3-21(C).
Effect of Non-Compliance
Any Issuer that does not have Minimum Portfolio Servicing Spread of at least 25 bps by the Effective Date may be subject to additional requirements, which could include, but are not limited to, restrictions on pools or loan packages with servicing spreads that are lower than the Minimum Portfolio Servicing Spread, or other minimum servicing spread determined by Ginnie Mae at its sole discretion. Ginnie Mae will notify in writing any Issuers at risk of non-compliance ahead of the Effective Date.
Chapter 3 of the MBS Guide is modified effective immediately to incorporate new subsection 3-21(C) Minimum Portfolio Servicing Spread Requirements, which contains additional details, as well as the definitions and formulas pertaining to this announcement. Please contact your Account Executive directly with any questions or concerns.
|2/12/2019 - APM 19-01|
Ginnie Mae is
undertaking a comprehensive revision of the MBS Guide, for the purpose of
harmonizing changes to this document (and associated processes and systems) that
have occurred over the years. This revision is intended to improve the form of
the document, and is not implementing policy changes. It is expected to take
much of 2019 to complete, and further guidance will be made available when it
comes closer to fruition.
This ongoing effort has
occasioned the need for a review of the process by which certain terms of the
Guide have been waived from time to time, because in many cases the
justification for a waiver, or the citation by which it was effected, have been
or will be altered by the upcoming revision, or by other circumstances
subsequent to original issuance of the waiver.
Ginnie Mae hereby requires
that all participants submit the following information via e-mail to GinnieMaeWaiver@hud.gov by 5:00pm
Eastern Time on March 15, 2019 for each waiver held:
PDF (Portable Document Format) copy of the waiver as an attachment;
participant’s (Issuer/Document Custodian) name and Ginnie Mae ID on the subject
brief narrative describing the participant’s continued need for the waiver, if
any, on the body of the email.
Upon receipt of the
email and information, Ginnie Mae will begin the process of examining the need
for re-issuance of the corresponding waiver. If Ginnie Mae determines that a
given waiver should not be re-issued, Ginnie Mae will inform the participant in
writing about this determination and outline any necessary actions that the
participant may need to take, if any. Ginnie Mae will automatically rescind any
waiver that is not submitted in accordance with this memorandum, including
waivers that are submitted without all of the information requested above.
All waivers submitted via
e-mail to GinnieMaeWaiver@hud.gov will remain in effect
until the earlier of the date of expiration per the terms of the original
waiver, the date of re-issuance, or May 1, 2019. When re-issued, the waivers will reflect
revised citations to the MBS Guide, which may be different from or in addition
to the citations reflected on the waiver when it was initially issued or
Please note that this
recall does not apply to waivers or variances granted as part of an R&W Agreement,
an Acknowledgment Agreement, or other agreements executed by both Ginnie Mae
and a program participant. Ginnie Mae will be reaching out individually to any
program participant with such agreements to coordinate any necessary updates.
If you have any
questions, please contact your Account
|12/21/2018 - APM 18-08|
Pursuant to the Housing
and Economic Recovery Act of 2008 (HERA), the Federal Housing Finance Agency
(FHFA) has announced increased conforming loan limits. Accordingly, Ginnie Mae
is revising its definition of High Balance Loans as follows. Effective for
issuances on or after January 1, 2019, a High Balance Loan is defined as a single-family
forward mortgage loan with an original principal balance (minus the amount of
any upfront mortgage insurance premium) that exceeds the following limits:
Maximum Loan Amounts
(net of any financed MIP or Guaranty Fee)
Contiguous 48 States, District of Columbia, American
Samoa, and Puerto Rico
Alaska, Hawai’i, Guam, and the U.S. Virgin
Additional information on conforming loan limits for the Commonwealth of the
Northern Mariana Islands may be obtained directly from FHFA. High Balance Loans
are eligible for Ginnie Mae MBS subject to the restrictions detailed in
Sections 9-2(B) and 24-2(A)(1) of the Mortgage Backed Securities Guide, HUD Handbook
5500.3, Rev-1 (MBS Guide).
If you have any
questions regarding this announcement, please contact your Account Executive in
the Office of Issuer and Portfolio Management directly or at (202) 708-1535.
|11/15/2018 - APM 18-07|
Ginnie Mae monitors Issuer performance and requires Issuers to engage in practices that are consistent with its mission and the integrity of the Mortgage-Backed Securities (MBS) Program. To promote stability and liquidity in the secondary market, Ginnie Mae is implementing a series of updates to its counterparty risk management framework to strengthen the financial resilience of Issuers. The following MBS Program policy changes constitute the first set of program policy adjustments in this series.
Issuer Application Process
In addition to examining an applicant’s financial qualifications against the minimum financial standards in the Guide (such as net worth and liquidity), Ginnie Mae will perform corporate credit evaluations. The credit evaluation, which is similar to those employed by credit rating agencies, will be used by Ginnie Mae to determine whether an applicant is qualified and whether such approval is conditioned upon the imposition of additional requirements, even if minimal financial standards are met. Ginnie Mae also applies additional scrutiny to applicants relying on a subservicer arrangement to ensure that any newly approved Issuer possesses the competencies required to meet and oversee the servicing and investor reporting obligations required by the MBS Program. If a proposed subservicer arrangement is deemed unsatisfactory for approval and the application is denied, further consideration would require the re-submission of a new application. Lastly, new applicants are no longer being asked to complete the Ginnie Mae online university courses, as the course modules are no longer available on Ginnie Mae’s website. These MBS Guide changes have been incorporated to Chapter 2 and Chapter 7 of the MBS Guide.
New Notification Requirement – Subservicer Advance and Servicing Income Agreements
Effective immediately, Ginnie Mae is implementing new notification requirements for Issuers engaged in certain subservicer advance or servicing income agreements, which do not require prior Ginnie Mae approval, but can impact an Issuer’s ongoing liquidity position and financial obligations. While Ginnie Mae currently permits subservicers to advance funds on behalf of an Issuer to pay security holders under the MBS Program, subservicers will now be required, upon request, to notify Ginnie Mae about such advances, including details about the frequency, amount, and purpose. Similarly, Issuers that enter into pledges of servicing income, or other transactions that encumber an Issuer’s Servicing Income, that are not subject to an Acknowledgment Agreement, must notify their Account Executive via email no later than 15 business days after the date that the transaction agreement is executed. Upon notification, Ginnie Mae may require the Issuer to provide the specific terms of the transaction, relevant documentation, or updated financial information. In addition, as a one-time requirement, all Issuers that have executed pledges of Servicing Income, or other transactions that encumber that Issuer’s Servicing Income (not subject to an Acknowledgment Agreement) as of the date of this Memorandum, must notify their Account Executive via email 1) that the Issuer has executed one or more such transactions; and 2) the date that any such transaction was executed. This one-time notification should occur no later than December 15, 2018. These notification requirements have been incorporated to Chapter 4 and Chapter 21 of the MBS Guide. For avoidance of doubt, such notifications do not constitute any approval by Ginnie Mae of the pledge and do not provide the subservicer or any other party with any rights with respect to the Issuer’s servicing portfolio.
Factors Governing the Imposition of Enhanced Financial or Operational Requirements
Section 3-8 of the MBS Guide grants Ginnie Mae discretion to impose additional financial or operational requirements on program participants when warranted by market conditions or other relevant factors that may impair an Issuer’s ability to meet its obligations under the MBS Program. As part of this first series of counterparty risk policy updates, Ginnie Mae is announcing a list of risk factors that may trigger the imposition of enhanced financial or operational requirements on a specific Issuer, in consideration of that Issuer’s current financial standing, financial history, and overall compliance. These factors have been incorporated to Section 3-21(B) and are effective immediately.
Restatement of Issuer Financial Requirements
As part of ongoing efforts to standardize and modernize the MBS Guide, Ginnie Mae is restating Issuer financial requirements, including net worth and liquidity, but is not changing those requirements at this time.
In consideration of the number and nature of the MBS program changes implemented by this memorandum, and APM18-06, Ginnie Mae is including updated versions of MBS Guide Chapters 2, 3, 4, 7, and 21 as attachments to this APM. Issuers should review carefully the updated MBS Guide chapters. The guidance discussed here, as incorporated in the revised MBS Guide and Guaranty Agreements should serve as a basis for ongoing Issuer reviews. Issuers should consult with Ginnie Mae as necessary to ensure that their participation meets standards of acceptability.
If you have any questions regarding this announcement, please contact your Account Executive directly.
|11/15/2018 - APM 18-06|
In response to feedback received from both industry and Issuers, Ginnie Mae is updating the fidelity bond and errors and omissions (E&O) insurance policy requirements in Chapter 2 of the Mortgage-Backed Securities Guide, HUD Handbook 5500.3, Rev. 1 (MBS Guide).
Previously, Section 2-7(B)(4) of the MBS Guide prohibited policies that terminated automatically upon the takeover of the Issuer by a federal or state entity. Ginnie Mae will now accept policies with such automatic termination clauses so long as the policy in question affords Ginnie Mae at least 90 days after the date of termination to file a claim. Likewise, the previous version of Section 2-7(C) prescribed a specific loss payable endorsement clause to be included with each policy. Ginnie Mae acknowledges that the loss payee clause requirement is unnecessary because the remaining requirements in Section 2-7 are sufficient to afford Ginnie Mae the relevant protections it seeks. Consequently, the Loss Payable Endorsement clause requirement formerly contained in Section 2-7(C) of the MBS Guide is hereby eliminated.
The updates to Section 2-7(B) and the elimination of the loss Payable Endorsement clause described above have been incorporated to Chapter 2 and are effective immediately.
Ginnie Mae has also fielded inquiries relating to the maximum allowable deductible for the policies addressed under Section 2-7. Ginnie Mae is revising its coverage and deductible requirements in accordance with the table below.
|$100 million or less
higher of 10% or $100,000
|Over $100 million to and including $500 million
||$300,000 plus 0.15 percent of portfolio for amounts over $100 million to less than or equal to $500 million|
|Over $500 Million to and including $1 billion
||The amount produced by the preceding calculation plus 0.125 percent of portfolio for amounts over $500 million to less than or equal to $1 billion|
|Over $1 billion
||The amount produced by the preceding calculation plus 0.1 percent of portfolio for amounts over $1 billion
Lastly, Ginnie Mae is updating the MBS Guide to require that Issuers forward to Ginnie Mae a copy of their full fidelity bond and E&O insurance policy via upload the Independent Public Accountant (IPA) module within the Ginnie Mae Enterprise Portal (GMEP).
For existing Issuers, the new minimum coverage and deductible standards as well as the requirement to submit the complete fidelity bond and E&O policy will be effective for all new policies or policy renewals occurring on or after January 1, 2019. For new applicants, these new minimum coverage and deductible standards as well as the requirement to submit the complete fidelity bond and E&O policy are effective immediately. A version of these chapter 2 updates has been included as an attachment to APM 18-07.
For additional assistance, Issuers should contact their Ginnie Mae Account Executive in the Office of Issuer and Portfolio Management directly or at (202) 708-1535.