The COVID-19 National Emergency, and the necessary public health responses to it, have taken a tremendous toll on our nation’s economy. Ginnie Mae has taken several steps in recent weeks to help counteract this and maintain stability and liquidity in the government insured mortgage-backed securities (MBS) market. These steps have enabled Issuers and mortgage servicers to provide the financial flexibility that millions of homeowners and renters needed, while maintaining broad-based market confidence.
The enhancement of the Pass-Through Assistance Program (PTAP), announced in early April received the most attention from the industry. This enhanced program, known as PTAP/C19 provides a financial facility for Issuers that are experiencing a temporary liquidity shortfall as they manage mortgage borrower forbearance programs. In early May, Ginnie Mae broadened the program to Issuers of Multifamily MBS. Both program components are open to all qualifying Issuers and are designed to be used when all other financial options available to Issuers have been exhausted. Unlike prior pass-through assistance programs, applying for or receiving PTAP/C19 assistance is not considered an event of default in the Ginnie Mae program. We made this change because of the severity and wide-spread economic impact of the COVID-19 National Emergency.
As Ginnie Mae moved quickly to develop the PTAP/C19 program to help mitigate both the anticipated and unknown effects of mortgage forbearance programs on Issuer liquidity, our strategy included providing regular updates on program usage. We began publishing usage and related information on our website in April.
Almost from the start of the National Emergency, many industry observers forecast tremendous strains on Issuer/servicer liquidity, especially in the non-bank sector. Thankfully, Ginnie Mae was prepared for this heightened risk. Over the past few years, we have modernized existing proprietary tools and incorporated new methods to monitor Issuer liquidity and overall financial health. At the same time, the agency is working on further enhancing its Acknowledgement Agreement to afford Issuers more financial flexibility with respect to Ginnie Mae servicing rights and required issuer advances, including innovations intended to attract new types of investors to the Ginnie Mae market.
Along with providing a liquidity facility for Issuers, Ginnie Mae took steps to ensure that reporting of delinquent loans because of forbearance would not negatively affect an Issuer’s standing with the agency, as would normally occur when delinquency levels spike. On May 14 Ginnie Mae established new guidance through APM 20-06 for Issuers reporting delinquent mortgage loans to Ginnie Mae that provides temporary relief from sanction related to the delinquency threshold requirement.
These MBS program enhancements have helped to keep the government mortgage market operating efficiently, reduce risk to taxpayers, and allow Issuers to focus on meeting the mortgage needs of their customers, all while maintaining Ginnie Mae’s commitment to its investors that scheduled principal and interest will be paid on time and in full.
As the mortgage market response to the COVID-19 National Emergency evolves, Issuers and other stakeholders can rest assured that Ginnie Mae will continue to safeguard the stability and safety in the government-insured mortgage market while minimizing risk to taxpayers.