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All ​Participant Memorandums (APMs)

APMs (All Participant Memoranda) are issued by IPM generally to announce policy and MBS Guide changes accessed by Issuers, Document Custodians and other participants in Ginnie Mae programs.

5 most recent APMS
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.

​Total Servicing Portfolio Minimum Amount of Coverage ​ Maximum Deductible​
$100 million or less​ ​$300,000



​ ​ ​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


15%

 

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.

6/1/2018 - APM 18-05

Periodically, Ginnie Mae implements minor updates to the Mortgage Backed Securities Guide, HUD Handbook 5500.3, Rev. 1 (MBS Guide) to ensure that its policies are clearly and accurately reflected and to notify Issuers about upcoming operational changes. Please note the following announcements.

HMBS Issuers-Revision of the definition of ‘Original Interest Rate’ in Appendix III-28

Ginnie Mae has become aware of confusion about the data that should be reported for the “original interest rate” field in field 9, M01, of Appendix III-28, Form HUD 11705H and HUD 11706H. To ensure clarity and consistency, Ginnie Mae is updating the definition of “original interest rate” as follows. The term “Original Interest Rate” will be revised as “The original interest rate for the HECM loan, as reported at the initial pooling (first Participation).” Appendix III-28 of the MBS Guide has been updated in accordance with this APM and is effective immediately.

List of Acceptable Abbreviations for Custodial Account Titles

Ginnie Mae is publishing a list of acceptable acronyms for use when titling custodial accounts. If an Issuer needs to abbreviate the title of an account, the Issuer may use only the abbreviations approved by Ginnie Mae. The table below contains a list of approved abbreviations for identifying the account type or the Issuer’s legal name, d/b/a name, or business form, as applicable, and is being incorporated into Chapter 16 of the MBS Guide and is effective immediately.

APM 18-05 Chart.png
 

Changes to MBS I ACH Debit Procedures

Historically, Ginnie Mae has processed investor pass through (P&I) obligations for all Ginnie Mae I book entry securities through our Depository, the Federal Reserve Bank of New York (FRB). Effective August 1, 2018, and thereafter, ACH debit processing for all Ginnie Mae I MBS Program securities will be performed by Ginnie Mae’s Central Paying & Transfer Payment Agent (CPTA), the Bank of New York Mellon. The FRB will discontinue ACH debits at the end of July 2018. Consequently, and effective with investor payments beginning August 2018, Ginnie Mae’s CPTA will assume all ACH debit responsibilities for both Ginnie Mae I and II MBS. Upon receipt of all Issuer pass-through payments, the CPTA will wire the funds to the Federal Reserve for distribution to investors.

The CPTA will conduct testing prior to the Ginnie Mae I MBS Program August payment date to ensure that it has the requisite access to debit the corresponding custodial accounts successfully. To ensure a seamless transition, all Issuers participating in the Ginnie Mae I MBS Program must confirm that the Bank of New York Mellon can successfully debit the designated custodial account unimpeded by fraud filters or other limits to the debit process. The ACH Originator ID for the Bank of New York Mellon is 1135160382. Once you have confirmed that your custodial accounts are properly configured, no further action is required unless the prenote test fails and you are contacted by Ginnie Mae or the Bank of New York Mellon. The MBS Guide changes relating to the new ACH Debit process will be published prior to August 2018.

Updated Summary of Addresses

Ginnie Mae has also updated its Summary of Addresses to ensure participants have the most up to date contact information for Ginnie Mae and its agents.

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.

5/30/2018 - APM 18-04

On May 24, 2018, the President of the United States signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155 / P.L. 115-174). The Act prohibits Ginnie Mae from guaranteeing securities backed by certain loans. As part of the implementation of the prohibition in the “Loan Seasoning for Ginnie Mae Mortgage-Backed Securities” provision in the Act, Ginnie Mae is hereby implementing additional pooling eligibility requirements. The implementation of the Act in the Ginnie Mae multi-class securities program will be addressed in a separate announcement.

New Pooling Eligibility Criteria

Effective with mortgage-backed securities guaranteed on or after June 1, 2018, a refinance loan insured or guaranteed under the United States Department of Veteran Affairs benefit program in chapter 37 of title 38 of the United States Code is eligible for Ginnie Mae securities only if it meets the following condition.

The note date of the refinance loan must be on or after the later of:

a) the date that is 210 days after the date on which the first monthly payment was made on the mortgage being refinanced, and

b) the date on which 6 full monthly payments have been made on the mortgage being refinanced.

Impact on Security Issuances Dated June 1, 2018 or Later

Refinances, including refinances that bear a note date prior to the date of this announcement, that do not meet the condition implemented by the Act and announced in this memorandum are not eligible for inclusion in any new pool or loan package in the Ginnie Mae I or the Ginnie Mae II MBS Program.

Ginnie Mae understands that some Issuers have already certified pools and loan packages for June 2018 issuances, which may contain loans that do not meet the seasoning requirements implemented by the Act and reflected on this memorandum. Ginnie Mae’s Office of Issuer and Portfolio Management will be contacting any impacted Issuers ahead of the June 1st issuance date to provide additional guidance on curing any pools or loan packages that have become defective as a result of the recently enacted statutory prohibition.

Notwithstanding the foregoing, Issuers are required to review and evaluate the eligibility of any VA Refinances submitted with any pools or loan packages scheduled for June delivery or later. Issuers may also contact the Pool Processing Agent, at (800) 234-4662 Option 1, to determine status of pools in the pipeline.

Impact on Security Issuances Dated May 1, 2018 or Earlier

Refinances that do not meet the seasoning condition implemented by the Act and announced in this memorandum remain eligible collateral for securities that were previously issued with a date of May 1, 2018, or earlier, assuming they meet all other pooling and program requirements. The Ginnie Mae guaranty attached to any security issued with a date of May 2018 or earlier is not affected by the Act or this memorandum, even if such security is backed by one or more pools or loan packages containing refinances that do not meet the condition implemented by the Act.

Chapter 24 of the MBS Guide has been amended effective immediately in accordance with this announcement. Ginnie Mae will publish a subsequent memorandum announcing new document custodian certification requirements for VA refinance loans.

Please contact your Account Executive in the Office of Issuer and Portfolio Management directly or at (202) 708-1535 with any questions.

2/1/2018 - APM 18-03

The success of Ginnie Mae’s Mortgage-Backed Securities Program is contingent on the integrity of the collateral backing Ginnie Mae securities and on compliance with the requirements of the insuring or guarantying agencies. Ginnie Mae requires Issuers to ensure that each mortgage backing a Ginnie Mae security has a first lien position at the time of pooling and to provide an approved type of title insurance product for each mortgage submitted for pool certification. Over the last two years, Ginnie Mae has increased the number of acceptable title insurance products for modified mortgages to include ALTA Form Mortgage Modification Policies (MMPs). In contrast, Ginnie Mae has never accepted and does not accept Mortgage Priority Guarantees (MPGs), with the limited exception being announced here. Effective immediately, Ginnie Mae will accept MPGs only for modified mortgages backing securities with issuance dates of January 1, 2016 or earlier. MPGs are not acceptable for securities with issuance dates of February 1, 2016, or later.

Under previous document custody and pool certification requirements, Ginnie Mae prescribed Issuers to provide new title policies or title policy endorsements to satisfy the title insurance requirements for modified mortgages. On February 1, 2016, Ginnie Mae published APM 16-01, which revised the Document Custody Manual (DCM), Appendix V-01 of the Mortgage-Backed Securities Guide, HUD Handbook 5500.3 Rev.1. The 2016 DCM revisions allowed Issuers to satisfy title insurance requirements for modified mortgages by delivering an MMP in lieu of a new title policy or title policy endorsement. The 2016 DCM did not include MPGs as acceptable title insurance products.

Ginnie Mae allowed the use of MMPs to address operational challenges faced by Issuers seeking title policy endorsements for certain modified mortgages. MPGs were not included as acceptable title insurance products in the 2016 DCM, in part, because the coverage provided by MPGs was not standard across the industry and could therefore vary across policy providers.

To ensure the lien position of modified mortgages, and prior to the publication of the revised DCM, some Issuers obtained and provided an MPG for modified mortgages submitted for pooling outside of Ginnie Mae standards. The pools containing MPGs are now subject to pool certification issues related to deficient title insurance documentation.

Certain title insurance companies who provided MPGs to Issuers entered into agreements with Ginnie Mae to address the concern surrounding the potential variances in the coverage provided by their MPG products. In response to these agreements and to provide limited relief to Issuers, Ginnie Mae will accept MPGs, but only for modified mortgages backing securities with issuance dates of January 1, 2016 or earlier. The table below illustrates the types of insurance products that are acceptable for modified loans based on the security issuance date corresponding to each loan.

​Security Issuance Date ​Acceptable Title Insurance Products
​January 1, 2016 or earlier ​New Title Policy
Title Policy Endorsement (ensuring priority over defects, liens, and encumbrances)
ALTA Mortgage Modification Policy (MPP)
Mortgage Priority Guarantee Policy (MPG)
​February 1, 2016 or later ​New Title Policy
Title Policy Endorsement (ensuring priority over defects, liens, and encumbrances)
ALTA Mortgage Modification Policy (MPP)
 

All other Issuer responsibilities relating to pool certification and loan documentation remain unchanged, including an Issuer’s responsibility to obtain and record any subordination agreements necessary to ensure that any modified mortgage submitted for securitization has a first priority position.

The updates announced in this APM are reflected in Chapter 24 of the MBS Guide and in Chapter 3 of the Document Custody Manual and are effective immediately. You may retrieve the updated version of these chapters from Ginnie Mae’s website.

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.


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Last Modified: 6/22/2018 7:48 PM