|12/31/2019 - APM 19-08|
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, 2020, 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, Hawaii, Guam, and the U.S.
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 Ch. 9, Part
2, § B and
Ch. 24 Part 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.
|12/31/2019 - APM 19-07|
To provide HMBS Issuers with additional
guidance relating to monthly and annual reporting obligations, Ginnie Mae is hereby
announcing the publication of its HMBS Investor Reporting Manual. Ginnie Mae is
also revising Chapter 35 of the MBS Guide to provide expanded guidance in
accordance with the content of the newly published manual. The MBS Guide changes addressed below will
become effective on April 1, 2020 and will be reflected in an updated version
of Chapter 35 published at that time.
35 MBS Guide Updates
Ginnie Mae is modifying Chapter 35, Part
1 to remind issuers that FHA requirements, not the MBS Guide provisions, dictate
whether Participations are permitted for any HECM Loan pooled into an HMBS.
Further, Ginnie Mae is revising Chapter
35, Part 5, Section A to establish the first (1st) day of the month
that is subsequent to the loan closing date as the earliest date a
Participation can be pooled for securitization. Please note that, HMBS Issuers
may select, at their discretion, the timing and frequency of pooling
Participations to be later than that date, so long as all other pooling
requirements are met.
Chapter 35, Part 5, Section B has been
revised to limit the overall number of Participations that can be associated
with any single HECM loan to nine-hundred and ninety-nine (999).
Previously, the language in the MBS
Guide allowed the Issuer to determine whether to establish an escrow
account. Under changes made to Chapter
35, Part 7, Section G, Ginnie Mae will require Issuers to establish an escrow
account in order to participate in the HMBS program and to execute Master
Agreement (Appendix III-3), form HUD11720 for such account(s).
Under revisions to Chapter 35, Part 12,
Section F, Ginnie Mae will require any HMBS Issuer approved on or after January
1, 2020, to select the last business day of the month as the monthly reporting
cut-off date to ensure consistency across all HMBS program participants and
with the provisions of the newly published HMBS Investor Reporting Manual.
HMBS Investor Reporting Manual
The HMBS Investor Reporting Manual
referenced in this memorandum is effective immediately and may be accessed via
the link below.
Please contact your Ginnie Mae Account
Executive in the Office of Issuer and Portfolio Management directly or at (202)
708-1535 with any questions you may have.
|8/22/2019 - APM 19-06|
Ginnie Mae continually monitors Issuer performance and seeks to encourage Issuer practices that are consistent with its mission and the integrity of the Mortgage-Backed Securities (MBS) Program. As part of a series of counterparty risk management policy updates, Ginnie Mae is implementing the following requirements.
Rating Requirements for Issuers with a Servicing Portfolio Exceeding $25 Billion
To minimize potential exposure to large Issuer defaults, Ginnie Mae will be obtaining additional key risk indicators relating to servicing capability and creditworthiness. Effective September 1, 2020, Issuers with a Ginnie Mae Single-Family (SF) Servicing Portfolio Amount that exceeds $25 billion in UPB will be required to obtain an external primary servicer rating. For the purpose of this requirement, the term Ginnie Mae Single-Family Servicing Portfolio Amount is the sum of the unpaid principal balance of an Issuer’s outstanding Ginnie Mae SF MBS and HMBS for which it is the Issuer of Record in addition to the sum of the unpaid principal balance of any outstanding SF MBS and HMBS that the Issuer is subservicing on behalf of another approved Ginnie Mae Issuer. Issuers with a Ginnie Mae Single-Family Servicing Portfolio that exceeds $50 billion in UPB will be required to obtain credit ratings in addition to the external primary servicer rating. Both, the primary servicing rating and credit rating requirements are detailed in Chapter 3 of the MBS Guide.
Revised Financial Requirements for Applicants and Issuers
Ginnie Mae is amending Chapter 2 and Chapter 3 of the MBS Guide to change the manner in which liquidity and net worth are calculated. Effective immediately, new applicants will be permitted to satisfy minimum liquidity requirements using a combination of AAA rated government securities that are marked to market in addition to cash and certain cash equivalents. However, new applicants will no longer be permitted to include deferred tax assets when computing the minimum net worth required for participation in the MBS Program. For approved Issuers, these changes will become effective for fiscal year 2020. Ginnie Mae will take into account these changes when evaluating an Issuer’s compliance with Ginnie Mae’s liquidity, net worth and capital requirements as part of the review of the Issuer’s audited financial statements and documents covering fiscal year 2020.
Moreover, Ginnie Mae is exempting Issuers that participate exclusively in the HMBS program from the leverage ratio requirements in cases where Ginnie Mae, in its sole discretion, determines that the HMBS Issuer’s failure to meet the requisite leverage ratio test is directly attributable to a demonstrated lack of true sale accounting treatment in the HMBS Program. This exemption for HMBS Issuers has been incorporated into Chapter 3, Part 8, § C of the MBS Guide, and is effective September 1, 2019.
Secured Debt Ratio as a Risk Factor
Effective September 1, 2019, Ginnie Mae is amending Chapter 3, Part 21 § B to prescribe that Issuers with secured debt to gross tangible asset ratios greater than sixty percent (60%), as described in the Guide, may, at Ginnie Mae’s sole discretion, be subject to additional financial and operational requirements prior to receiving approval for various transactions within the MBS Program, including, but not limited to requests for commitment authority and approval of Transfers of Issuer Responsibility.
Risk Factors Applied to the Approval of Transfers of Issuer Responsibility
Effective September 1, 2019, Ginnie Mae is updating Chapter 21 to inform Issuers about various risk factors that Ginnie Mae currently evaluates when assessing requests for Transfers of Issuer Responsibility, including an evaluation of whether a given approval would lead to a degree of concentration of Issuer responsibility that may pose a substantial risk to the overall integrity and soundness of the MBS Program.
Risk Factors applied to the Approval Issuer-Subservicer Agreements
Ginnie Mae, in its sole discretion, may grant or withhold approval of Issuer-Subservicer arrangements. Effective September 1, 2019, Ginnie Mae is amending Chapter 4, Part 3 of the MBS Guide to inform Issuers that it will assess the percentage of the outstanding Ginnie Mae MBS or HMBS portfolio being subserviced by any entity involved in the transaction as a factor when evaluating Issuer requests for approval of subservicing arrangements.
Revised Demonstrated Participation Requirements
Ginnie Mae dedicates significant resources to monitoring the performance of its Issuers and seeking to ensure the active and successful participation of each Issuer. Ginnie Mae grants Issuers an 18-month period to perform a qualified activity in the MBS Program. Entities that do not perform any qualified activities within that prescribed period risk losing their status as approved Issuers. Ginnie Mae is revising Chapter 3, Part 21 § A to require all Issuers to perform at least one qualified activity within a consecutive 12-month period in order to maintain their approved Issuer status and to eliminate the blanket exemption for state housing finance agencies from these requirements. The revised Demonstrated Participation Requirements have been incorporated to Chapter 3, Part 21 § A of the MBS Guide and will be effective September 1, 2020.
Revised Custodial Bank Rating Requirements
Ginnie Mae is updating the rating requirements applicable to funds custodians to align with industry standards. These revisions have been incorporated into Chapter 16, Part 8 and are effective September 1, 2019.
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.
|8/1/2019 - APM 19-05|
On July 25, 2019, the President of the United States signed into law the Protecting Affordable Mortgages for Veterans Act of 2019, which revises the loan seasoning requirements and Ginnie Mae statutory changes prescribed by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. Ginnie Mae published APM 18-04 to implement the seasoning requirements prescribed by the 2018 Act as part of a series of pooling restrictions to disincentivize practices that result in unduly rapid prepayments in Ginnie Mae mortgage-backed securities and to ensure the strength and liquidity of the MBS Program.
Since the publication of APM 18-04, Ginnie Mae has collected industry feedback to explore additional MBS program requirements that may have a positive impact on the performance of Ginnie Mae securities, and thereby benefit the borrowers participating in the federal housing programs we support. In order to advance these objectives and implement the Protecting Affordable Mortgages for Veterans Act of 2019, Ginnie Mae hereby announces changes to the pooling eligibility requirements applicable to all VA-guaranteed refinance loans and new pooling criteria for certain cash-out refinances with loan-to-value ratios exceeding 90 percent.
Revised Seasoning Requirements
Ginnie Mae is revising the seasoning requirements in Chapter 24, Part 2 §(A)(3)(d)(i) to ensure that the requisite seasoning period is computed by reference to the first payment due date on each covered loan rather than by reference to the date on which the first payment is made. Effective with mortgage-backed securities guaranteed on or after August 1, 2019, 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:
(1) the date on which the borrower has made at least six monthly payments on the loan being refinanced; and
(2) the date that is 210 days after the first payment due date of the loan being refinanced
Exemption from Seasoning Requirements for Re-Performing Refinance Loans and Permanent Financing Construction Loans
Effective with mortgage-backed securities guaranteed on or after August 1, 2019, Re-Performing Refinance Loans and Permanent Financing Construction Loans—as defined in APM 19-03, are exempt from the seasoning requirements in Chapter 24, Part 2 §(A)(3)(d)(i).
Additional Pooling Restrictions for High LTV VA Cash-Out Refinance Loans
For purposes of this new requirement, the term “High LTV VA Cash-Out Refinance Loan” means a Refinance Loan that is insured or guaranteed under the provisions of chapter 37 of title 38 of the United States Code with a loan-to-value ratio that exceeds 90 percent at the time of origination (i.e. 90.01 LTV and higher), and where the borrower converts any amount of home equity into cash.
Effective with mortgage-backed securities guaranteed on or after November 1, 2019, High LTV VA Cash-Out Refinance Loans are ineligible for Ginnie Mae I Single Issuer Pools and Ginnie Mae II Multiple Issuer Pools, except in cases when the loans are Permanent Financing Construction Loans, as defined in Chapter 24 of the MBS Guide.
High LTV VA Cash-Out Refinances may be pooled into Ginnie Mae II Custom Pools without restriction, provided they satisfy the seasoning and number of payment requirements detailed in Chapter 24, Part 2 § (A)(3)(d).
Chapter 24 of the MBS Guide has been amended effective immediately in accordance with this memorandum. 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.
|6/13/2019 - APM 19-04|
As part of a multi-phase effort to implement a new formatting structure for the MBS Guide, Ginnie Mae is hereby announcing updates to the numbering convention used to identify the headers and clauses in all 35 MBS Guide chapters. Please note that no substantive policy changes are being implemented by this revision.
Effective immediately, each MBS Guide chapter will reflect the following convention to identify the level of each of its clauses. Chapter sections will be identified first by Chapter number, followed by a “Part”, then followed by a section number, and followed by subsequent, consistent alphabetical and romanette letters. For example, a citation to a subpart of Chapter 24 would read “Chapter 24, Part 2, Section A(1)(c)(i)”.
In connection with this update, the PDF version of each chapter published on our website will reflect two additional changes. First, a new outline format that is different from the two-column format that was previously used, and second, red text under each part or section, as may be applicable, will indicate the effective date of the various clauses.
For your reference and convenience, we have included a pdf file containing the previous version of all 35 chapters as well as an excel file containing a few examples that map citations in the previous version of the Guide to the new citation format. Both of these documents appear on our website as attachments to this memorandum.
Please contact your account executive directly with any questions.