Since it was founded, Ginnie Mae has strived to be a model for effective governmental involvement in a sizable, complex, market-oriented segment of the economy. The events of 2020 presented us with new and unique challenges in executing on this goal as the country confronted a pandemic that still disrupts nearly every aspect of life.
Our strategic response to the COVID-19 pandemic, and government policy response, was intended to support the relief efforts while preserving market confidence in the security and honoring the overarching imperative that MBS investors be assured of timely and full payment. To do so, we implemented a number of changes to our internal and external-facing initiatives. The internal changes aimed to increase the efficiency and effectiveness of our business processes, even if only temporarily, as a means to free up the resources needed to deploy a suite of pandemic-related programs.
The suite of external-facing initiatives included MBS Program updates designed to meet the needs of the moment while balancing the interests of stakeholders, and included updates that:
1 enable greater use of digital assets and electronic transactions to minimize business disruptions associated with public health guidelines (i.e., APM 20-01 Temporary Use of Digital Signatures on form HUD 11711A and form HUD 11711B, APM 20-04 Servicemembers Civil Relief Act (SCRA) Process Improvements, APM 20-10 Digital Collateral Program Launch, APM 20-11 MyGinnieMae Guide Updates);
2 safeguard liquidity as well as the safety and soundness of the government-backed mortgage secondary market segment (i.e., APM 20-03, APM 20-05, APM 20-07, APM 20-16, and APM 20-19);
3 provide MBS Program participants with temporary or limited flexibilities as to reduce compliance and regulatory burdens (i.e., APM 20-02, APM 20-06, APM 20-14 Alternative Procedures Permitted for Certain Aspects of Issuer Annual Audit Report for Fiscal Year 2020; APM 20-17, APM 20-18); and
4 support and foster alignment in federal and industry-wide initiatives (i.e., APM 20-12, APM 20-13).
We recognize that the task of navigating through the COVID-19 pandemic is not yet complete, but the new year provides an opportunity to begin shifting our focus to what must occur next. The MBS Program initiatives implemented this year are different both in degree and in kind from those that were implemented in the past, and as a whole could not be sustained in perpetuity in their present form without detriment to the overall program. As a result, Ginnie Mae expects to amend or retire many of the temporary programs put in place in 2020, and renew its focus on our previously published strategic agenda.
Two principles will guide Ginnie Mae in this process. The first is that programs put in place to combat the effects of the pandemic and the government response to it were never designed to be permanent. Of course, Ginnie Mae will continue to support initiatives deployed in 2020 which were always going to be implemented but were altered or accelerated due to the pandemic, such as those associated with digitalization efforts. But a number of initiatives will necessarily sunset. This includes, for example, the extraordinary relief programs necessitated by the increases in borrower forbearance volumes such as the Pass-Through Assistance Programs and the Temporary Relief from the Acceptable Delinquency Threshold Requirements, which are set to expire and will not be necessary once affected borrowers find a permanent loan resolution option. The second is that changing economic conditions may require Ginnie Mae to continue, alter, or expand some of these temporary programs – though it should be understood that Ginnie Mae does not anticipate doing so absent elevated delinquencies or other adverse economic developments.
Part of the task ahead is clearly articulating to program participants which initiatives will be retained, which will be amended, and which will be allowed to expire. For this effort, we intend to collaborate with all stakeholders and leverage the lessons and leading practices acquired during the recent trials. We look forward to the new year and the collective work we’ll be undertaking with our governmental and commercial partners.