Ginnie In Brief
|A Time to Reflect on Both the Past and the Future|
|by Eric Blankenstein | 1/5/2021|
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.
|Looking Ahead at Ginnie Mae|
|by Seth D. Appleton | 11/30/2020|
When Secretary Carson asked me to lead Ginnie Mae in October of 2019, I could have never predicted the year to come. You may recall I was adamant that my appointment represented a change in personnel, not a change in policy and that Ginnie would continue to focus on its core principles of maintaining a liquid and attractive security, modernizing our platform, and operating a fiscally sound program. In shorthand, we would continue following the roadmap laid out in the Ginnie Mae 2020 plan.
To a large degree we successfully did that. But it wasn’t the only thing we did. The COVID-19 pandemic changed the way we worked and the uncertainty it presented in the housing market caused us to reorder, and in some cases double down on, some key long-term strategic priorities.
From a top line perspective, Ginnie Mae’s previous record for MBS issuance was $505 billion; in Fiscal Year 2020, we issued $748 billion in MBS without a hitch, proving for the world that our platform truly is volume agnostic. And with this record volume, we were able to help 2.8 million American households access homeownership and affordable rental housing, through our support of the FHA, VA, USDA, and PIH mortgage loan insurance and guarantee programs.
March was a turning point in the year. With forbearances relating to the pandemic spreading, Ginnie Mae took quick and decisive action to support the housing market by designing and deploying a last resort liquidity facility, the Pass-Through Assistance Program, in record time. While utilization has not been high, it reassured the entire housing finance ecosystem that the market would be able to continue to function. It was around this time that we also made the decision to accelerate the launch of our Digital Collateral pilot allowing for the use of eNotes in Ginnie securitizations, as the importance of moving away from manual, paper-based processes became more and more evident.
Meanwhile, we continued our focus on facilitating the entry of additional capital into the system in support of mortgage servicing rights through enhancements to our acknowledgement agreement and most significantly the approval of advance financing in the GMSR structure. And we conducted issuer stress testing exercises and continued our work supporting prudential standards around capital, liquidity, and leverage, as well as resolution planning.
We improved the way we interface with program participants through the MyGinnieMae portal, which is now the single gateway to all Ginnie systems, applications, and resources and provides not only enhanced efficiency, but also enhanced security for our business partners.
With the impending retirement of LIBOR, Ginnie Mae took important steps to end the use of it as a reference rate for adjustable rate products and established a plan to transition to more reliable rates in the future in order to minimize any market disruption.
And just last week, Ginnie Mae received an unmodified opinion of its financials, the first time that Ginnie Mae has received a clean audit in seven years, which was an all hands-on deck effort.
The accomplishments noted above would have been a lot of work even in a normal year. After all, running the railroad of a $2.1 trillion government corporation is complicated business in the best of times. However, the Ginnie Mae team managed to pull all of this off while operating in a remote environment. That is a testament to the talented team members at Ginnie Mae who pour themselves into their work each and every day with dedication, knowledge, and professionalism. As a result of their work, Ginnie Mae excelled, and, in doing so, provided housing opportunities for millions of American families, modernized the program, mitigated risks to taxpayers, and provided stability and liquidity to the housing market.
So, as my time at Ginnie Mae concludes, I want to thank the staff of Ginnie Mae for their service and work during this unprecedented year. I also want to thank our issuers and investors for their support of homeownership and affordable rental housing. It is truly a team effort and the results would not have been possible without the hard work of all involved.
|Fiscal Year 2020 Surges to Second Highest First-time Homebuyer level in Five Years|
|by Ginnie Mae | 11/20/2020|
For the fourth time in five years, Ginnie Mae and its insuring and guaranteeing partners have financed homeownership for more than 900,000 first-time homebuyers. Fiscal year 2020 was the second highest total in five years at 965,115, coming just short of the 2017 high-point of 975,340 and significantly higher than the 888,437 initial buyers in 2019.
Ginnie Mae attracts capital for mortgage lending facilitated by four government programs: the Federal Housing Administration (FHA); the Veterans Administration (VA), the Rural Housing Service within the U.S. Department of Agriculture (USDA) and lending under the Public Indian Housing (PIH) program within the Department of Housing and Urban Development.
Measured by total loans within Ginnie Mae MBS, FHA was the most frequently used program by first-time buyers in FY 2020 with more than 636,000 mortgages. That is followed by the VA program at 228,148, USDA at 99,220 and PIH at 1,531.
However, as a percentage of each underlying agency’s program, 72 percent of all USDA loans went to first-time homeowners, followed by USDA and PIH each at 44 percent and VA at 19 percent.
|Introducing Capital Markets Live |
|by Ginnie Mae | 10/22/2020|
Ginnie Mae recently launched a new podcast series – Capital Markets Live! The podcast explores issues that affect Ginnie Mae mortgage-backed securities (MBS), with insight from officials within the agency and from market participants. The first episode of Capital Markets Live, hosted by Alven Lam, managing director for International Markets at Ginnie Mae, examines the conditions influencing the performance of Ginnie Mae MBS during the COVID-19 pandemic, featuring analysis from Managing Director and Head of Structured Credit at State Street Global Advisors, Jim Palmieri. Please visit this page to hear the interview and see the presentation.
|Ginnie Mae’s IT Investments Look to the Future|
|by Barbara Cooper-Jones | 10/16/2020|
With more than $2.1 trillion outstanding, the Ginnie Mae mortgage-backed security (MBS) is one of the largest fixed-income products in the world. The Ginnie Mae MBS is the only mortgage-backed securities program backed by the full faith and credit of the U.S. government and is the source of capital for more first-time homeowners and affordable rental choices than any other MBS in America. Tasked with such an important responsibility that touches the lives of millions of families, Ginnie Mae must sustain the MBS program’s value with a consistent and efficient investment in technology and business process design.
In the final quarter of the 2020 fiscal year, Ginnie Mae concluded important technology acquisitions that orient its business platform for a faster and more secure digital future that protects the taxpayer and creates more opportunities for consumers in the government mortgage market.
With assistance from the Office of the Chief Procurement Officer at HUD and the General Service Administration, Ginnie Mae awarded two long-term technology service contracts to companies that have extensive track records of success.
Ginnie Mae closed on a ten-year IT Infrastructure Dedicated Cloud Migration contract with Deloitte, who partnered with AWS, JHC Technology and Bank NY Mellon. This new contract will enable consolidation of legacy platforms, improve availability, and provide reliable, efficient, and high-quality services using cloud-native solutions. This contract will also provide a more modernized and centrally managed infrastructure platform integrated with leading-edge cloud services, enhanced security, development, security and operations (DevSecOps), monitoring, and service delivery across the entire Ginnie Mae application portfolio. The DevSecOps methodology and discipline facilitates agility, efficiency and enhanced security and operational capabilities throughout the software development lifecycle.
Because of this contract, Ginnie Mae stakeholders can expect the company to continue its evolution into a Cloud Center of Excellence, a business posture that enables innovation in the organization to sustain and improve a reliable government mortgage market that works for consumers and protects taxpayers.
The acquisition of a five-year general licensing contract with MicroTech, a minority-owned small business, will also help Ginnie Mae’s modernization program by strengthening data services and current and evolving IT requirements in all operational environments. The new contract consolidates many licenses that were previously spread across other procurements and better positions Ginnie Mae to keep pace with the growing MBS market and evolving requirements.
These agreements follow closely after the agency’s launch of its Digital Collateral Initiative, one of the most important program changes in recent years. Announced in July after extensive consultation with Issuers, document custodians, and industry groups, the Digital Collateral policy positions Ginnie Mae to meet emerging borrower demands upon Issuers for a more convenient and transparent closing experience. Before the COVID-19 National Emergency pushed many businesses to develop light- or no-touch processes, the mortgage industry was on a path to transition away from traditional wet-ink paper closings, and toward the technology necessary to support digital mortgage closings. Since this policy announcement, Ginnie Mae has received more than one dozen applications for participation and has been evaluating potential Issuers for inclusion in the pilot program. Issuers that are accepted will securitize loans exclusively with digital loan instruments, a milestone expected by end of the calendar year.
Ginnie Mae is working to transform important facets of its business for an expanded and more opportunistic digital future that is better for Issuers, consumers and taxpayers. The investments and policy enhancements made in 2020 are proof of that commitment.