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Ginnie Mae Announces Updates to Multiclass Securities Guide Related to Possible Cessation of U.S. Dollar LIBOR Index
Contact: Douglas Robinson
202-475-7818
Douglas.r.robinson@hud.gov
Published Date: 3/20/2020 9:20 AM

WASHINGTON, DC – Ginnie Mae announced today that it posted new updates for tranches indexed to the London Interbank Offered Rate (LIBOR) in the agency’s multiclass securities issued after March 1, 2020 in its Ginnie Mae Multiclass Securities Guide. This guidance follows Ginnie Mae’s adoption of the recommendations of the Alternative Rates Reference Committee (ARRC) relating to fallback language for new issuances of LIBOR floating rate securities.

Specifically, for LIBOR classes issued after March 1, 2020, Ginnie Mae will determine:

o if and when a transition event occurs concerning LIBOR;

o the date on which LIBOR will be replaced for LIBOR Classes; and

o the applicable benchmark replacement for LIBOR and spread adjustment.

In addition, the Guide update adds the Secured Overnight Funding Rate (SOFR) as an available index for new issuance of floating rate Multiclass Securities and adoption of the ARRC recommended SOFR fallback provision. Finally, the Guide update also announces the elimination of the Cost of Funds Index (COFI) as an eligible index for new issuances.

“The Ginnie Mae program will be prepared in the event that LIBOR is no longer published after 2021. Today’s announcement is the first of many by Ginnie Mae that will guide program participants through a potential LIBOR transition for both legacy and prospective MBS and Multiclass Securities,” said Ginnie Mae Executive Vice President and Chief Operating Officer Eric Blankenstein. “Ginnie Mae is committed to working with our program participants and other federal entities to fulfill our mission and ensure that capital continues to flow efficiently through our program to support the American housing system.”

For more information, market participants are encouraged to call Ginnie Mae’s Office of Capital Markets at (202) 475-7820 with any questions or comments regarding this announcement.

About Ginnie Mae

Ginnie Mae is a wholly owned government corporation that attracts global capital into the housing finance system to support homeownership for veterans and millions of homeowners throughout the country. Ginnie Mae MBS programs directly support housing finance programs administered by the Federal Housing Administration, the Department of Veterans Affairs, the Department of Housing and Urban Development’s Office of Public and Indian Housing and the Department of Agriculture Rural Housing Service. Ginnie Mae is the only MBS to carry the explicit full faith and credit of the United States government.

Ginnie Mae I MBS are modified pass-through mortgage-backed securities on which registered holders receive separate principal and interest payments on each of their certificates. Ginnie Mae I securities can include single-family, multifamily, manufactured home and project construction loans.

Ginnie Mae II MBS are modified pass-through mortgage-backed securities for which registered holders receive an aggregate principal and interest payment from a central paying agent. An Issuer may participate in the Ginnie Mae II MBS either by issuing custom, single-Issuer pools or through participation in the issuance of multiple-Issuer pools, which combine loans with similar characteristics.

Multiclass Securities are structured mortgage-backed securities in which the cash flows from the underlying collateral consisting of Ginnie Mae I and II MBS are allocated to different bond classes having different maturities, coupons, and payment priorities.

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