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Ginnie Mae approves private market servicer liquidity facility
Contact: Douglas Robinson
Published Date: 4/7/2020 5:05 PM

Washington, DC – April 7, 2020 - Ginnie Mae today announced that it had approved the inclusion of a servicing advance financing facility under its Acknowledgment Agreement program. Under its Acknowledgment Agreements, Ginnie Mae has permitted a Note Securitization (NS) structure, which was developed in 2016 and allows for the securitization of servicing cash flows through a trust. This structure has been strongly supported by institutional investors that previously lacked a vehicle for investing in mortgage servicing rights (MSRs). Five of Ginnie Mae’s top 11 Issuers (by February issuance volume) utilize the NS structure.

As a result of the current transaction, PennyMac Financial Services, Inc. will be able to access financing for servicing advances through the NS trust. This transaction represents the first time that the NS Structure, which was originally designed to provide financing based on the value of the MSRs as a whole, has been expanded to separately finance the advanced payments that a servicer makes in connection with individual loans in its MBS pools. Separate financing for servicing advances under government insured-mortgage lending has been much more difficult for the private market to supply than for conventional loans.

“Owning and servicing MSRs is a capital-intensive proposition, and the more avenues that exist for private capital to flow into the system on attractive terms, the easier it becomes to fulfill our mission of bringing global capital into the US housing market, while minimizing risk to the taxpayer,” said Ginnie Mae Principal Executive Vice President Seth Appleton. “We are pleased to have been able to finalize this transaction, because it represents another step forward in the improvement of the liquidity supply for the housing finance system.”

Outstanding financing under the NS Structure exceeded $3 billion as of year-end 2019.

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.