To Ginnie Mae Issuers
As ACH debit blocks continue to grow in use and sophistication as a means of preventing fraud, it is very important that all Ginnie Mae Issuers ensure that they do not have restrictions in place that would impact Ginnie Mae's ability to draft funds from the central P&I custodial accounts on the 15th and 20th calendar day of each month. This notice is being sent to ask all Issuers to please ensure that processes and procedures are in place to, not only allow Ginnie Mae to access funds, but also implement a process of checking to ensure that funds are successfully drawn at 7:00 am EST on each 15th and 20th. It is critical that each Issuer also have in place a process for communicating with Ginnie Mae and its Central Paying and Transfer Agent, currently the Bank of New York Mellon, if any issues arise or are identified.
Issuers must abide by the P&I pass-through payment obligations reflected in both the Ginnie Mae MBS Guide and the Guaranty Agreement related to all Ginnie Mae book-entry securities. Under these obligations, Issuers are required to deposit into the designated central P&I custodial account funds sufficient to cover the total indicated on the final pre-collection notice received by the Issuer, without regard to whether the Issuer will be able to recover such funds from liquidation proceeds, insurance proceeds, or past due payments. When setting up a new central P&I custodial account, the Issuer must authorize Ginnie Mae and its Central Paying and Transfer Agent to perform ACH debit transactions and confirm that there are no ACH locks or fraud filters on the account identified in the Form HUD 11709-A that would prevent a successful collection of the requisite P&I and guaranty fee payments.
To avoid the possibility of a P&I or guaranty fee collection failure, Ginnie Mae recommends the following best practices. These recommendations also apply to the payment of commitment and pool transfer fees to Ginnie Mae.
- Review the initial and final pre-collection notices delivered on the 3rd and 6th business days, via eNotification.
- One business day prior to the scheduled collection for Ginnie Mae I MBS:
- Confirm that guaranty fee and P&I pass-through payment amounts to be drafted are fully funded in the account. For larger amounts, confirm there are no holds or system limitations, i.e., fraud filters that will restrict ACH.
- One business day prior to scheduled collection for Ginnie Mae II MBS:
- Confirm that the guaranty fee and P&I pass-through payment amounts to be drafted are fully funded in the account. For larger amounts, confirm there are no holds or system limitations i.e., fraud filters, that will restrict ACH.
- Day of the scheduled collection via ACH draft for Ginnie Mae II MBS:
- Confirm that funds have been swept from the designated account. If the scheduled draft has not occurred, contact the custodial bank directly for inquiries.
If the Issuer discovers that their central P&I custodial account was not drafted on the morning of the 15th calendar day of each month for Ginnie Mae I MBS, or on the 20th calendar day of each month for Ginnie Mae II MBS, the Issuer must notify its funds custodian bank immediately to assess the cause of the ACH Debit failure and provide its Ginnie Mae Account Executive the plan enacted to remedy the collection failure, and as necessary, any status updates until the situation is resolved. Failure to comply with these requirements will result in a Notice of Violation and Civil Money Penalty.
Michael R. Bright, Ginnie Mae
Executive Vice President and Chief Operation Officer