Earlier this year, Ginnie Mae announced that it was launching an investigation into mortgage lenders who were aggressively targeting service members and military veterans for quick and potentially risky refinances of their mortgages.
And, last month Ginnie Mae started getting the word out that it is actively monitoring the pooling activity of issuers to identify behavior that violates the latest changes to issuer policies.
Any issuer that does not comply with the program requirements will be subject to sanctions, Ginnie Mae said.
So what’s the impact of these actions down the line?
Brent Nyitray, director of capital markets for iServe Residential Lending, said in an email today, loan officers are taking note of “lousy” pricing for Federal Housing Administration and Department of Veterans Affairs loans higher up in the rate stack.
“This is an industry-wide phenomenon,” Nyitray said in his morning report. “For some reason, there is not much demand for the higher coupon Ginnie Mae TBAs, which means borrowers aren't seeing the pickup in lender credit they would expect as they go up in rate.”
Here is his full take:
"It has been so bad, that we are seeing state downpayment assistance programs suspend pricing until things work themselves out. I am not sure what is driving this – the knock on Ginnie mortgage backed securities has always been prepayment speeds. Between FHA streamlines and VA IRRRLs, the prepay speeds have been much higher than trading desks have been modeling. Ginnie has issued new guidance and regulations in order to prevent serial refinancings. So far, that hasn't translated into demand for the higher note rate TBAs."
Does anyone else have a guess as to what is driving this behavior?
Please leave your answer in the message board below. We're all ears, at this point.
