Ginnie Details Changes to Support Warehouse Lines

The Government National Mortgage Association (Ginnie Mae) today detailed two operational changes to Ginnie II multiple-issuer pools. The Ginnie Mae program changes, initially announced by Housing and Urban Development (HUD) secretary Shawn Donovan and confirmed to HousingWire in April, include program enhancements aimed at minimizing financial risk for warehouse lenders and making the program more efficient for all lenders. Beginning in the fall of 2010, issuance for Ginnie II multiple-issuer pools can occur on a daily basis, rather than once a month. This will clear warehouse credit lines more often and will support liquidity at these firms. “Lenders will be able to better utilize warehouse lending lines and reduce interest costs associated with carrying loans until they can be securitized and settled,” Ginnie president Theodore Tozer said in a statement. “There will just be more deliveries done by the issuer throughout the month,” he told HousingWire last month. Under another program change outlined today, lenders will be able to securitize a single loan in Ginnie Mae multiple-issuer pools, eliminating the current three-loan minimum requirement. This will allow small lenders to participate in multiple-issuer pools because it will require only one loan to participate in the pooling of a security. Additionally, Ginnie said, the change accommodates “orphan loans” that cannot be securitized because the interest rate differs significantly (at least 50 basis points) from other, more similarly characterized loans in the pool. Ginnie Mae expects to begin accepting single loans into multiple-issuer securities in July of 2010. Lender advocacy groups like the Mortgage Bankers Association (MBA) are already weighing in on the program changes. “Efforts to bring stability to the mortgage market by quickly and prudently creating business solutions for MBS issuers, such as those announced today, exemplify the leadership role [Ginnie has] taken,” said MBA president and CEO John Courson in a statement. Write to Diana Golobay.

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