Ginnie Mae has published new servicing and issuer application rules aimed at strengthening the stability and integrity of the mortgage-backed securities market.
All Participants Memorandum 18-07 outlines steps the agency will take to evaluate the credit strength of new Issuers; implements new notification requirements for issuers engaged in certain subservicer advance or servicing income agreements; and codifies Ginnie Mae’s ability to impose additional financial or operational requirements on program participants when warranted by market conditions.
As per a company press release, the update does the following:
- Requires mortgage servicers to notify Ginnie Mae if any arrangements are made to finance Ginnie MSRs, ensuring that Ginnie Mae can adequately monitor risks as they move throughout the system;
- Modifies application requirements for new issuers so that applicants who would immediately appear on Ginnie Mae’s internal financial conditions watchlist are not approved as Ginnie Mae issuers; and
- Clarifies Ginnie Mae’s authority to require supplemental financial or operating requirements before certain issuers are granted additional commitment authority.
“These enhancements add to the factors Ginnie Mae will consider as we keep pace with an evolving mortgage market, protect taxpayers, and ensure that important differences in risk among issuers and servicers are properly accounted for,” says Michael Bright, executive vice president and chief operating officer for Ginnie Mae. “Our goal continues to be the assurance of a safe and sound program as well as a healthy mortgage-backed security.”