PennyMac Financial Services Inc. (PFSI) has completed an agreement for new servicing advance financing through PNMAC GMSR ISSUER TRUST, an indirect, wholly owned subsidiary of PFSI. Under this agreement, the trust has issued new GMSR Servicing Advance Notes, which will provide PFSI enhanced liquidity to directly support its servicing advance obligations to Ginnie Mae and its security holders as necessary and afford borrowers relief as required under the recently enacted CARES Act.
In recent years, Ginnie Mae has made enhancements to its acknowledgment agreement to be more widely used and increase the supply of private financing from large banks and other institutional investors to support investment in Ginnie Mae mortgage servicing rights. Through this new transaction, PennyMac is leveraging its existing MSR financing facility to support a separately defined servicing advance facility within the existing structure. In this case, the security of the collateral for the advance line depends on the control of the MSRs granted under the Ginnie Mae acknowledgment agreement.
“The ability of leading mortgage servicers such as PennyMac to finance MSR assets and the related servicing advances is necessary for the smooth functioning of the residential finance industry and is of especially high importance given the current dislocations in the financial and mortgage markets as a result of the novel coronavirus pandemic,” says PennyMac Financial President and CEO David Spector.
“We are seeing elevated requests for borrower assistance and have put in place forbearance plans for our borrowers where needed over the phone and through our automated systems, including our website,” Spector adds. “We applaud Ginnie Mae’s executive team for working tirelessly to develop and put in place this highly sophisticated structure that helps support the housing market by facilitating enhanced liquidity from the private markets.”
The new series of notes are secured by certain participation certificates relating to servicing advances made by PFSI subsidiary PennyMac Loan Services LLC (PLS) on Ginnie Mae MSRs. The servicing advances eligible for financing include advances made by PLS to support regularly scheduled monthly principal and interest to mortgage-backed securities holders, taxes, homeowners insurance and other escrowed items and other expenses related to servicing delinquent loans.