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Ginnie Mae now requires issuers to disclose cybersecurity incidents within 48 hours
On March 4, the President of Ginnie Mae released All Participants Memorandum (APM) 24-02, which set forth a new requirement applicable to all issuers, including issuers that subservice loans for others. The memo mandated that all approved issuers must notify Ginnie Mae of any significant cybersecurity incident within 48 hours of detection. Ginnie Mae defined a “Cyber Incident” as “an event that actually or potentially jeopardizes, without lawful authority, the confidentiality, integrity, or availability of information or an information system; or constituted a violation or imminent threat of violation of security policies, security procedures, or acceptable use policies and has the potential to directly or indirectly impact the Issuer’s ability to meet its obligations under the terms of the Guaranty Agreement.” If a Cyber Incident has occurred, issuers must it report to Ginnie Mae via a specified email address and must include (i) the date and time of the incident, (ii) a summary of the incident, and (iii) points of contact responsible for coordinating any follow-up questions regarding the incident. These requirements are also now reflected in Chapter 03, Part 18 of the Mortgage-Backed Securities Guide, 5500.3, REV-1.
Fannie, Freddie release an updated Single-Family Social MBS Framework
On January 23, Freddie Mac and Fannie Mae (the “Enterprises”) announced an updated Single-Family Social MBS and Corporate Debt Bonds Framework, and updates to mortgage-backed securities (“MBS”) disclosures. As part of the framework updates, the Enterprises will rename the Social Index to the “Mission Index” in February. Additionally, Fannie Mae will update the formulation of the index in February, and Freddie Mac will update the formulation of the index in May. The Mission Index offers MBS investors insights into the Enterprises’ mission-oriented lending initiatives, enabling investors to allocate capital towards those activities. The revised Mission Index will apply to pools issued by Fannie Mae starting in March and for Freddie Mac starting in June.
The updated frameworks define criteria beginning in June for the Enterprises’ mortgage collateral that may be pooled, issued and labeled “Social MBS.” That label is applied when the Mission Index score of the underlying pool exceeds a specified threshold. The Enterprises also announced they plan to provide impact reporting annually beginning in 2025, “which will help the market understand the associated impact of the loans underlying their investments.”
Ginnie Mae to explore a new reverse MBS
On January 16, Ginnie Mae announced its plans to consider the development of a new securitization product in connection with broader efforts to expand its existing Home Equity Conversion Mortgage (HECM) mortgage-backed securities program. Specifically, Ginnie Mae is considering the viability of a securitization product that would accept HECM loans with balances above 98% of the FHA’s Maximum Claim Amount. Ginnie Mae stated that the proposed product reflects efforts to address liquidity issues affecting the stability of secondary mortgage markets, which are crucial for older Americans who may need to rely on home equity for financial support.
Ginnie Mae announces changes to its Pass-Through Assistance Program in response to Covid-19
On April 10, Ginnie Mae issued APM 20-03, announcing that Ginnie Mae has revised and expanded the Issuer assistance programs in Chapter 34 of the Mortgage Backed Securities Guide (MBS Guide), including the Pass-Through Assistance Program (PTAP). PTAP/C19—the PTAP that is specifically authorized for use in response to the Covid-19 national emergency—is available for Issuers that apply for assistance through an executed request and repayment agreement, and subject to a Master Supervisory Agreement, which will govern the terms of the assistance. The PTAP funds will carry a fixed interest rate for all Issuers requesting assistance in that month, to be posted on Ginnie Mae’s website on the second business day of each month. Funds may only be used to cover shortfalls in required principal and interest payments, and may not be used for any other fees or operational costs of the servicer. In addition, Issuers may only request assistance once in any given month. While neither a request for assistance nor the provision of assistance under the program will constitute a basis for default under the Ginnie Mae Guarantee Agreement, any breach of the Master Supervisory Agreement or related Request and Repayment Agreements will constitute an event of default under the Master Supervisory Agreement and related Request and Repayment Agreements, the MBS Guide and the Guaranty Agreement. The APM provides additional information for third-party financers and issuers on topics including use of the PTAP/C19 funds and the deadline for seeking PTAP/C19 assistance.
Ginnie Mae seeks feedback on changing standards for VA loan securitization
On May 3, Ginnie Mae published a Request for Input (RFI) soliciting feedback on potential changes to the parameters governing loan eligibility for pooling into its mortgage-backed securities (MBS). As previously covered by InfoBytes, in May 2018, Ginnie Mae announced changes to pooling eligibility requirements for Department of Veterans Affairs (VA) loans “to address abnormal prepayment patterns in some mortgages pooled in Ginnie Mae MBS that negatively affect MBS pricing, to the detriment of home mortgage loan affordability.” In the RFI, Ginnie Mae notes its focus on adverse trends in the trading of some Ginnie Mae MBS relative to securities issued by Fannie Mae, and cites published commentary and analysis that its MBS are “believed to be susceptible to refinance activity out of proportion to what should be expected from prevailing economic conditions.” The RFI now seeks feedback on, among other things, the propensity of high-LTV VA cash-out refinances to prepay in comparison with those of other loan type categories, any related impact on MBS pricing, and whether a loan-to-value ceiling of 90 percent for cash-out refinance loans “is an appropriate threshold for identifying the loan type category that would be subject to an alternative securitization path.” Ginnie Mae is considering such an alternative securitization path to provide liquidity for excluded (or restricted) loan type categories, highlighting (i) single-issuer custom securities; (ii) securities that are restricted based on a de minimis standard; and (iii) shorter duration loan types as logical possibilities. Comments on the RFI must be received by May 22.