Fay Servicing and GSF Mortgage have been approved by Ginnie Mae as issuers of the government agency's mortgage-backed securities. Fannie Mae has also approved Fay as a servicer.
The approval is a boon to both companies, allowing them to deal directly with Ginnie Mae when it comes to securitizing Federal Housing Administration-insured and Veterans Affairs-guaranteed mortgages.
Previously, they had to sell loans that were turned into Ginnie Mae securities through an intermediary which could require underwriting standards above what FHA and VA require. Thus gaining this approval can be an opportunity to expand both companies' potential customer base.
In a press release Fay said that it plans to buy servicing rights as well as offer performing the servicing function for third parties. Fay started out as a servicer of distressed mortgages
The approvals "add meaningful opportunity for us to grow both our servicing and origination businesses," said Ed Fay, chief executive officer of Fay Servicing, which is headquartered in Chicago.
"We have had our sights set on becoming a Ginnie Mae issuer for some time," said Chad Jampredo, Brookfield, Wis.-based GSF Mortgage's president, in a company press release. "The ability to issue Ginnie Mae securities will allow GSF to establish its own underwriting criteria," Jampredo said.
