Ginnie Mae adding new pooling flexibility for reperforming loans

Ginnie Mae is opening up a new option for custom securities originally created during the pandemic as a vehicle for loans that had payment challenges but have gotten back on track.

Starting with securities issued on or after Oct. 16, new and legacy bonds of this type can be combined with others in 15- or 30-year Platinum certificates, according to a press release issued Wednesday. (Platinum securities consist of multiple mortgage-backed bonds.)

"Platinum depositors may commingle C-RG certificates with other custom securities to meet the investment needs of institutional investors" as of that date, said John Getchis, senior vice president, office capital markets, Ginnie Mae, in the press release.

Ginnie also recently extended new pooling flexibility to Home Equity Conversion Mortgages, which are loans that allow seniors to tap the value of their residences while living in them. The government guarantor began allowing multiple participations in securitizations starting Oct. 1.

The additional flexibility for reperforming loans comes roughly a year after Ginnie President Alanna McCargo announced other changes aimed at making them easier to manage at the Mortgage Bankers Association annual meeting, the latest of which is scheduled for next week.

Trade groups have welcomed the changes in this area Ginnie has made to date and are awaiting one more that they hope another arm of the Department of Housing and Urban Development will soon finalize.

The Federal Housing Administration's proposed payment supplement partial claim "could be a game-changer in avoiding having to re-pool loans of distressed borrowers," said Scott Olson, executive director of the Community Home Lenders of America.

The PSPC mechanism as drafted appears to accommodate a temporary reduction in payments without officially changing the first-mortgage note rate by putting the difference  in a second lien to be paid later. That could potentially make it easier to keep an FHA loan in a Ginnie pool. 

"This is important because the skyrocketing interest rates have made such repooling very costly for Ginnie Mae issuers," Olson said.

Innovations around the ability to get reperforming and modified loans into new securitizations played a key role in managing risks during the pandemic, McCargo said at a recent Bipartisan Policy Center event.

"Those enabled billions of dollars of … loans to be able to be resecuritized and put back out into the marketplace," she said.

In that speech, McCargo also reiterated interest in a permanent emergency lending facility for issuers, which suggests that Ginnie may be close to acting on its ambitions there.