Ginnie Mae's Pledge Acknowledgement Enhancements Opening Doors for Lenders

Ginnie Mae has announced that Credit Suisse has become the first institution to adopt a recently-revised pledge acknowledgement agreement. Under this new agreement, mortgage securities issuers will now be able to more easily tap funds at lower rates for their financing needs and should be able to increase liquidity for origination and servicing activities. “We announced program adjustments in October. Today we’ve delivered. And now our move to provide Issuers with greater flexibility to pledge mortgage servicing rights for financing has begun to impact industry players,” said Ginnie Mae President Ted Tozer. “Smaller institutions have expressed to us the liquidity difficulties they face as the U.S. housing finance market struggles to find its footing. The adjustments we’ve made to the pledge agreement should help improve their cash positions.” The agreement enables banks and non-depositories to obtain the liquidity needed to perform their responsibilities as Ginnie Mae Issuers. Additionally, the agreement provides creditors with more predictability about what Ginnie Mae will do in the event an Issuer defaults on its agreement with its creditor or its agreement with Ginnie Mae. The agreement also provides Ginnie Mae with assurance that servicing can be transferred to a competent financial institution. The agreement also clarifies that servicing portfolios pledged as collateral will not become mired in bankruptcy proceedings should the servicing transfer occur in conjunction with a failed Issuer. “We encourage other lenders in the industry to utilize this opportunity to address challenges that smaller-market participants face as they look to provide solutions to consumers,” Tozer said.