U.S. Department of Housing & Urban Development (HUD) Secretary Julián Castro, in a keynote address at the second annual Ginnie Mae Summit, called on the housing industry “to work together to see a robust, healthy housing market where those who are ready can buy a home. Our nation is making progress across the board, and HUD is focused on ensuring these opportunities reach every American,” said Castro.
Ginnie Mae President Ted Tozer told attendees that Ginnie Mae plans to unveil key program and policy initiatives designed to meet the evolving needs of the housing finance industry and respond to a mortgage market that is vastly different than the one in which Ginnie Mae was conceived.
“The retreat of traditional depository banks from mortgage lending and servicing is transforming the housing industry," said Tozer. "In fact, 60 percent of our top 10 issuers are non-depository institutions, this presents a variety of complex challenges for the industry."
These announcements reflect the progress Ginnie Mae has made in adapting to the changing housing industry by updating its policies and programs to preserve the integrity and sound administration of its MBS program, thereby protecting the American taxpayer. The corporation is also establishing measures to better manage resources and risks.
“I want to send a simple message to lenders, including those in this room, let’s work together. We share a common interest to see a robust, healthy housing market where those who are ready and responsible can buy a home. Let’s come together to secure the dream of homeownership not only for ourselves but for generations to come,” said Castro.
“Ginnie Mae’s primary goal has been, and always will be, to protect and preserve the utility, relevance and remarkably successful track record of the Ginnie Mae MBS program, said Ginnie Mae President Ted Tozer. “The agency’s pioneering role in the creation of a securities market for mortgage loans, its continued ability to refine the program as necessary to maintain its unblemished record of profitable operation over decades of market change and disruption is a testament to the power of a well-conceived and executed government effort to support the healthy functioning of a sizable and critical private sector function.”
Ginnie Mae will announce the following:
►An Era of Transformation: A position paper that will outline, from Ginnie Mae’s perspective, the major issues presented by the ongoing transformation in mortgage lending as a result of the 2007-2008 financial crises, including the retreat of traditional banking institutions and the increase in non-depository institutions. The paper will explain the corporation’s approach to these challenges. An Era of Transformation will also highlight five strategic views that explain Ginnie Mae’s corporate focus. A copy of An Era of Transformation can be found here.
►Net Worth and Liquidity Requirements: Ginnie Mae is finalizing changes to its net worth and liquidity requirements. Detailed information on the exact changes and when they will take effect will be announced at the Mortgage Bankers Association Annual Convention in October.
►Acknowledgement Agreement: Enhancements to our Acknowledgement Agreement will help expand liquidity by enabling issuers to further use mortgage servicing rights (MSRs) as collateral. The changes are designed to help balance the needs of the lenders to issuers and Ginnie Mae’s risk management and make the Agreement more widely used.
►Dormant Issuer Policy: Ginnie Mae expends a significant amount of resources in the review of applications for new issuers and in compliance monitoring of issuers' activities,–even issuers that have not issued securities. In order to most effectively utilize resources, Ginnie Mae has decided to adopt a policy whereby issuers must actively participate within an 18-month timeframe. The first evaluation will take place on Jan. 1, 2015. Ginnie Mae will work with issuers to help them come into compliance. Issuers that are concerned with their status should contact their Account Executive as soon as possible.
►The Federal Home Loan Bank of Chicago (FHLBC): FHLBC and Ginnie Mae launched a pilot program to give small financial institutions more access to the secondary market. The program allows FHLBC to issue securities guaranteed by Ginnie Mae. FHLBC is expected to begin issuing securities, backed by mortgages originated by member financial institutions as early as November, 2014.
