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New Ginnie Mae Tool Will Increase Issuer Effectiveness, Strengthening Ginnie Mae’s Model

Ted W. Tozer
Jan 02, 2015

The evolving housing finance landscape has forced everyone in the industry to evaluate the best way to continue providing a valuable service to their stakeholders and efficiently manage risk. That is also our focus at Ginnie Mae. We are successfully balancing the interests of our more than 400 Issuers, while providing a blueprint for success. To that end, Ginnie Mae will launch its Issuer Operational Performance Profile (IOPP) tool in early 2015. 

The new IOPP tool provides Issuers with a framework and methodology where they can gauge their effectiveness against Ginnie Mae’s expectations about Issuer performance. IOPP also measures an Issuer’s operational and default performance against their peers. The launch of the IOPP will help Ginnie Mae continue to ensure that a safe, effective, and government-backed channel for the flow of capital for U.S. mortgages exists, reducing risk to the taxpayer and providing much-needed capital for the government.

Essentially a “scorecard,” the IOPP will provide a method in which Issuers will be scored based on a pre-determined set of metrics. The IOPP will ensure Issuers are performing well, or if they aren’t, it will provide a way for them to identify and examine areas for improvement so adjustments can be made. This tool will improve Ginnie Mae’s management capability and allow Issuers to better manage their performance. The IOPP will also help drive internal consistency in monitoring the business activities across the broader population of Ginnie Mae Issuers and lay the basis for providing constructive feedback to our Issuers.

In the early phases of the development of the IOPP tool, Ginnie Mae worked closely with Issuers for help defining and validating the metrics that would be most useful to the IOPP and the Issuers. By involving the Issuers in the IOPP's development, the Issuers had a stake in the process and helped ensure Ginnie Mae was focused on identifying metrics which Issuers were able to influence to help improve their performance and outcomes within the IOPP. While Issuers contributed to the determination of the metrics, Ginnie Mae weighted each metric within the IOPP based on its significance and importance to Ginnie Mae.

Within the IOPP, each Issuer will be rated against a predefined peer group, based on portfolio unpaid principal balance (UPB). The end result will be two scores for each Issuer—one for operational management and one for delinquency management—both of which will be calculated and reported each month.

The operational management score will be based on key metrics such as failure to report UPB, timely reporting of UPB corrections, and a compliance review metric based on findings from Ginnie Mae’s most recently-completed compliance review of the Issuers. The metrics behind the delinquency management score will be based on early payment defaults, 60- to 90-plus day roll rates, DQP ratio, workout effectiveness, DQ time and percentage of loans in foreclosure.

Ginnie Mae is looking forward to launching the IOPP in 2015 and working with its Issuers to continue to provide stability to the housing finance industry and to meet its mission of bringing global capital to provide affordable housing opportunities to millions of Americans. 



Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae's $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.

 



This article originally appeared in the December 2014 print edition of National Mortgage Professional Magazine. 

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