Although Ginnie Mae has yet to not issue any formal announcement of this decision, a Bloomberg report citing “a person familiar with the matter” said that the action followed an investigation of churning practices that targeted military personnel and veterans with unnecessary refinancing. Under the new restrictions, NewDay and Nations Lending will be able to issue Ginnie Mae-backed securities in “custom pools” that aren’t mixed with loans from other lenders, an action that will most likely make these offerings less attractive to potential bond investors.
The two lenders issued statements issued statements critical of the reported Ginnie Mae decision.
“Our record is absolutely clear: NewDay does not churn veteran loans,” said Kelly Gannon, NewDay’s Senior Vice President of Communications. “We have been an outspoken supporter of measures to end the shameful practice of loan churning. Policy changes recommended by Ginnie Mae will do virtually nothing to stop the unprincipled practice of veteran loan churning but in all likelihood, will force the elimination of much needed benefits and financial services for tens of thousands of veterans—especially those veterans struggling with poor credit. The company said it made recommendations to Ginnie Mae to reduce churning but that those haven’t been implemented.”
Nations Lending Chief Administrative Officer Cheryl Lieber issued a statement saying the Department of Veterans Affairs without a problem and that the company doesn’t have issues with its VA loan program.
“We are confident that the matter will be successfully resolved in the very near future,” Lieber said.