Ginnie Mae Approves Private Market Servicer Liquidity Facility

Ginnie Mae has announced that it had approved the inclusion of a servicing advance financing facility under its Acknowledgment Agreement program. Under its Acknowledgment Agreements, Ginnie Mae has permitted a Note Securitization (NS) structure, which was developed in 2016 and allows for the securitization of servicing cash flows through a trust. This structure has been strongly supported by institutional investors that previously lacked a vehicle for investing in mortgage servicing rights (MSRs).

 

As a result of the current transaction, PennyMac Financial Services will be able to access financing for servicing advances through the NS trust. This transaction represents the first time that the NS Structure, which was originally designed to provide financing based on the value of the MSRs as a whole, has been expanded to separately finance the advanced payments that a servicer makes in connection with individual loans in its MBS pools. Separate financing for servicing advances under government insured-mortgage lending has been much more difficult for the private market to supply than for conventional loans.

 

“Owning and servicing MSRs is a capital-intensive proposition, and the more avenues that exist for private capital to flow into the system on attractive terms, the easier it becomes to fulfill our mission of bringing global capital into the US housing market, while minimizing risk to the taxpayer,” said Ginnie Mae Principal Executive Vice President Seth Appleton. “We are pleased to have been able to finalize this transaction, because it represents another step forward in the improvement of the liquidity supply for the housing finance system.”

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