Ginnie Mae Streamlines FHA Advanced Loan Modification program
Documentation changes eliminate requirements for recordation and title insurance.
- This is the third time Ginnie Mae has made changes intended to help homeowners transition from forbearance.
The Government National Mortgage Association, or Ginnie Mae, said late Friday that it has streamlined its documentation requirements for servicers participating in the Federal Housing Administration's Advanced Loan Modification (ALM) program.
Ginnie Mae said the changes will eliminate the requirement for recordation and title insurance. The new policy, effective for all ALMs — including those already in process or completed — supports the Biden-Harris Administration’s goal of assisting homeowners affected by the pandemic. The change also helps create more efficiency, so that servicers/issuers can help more homeowners transition from forbearance into a permanent modification, Ginnie Mae said.
This is the third time Ginnie Mae has made changes intended to help homeowners transition from forbearance. In November, it expanded the use of digital signatures for mortgage modifications, and in December it guaranteed the first MBS pools comprised of extended-term mortgages up to 480 months that increase affordability for qualifying homeowners.
“In order to fully stabilize the economy, servicers need as many tools as possible to help homeowners recover from the pandemic’s economic effects,” said Ginnie Mae President, Alanna McCargo. “This policy gives issuers clear guidance on how to move forward to help tens of thousands of FHA homeowners coming out of forbearance benefit from the FHA Advance Loan Modification.”
Under the streamlined policy, the issuer is required to provide the following documentation to the Document Custodian:
- Original fully executed Loan Modification Agreement, signed by all borrowers and in recordable form.
- If the Issuer determines recordation is necessary to maintain an enforceable first-lien position, or if the loan modification agreement contains assignments of leases or rents provisions, the modification must be recorded for final certification.
- If the modification is recorded, the Issuer must also comply with the title insurance requirements in Chapter 24, Part 2, §A(2), as well as obtain the necessary title policy or endorsement, and subordination(s) as indicated on title.
- The modified loan file must clearly identify for the document custodian that it is an ALM.
Document custodians will not be required to verify that the ALM is recorded, unless the loan modification agreement contains provisions for assignment of leases or rents, or title insurance is present. However, if the ALM loan modification agreement is recorded, title insurance that meets the requirements of Chapter 24, Section 2, is required.
For more on the new streamlined policy, visit www.ginniemae.gov.