Ginnie Mae is altering the guarantee fee structure for its Platinum program, decreasing the minimum amount needed to create a security.
The new changes will become effective starting with October 2015 settlements. The government agency said that the modifications will lower administrative fees and allow Ginnie Mae MBS certificate holders to aggregate smaller pools into larger ones.
“We want to encourage utilization of the program by lowering the G-Fee the minimum amount investors need to create a platinum security, which will increase the administrative, pricing and distribution efficiency of the mortgage-backed securities program,” said John Getchis, senior vice president of capital markets at Ginnie Mae, in a Sept. 16 press release.
Among the changes, Ginnie Mae has added a new pricing tier to the guarantee fee structure and lowered the feed by 0.25-0.50 Tics across the tiers. For instance, for face amounts of $25 million to $50 million, the new fee is 1.5 Tics versus 2.0 in the old structure. One Tic is equal to 1/32 of 1%.
Additionally, Ginnie Mae reduced the non-cash fee associated with the creation of a Ginnie Mae Platinum Principal Only bond to $1,000 from $5,000. Ginnie Mae also modified the minimum aggregate remaining principal balance of underlying Ginnie Mae MBS Certificates to just over $5 million from just over $10 million.
