Ginnie Seeks More Resources to Police Servicers
Ginnie Mae executives are anxiously watching the congressional appropriations process to see if they can hire more personnel to beef up the agency's monitoring and risk management units.
Over the past four years, Ginnie has seen its mortgage-backed securities outstanding jump from $1 trillion to $1.5 trillion. But it still has a tiny staff of just 110 full-time employees. The secondary market agency depends on a lot of private contractors to augment its staff.
Besides the growing portfolio, Ginnie Mae has witnessed a huge transfer of servicing rights from banks and to nonbanks, such as Ocwen Financial of Atlanta, and Nationstar Mortgage in Lewisville, Texas.
These developments prompted the White House to seek a $6 million increase in personnel funding for Ginnie Mae.
Such an increase would boost the agency's personnel costs to $26 million this fiscal year and bring staffing up to 163 full-time workers. To pay for this $6 million increase, the White House Office of Management and Budget proposed to charge Ginnie issuer/servicers a one-time commitment fee increase.
The House and Senate Appropriations Committees have not embraced this one-time fee. But they are moving to increase Ginnie's staffing levels by $2 million in the House and $4.5 million in the Senate.
Last year, the appropriators increased Ginnie's allowance so it could hire 20 to 30 new employees. The agency has not filled all those positions yet.
Senate appropriators noted in their committee report that Ginnie Mae has experienced a 30% increase in new issuers since 2008.
"While all new issuers require scrutiny, even more staff time is needed for non-depository institutions, such as private equity firms and hedge fund participants, which are increasing in number," the Senate report says.
Ocwen was not a Ginnie servicer until it acquired a $36 billion Federal Housing Administration servicing portfolio out of bankruptcy in the first quarter of 2013, according to Ginnie Mae president Ted Tozer.
Nationstar acquired its first Ginnie servicing portfolio in 2009. Nationstar is now the fifth largest Ginnie Mae servicer and Ocwen is the tenth largest.
"It is forcing us to become a lot more involved with these nonbank issuer/servicers to avoid any problems in the future," Tozer says.
Only two years ago, eight of the top 10 servicers were banks. Today, six of the top 10 servicers are nonbanks. Previously, Ginnie could rely on the Office of the Comptroller of the Currency and other bank regulators to ensure its servicers could meet their financial obligations—but not anymore.
"So we have to spend a lot more time understanding their financial structure," Tozer says, "and ensuring consumers are being treated properly."
Ginnie is reworking its policies and procedures to deal with the growth of the MBS portfolio and the number of nonbank servicers. And the agency is seeking more resources from Congress.
It’s a "challenge getting appropriations through Congress," Tozer says. "But we really need to beef up our staff."