4 servicing changes from the pandemic that HUD will keep
February 28, 2022 3:01 PM
Andrew Harrer/Bloomberg
Government agencies within the Department of Housing and Urban Development are starting to decide which emergency mortgage-relief programs will become permanent post-pandemic, officials said at an industry conference last week.
Interestingly, those that will be preserved weren’t always the most widely used, the officials told attendees at the Mortgage Bankers Association’s servicing conference.
Ginnie Mae, for example, is keeping a program one official described as having “not much uptake” for coronavirus hardships, but had other benefits.
But determining what will become permanent post-pandemic remains tricky because some of the transitional, post-forbearance programs have not been fully tested yet. For example, the Federal Housing Administration is just now starting to see how expanded loss mitigation measures work in practice, but it is already dedicated to preserving aspects of it.
Read on to learn more.
Interestingly, those that will be preserved weren’t always the most widely used, the officials told attendees at the Mortgage Bankers Association’s servicing conference.
Ginnie Mae, for example, is keeping a program one official described as having “not much uptake” for coronavirus hardships, but had other benefits.
But determining what will become permanent post-pandemic remains tricky because some of the transitional, post-forbearance programs have not been fully tested yet. For example, the Federal Housing Administration is just now starting to see how expanded loss mitigation measures work in practice, but it is already dedicated to preserving aspects of it.
Read on to learn more.
Pass-Through Assistance Program facilities
The upgraded Pass-Through Assistance Program that Ginnie Mae offered for single- and multifamily issuers will become permanent. The program provides emergency liquidity facilities to servicers that ran short of the funds they needed to advance while borrowers were in forbearance.
“We have looked at the program in terms of lessons learned already and have some plans to tweak some things on the edges, but overall it worked very well,” said Leslie Meaux Pordzik, senior vice president in Ginnie’s office of issuer and portfolio management. “So that is one thing we will be putting on the shelf if we need to quickly respond again to a similar type of situation that can potentially roil our issuers, and their ability to advance funds.”
While use of this programwas limited because a refinance boom bolstered the cash resources of many servicers with lending arms, nine issuers took advantage of it, making 27 requests that totaled a little over $13 million. No disruption occurred in the payments Ginnie Mae insures for investors in government loan securitizations as a result, according to Pordzik.
“We heard from many issuers that while they did not take advantage of it, it calmed things down,” the Ginnie Mae executive said.
“We have looked at the program in terms of lessons learned already and have some plans to tweak some things on the edges, but overall it worked very well,” said Leslie Meaux Pordzik, senior vice president in Ginnie’s office of issuer and portfolio management. “So that is one thing we will be putting on the shelf if we need to quickly respond again to a similar type of situation that can potentially roil our issuers, and their ability to advance funds.”
While use of this program
“We heard from many issuers that while they did not take advantage of it, it calmed things down,” the Ginnie Mae executive said.
The inclusion of advances in acknowledgement agreements
In the agreements Ginnie Mae uses to acknowledge third-party claims on servicing assets being financed, it will also keep a contractual provision that allows advances to be used as collateral , according to Pordzik.
Originally an innovation introduced by PennyMac with an authorization Ginnie extended to the broader market as well, the strategy proved to be one that got some use during the pandemic.
“Through the end of 2021, we have closed 16 of these agreements with our issuers and pushed out another $13 billion-plus dollars into the marketplace,” Pordzik said.
Originally an innovation introduced by PennyMac with an authorization Ginnie extended to the broader market as well, the strategy proved to be one that got some use during the pandemic.
“Through the end of 2021, we have closed 16 of these agreements with our issuers and pushed out another $13 billion-plus dollars into the marketplace,” Pordzik said.
Increased access to digital collateral use at Ginnie Mae
A digital collateral pilot that was expedited to allow some Ginnie issuers to use electronic signatures and remote online notarization amid the pandemic, most recently for modifications , also will become a permanent program rolled out to all issuers.
“We saw it as a need once the pandemic hit, and we've had that going on for a year,” Pordzik said. “We've securitized $3 billion to date.”
Fifteen issuers, three document custodians and two subservicers are currently participating, she said.
“We will be opening this up to other Ginnie Mae issuers in about six months,” said Pordzik.
“We're very excited to get more issuers engaged in this and on board.”
“We saw it as a need once the pandemic hit, and we've had that going on for a year,” Pordzik said. “We've securitized $3 billion to date.”
Fifteen issuers, three document custodians and two subservicers are currently participating, she said.
“We will be opening this up to other Ginnie Mae issuers in about six months,” said Pordzik.
“We're very excited to get more issuers engaged in this and on board.”
Expanded FHA modifications
Forbearance exits are still ongoing, so the Federal Housing Administration has yet to fully see how the modifications expanded for borrowers with pandemic-related distress perform, but it is reviewing them for permanent use.
“We are not out of the woods yet. We're waiting to see how a lot of the forbearances that rolled off…perform,” said Julienne Joseph, deputy assistant secretary in the FHA’s office of single-family housing. “I think in that process what we want to do is evaluate what in the COVID waterfall works that we can take to our permanent loss mitigation.”
“We are not out of the woods yet. We're waiting to see how a lot of the forbearances that rolled off…perform,” said Julienne Joseph, deputy assistant secretary in the FHA’s office of single-family housing. “I think in that process what we want to do is evaluate what in the COVID waterfall works that we can take to our permanent loss mitigation.”
