Ginnie Mae preparing to make digital mortgage leap
The Ginnie Mae 2020 report coming out this summer will reveal the path the agency is taking toward working with digital mortgages, an agency executive said at an industry conference.
The mortgage industry has been looking for Ginnie Mae to speak about its plans for digital mortgages, Michael Drayne, senior vice president, issuer and portfolio management, said at the Mortgage Bankers Association National Secondary Market Conference in New York.
Ginnie Mae 2020 will "talk about the principles important to us in this and the path forward," Drayne said.
This report started as an attempt to address needs raised by mortgage-backed securities issuers as part of an effort by the agency's new leadership to be more communicative with the industry.
Ginnie Mae has to work with its partner agencies to develop standards around the digital mortgage, but it is possible a pilot program could be developed in the next six months to a year.
The Veterans Affairs program is also updating its technology, looking to create an end-to-end solution for every part of the loan cycle, said Jeffrey London, director of the loan guarantee service. The first phase, addressing servicing and some part of the origination process, will come out next spring.
Even the Federal Housing Administration is looking to create new technology to move away from its legacy mainframe system and paper-based processes. There is an information technology fee to be charged to lenders that was included in the federal budget proposal that will be targeted for the single-family system, said Lisa Saunders, director of program development in the FHA's Office of Single Family Housing.
"We want to create systems that aren't fitting a square peg in a round hole," she said.
It is not just about reducing costs. "There is a lot of opportunity to take risk out of the system by technology innovation," Drayne said. Right now, pool collateral for Ginnie Mae issuances is held in multiple locations and managed by multiple parties.
But technology will allow Ginnie Mae to have more knowledge about the collateral documents, including being able to time stamp them, and reducing the risk to the system, he said.
Upgrading technology is more than that, added Michelle Corridon, deputy director of the U.S. Department of Agriculture Rural Housing Service's single-family housing guaranteed loan division.
"People see it as a cost savings, but also it is what is the customer experience," she said.
Another topic to be covered in the Ginnie Mae 2020 release will be system liquidity, Drayne said. The agency "wants to further liquidity in dramatic and different ways," and that includes changes to the acknowledgment agreement. Over time, the agreement has been modified to allow issuers to use servicing rights as collateral for financing.
In addition to the net worth requirements, Ginnie Mae wants to develop analytics that will allow it to home in on particular situations. The net worth standard is not going away, "but there are other ways you can evaluate and react to risk," Drayne said.