Ginnie Mae Tests Scorecard of Issuers' Performances

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DALLAS — Ginnie Mae has been more closely monitoring how well issuers follow its guidelines, and now it is starting to keep score.

This week Ginnie Mae launched a beta test of its Issuer Operational Performance Profile, which gauges issuers' operational strength and management of delinquent loans relative to their peers. The move followed about two years of industry input and the release of a prototype last year.

The scorecards were released privately to individual issuers at the Mortgage Bankers Association’s servicing conference; they are not meant for public consumption. And initially Ginnie is limiting the number of users who can access dynamic graphs and other scorecard information through its automated system.

“We will not be holding you to these scores,” Rene Mondonedo, senior mortgage banking analyst at Ginnie Mae, told conference attendees, stressing that the scorecards are still in test mode. “This will evolve.” It will take at least 12 months to build performance data, he said.

Ginnie is still accepting feedback on the scorecards from the industry and may make changes based on further suggestions from issuers.

The metrics behind the delinquency management score will be based on early payment defaults, 60- to 90+ day roll rates, workout effectiveness, and percentage of loans in foreclosure. The tool will be made available to issuers of single-family, multifamily, and Home Equity Conversion Mortgage-backed securities.

One of the things Ginnie Mae is considering down the road is giving greater commitment authority to issuers who rank highly in their peer group, Leslie Meaux, director of monitoring and asset management at Ginnie, told National Mortgage News.

A greater level of scrutiny will be applied to those who rank lower. In those cases issuers will work with their account executives to “figure out how best to improve those scores,” according to Mondonedo. The scorecards are not intended to be punitive, Meaux said.

A shift in the issuer mix away from regulated banks to nonbanks, which historically have been less regulated, has made Ginnie Mae more cautious about counterparty risk.

“I think Ginnie Mae is making sure they’re adapting to the new market,” Faith Schwartz, a senior vice president at industry vendor CoreLogic, said in an interview.

Rankings in the monthly scorecards are based on quartiles, so that those ranked in the top 25% of their peer group based on a set of weighted metrics are considered tier one, and so on.

The new scorecards essentially quantify Ginnie’s more qualitative guidelines and are similar in some ways to peer group benchmarking done by other governmental entities, Meaux said.

But the Ginnie Mae scorecard is more “global” than the peer group benchmarking done by the Federal Housing Administration, for example. The FHA guarantees payments on individual loans sold into Ginnie securitizations. Ginnie guarantees timely payment of principal and interest to securitization investors.

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