Ginnie Mae to have new pool type ready for 40-year loans by December

Government bond insurer Ginnie Mae has unveiled the pool type it will use for newly modified mortgages with terms up to 40-years, and made plans to begin issuance before year-end.

Ginnie, part of the Department of Housing and Urban Development, confirmed earlier announcements indicating pools would be labeled C ET in order to designate that the fixed-rate, single-family loans involved have extended terms. These pools will consist of mortgages with terms ranging from 361 to 480 months and will have a minimum of one loan with a principal balance of $25,000.

Issuers also will have to agree to an attestation added to their contract with Ginnie Mae stating that all modifications after origination “have been occasioned by default” or a “reasonably foreseeable” one.

The availability of the pools will help further efforts to give servicers more leeway to modify mortgage terms for borrowers with pandemic-related hardships after they exit forbearance plans that have allowed them to put their payments on hold. The Federal Housing Finance Agency, which oversees two other major government-related secondary mortgage market players, has directed its charges to broaden the scope of modifications available to borrowers exiting forbearance plans in other ways.

Single-family loans insured by the Federal Housing Administration or guaranteed by the Department and Veterans Affairs, which are the main types of mortgages sold into Ginnie securities, have a forbearance rate of 3.9%, according to Black Knight’s latest weekly report. In contrast to the accelerated declines in the broader market, FHA/VA forbearance dropped at a slightly slower pace in the last seven-day period. Slower exits from FHA/VA forbearance in the wake of extended deadlines for initial plan filings could give Ginnie more time to get the pools in place to accommodate modifications before some borrowers exit.