Ginnie Mae will shorten repooling times for RPLs next month

Next month, Ginnie Mae will follow through with a plan announced last year to reduce the 180-day waiting period for returning reperforming loans to mortgage-backed securities pools.

Alanna McCargo, president of the housing agency, had promised that the change to the pandemic era policy would be put in place during the first quarter of this year. It will become effective on Feb. 2.

As of then, borrowers must make three timely payments in the months just ahead of the issuance date for the mortgage-backed securitization involved in the new pooling. That date must also be a minimum of 120 days from the last point at which the loan was delinquent.

The announcement "demonstrates Ginnie Mae's continued commitment to providing programs and options to issuers that maintain the strength and liquidity of the government mortgage market," McCargo said in a press release.

Other details around the parameters for the new policy were pending at deadline.

The move is in line with Ginnie Mae's ongoing review of policy changes implemented during the pandemic with the aim of seeing whether they should be discontinued, updated, made permanent or reversed.

Other examples include an exemption from its pre-pandemic delinquency threshold that the government bond insurer recently extended.

McCargo has also considered the possibility of a permanent a liquidity facility that could help issuers in times of stress, limiting counterparty risk.

The Community Home Lenders of America recently renewed the call for such a facility in a letter to McCargo, noting that a "more robust, flexible and permanent" version of the Pass-Through Assistance Program that Ginnie introduced in April of 2020 would reduce issuer risk.

Use of the PTAP proved to be limited because lower rates instituted during the pandemic sparked a refinancing wave that returned cash to mortgage companies, helping servicers cover payments they had to advance for delinquent borrowers.

More recently, however, rates have been higher and Ginnie has in at least one instance had to step in and seize servicing due to the bankruptcy of a nonbank issuer in the specialized Home Equity Conversion Mortgage market.

An expanded PTAP could help nonbank Ginnie issuers in particular because they "are essentially acting as a banker to borrowers that miss mortgage payments, by making required advances" but lack funding and liquidity resources depositories have, the association said.