LoanDepot hit with Ginnie Mae sanctions over VA mortgage compliance

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Ginnie Mae has restricted loanDepot's ability to securitize Veterans Affairs mortgages because of apparent churning of recent originations.

Starting Feb. 1, loanDepot cannot include any VA loans in Ginnie Mae I or Ginnie Mae II multi-issuer securities, an agency press release said. The Irvine, Calif.-based lender remains an approved Ginnie Mae issuer and can still put VA loans in Ginnie Mae II custom pools and Federal Housing Administration and U.S. Department of Agriculture Rural Housing Service Loans in all eligible Ginnie Mae pool types.

The restriction is set to expire on July 1.

"While we respectfully disagree with this action, we remain firm in our resolve to continue to serve the veteran community, as we have since our inception," loanDepot said in a press release.

"Over the past several months, we have been working closely with Ginnie Mae to ensure that loanDepot's prepay speeds on all Ginnie Mae products are in line with other market participants.

"Like many valued government partners, many of our ongoing discussions with Ginnie Mae were paused as the result of the 35-day government shutdown. Now that the shutdown has ended, we look forward to furthering these conversations," loanDepot said.

Nine lenders, including loanDepot, were warned almost one year ago they could be removed from the program if they did not reduce rapid refinancings of VA loans.

Even as recently as November, high prepayment speeds among recent vintage VA loans was a major concern for then-acting Ginnie Mae head Michael Bright.

Ginnie Mae did not provide a specific reason in its announcement for issuing the restrictions, but it did include statements indicating churning as the cause.

"The removal of such a restriction is based on the issuer having demonstrated to Ginnie Mae's satisfaction that prepayment speeds can be considered substantially in-line with those of equivalent multi-issuer cohorts, and such improved performance is sustainable," the press release said.

"These program restrictions are part of Ginnie Mae's ongoing efforts to enforce Section 3-21 of Ginnie Mae's MBS Guide, which establishes as a required program risk parameter that an issuer's 'origination and servicing practices … ensure that the performance of an issuer’s securities is in line with that of similarly constituted securities for the Ginnie Mae portfolio as a whole.' "

Freedom Mortgage, which previously was restricted to Ginnie Mae II custom pools, will have its restrictions removed on March 1, the press release added.

Ginnie Mae had gross issuance of $339 billion of MBS in the first 10 months of fiscal year 2018, of which $135.9 billion was VA loans, down 7% from the same period in fiscal year 2017, the agency's December report said. No report was issued for January because of the government shutdown.

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Enforcement Compliance Refinance MBS Ginnie Mae The VA