Single Loans Eligible for Ginnie Mae Pools

Ginnie Mae will begin purchasing single loans in July in an initiative to help smaller lenders improve their bottom lines, HUD secretary Shaun Donovan said at the Mortgage Bankers Association's annual National Policy Conference in Washington. The Housing and Urban Development secretary also announced that in early May, HUD will begin releasing a regular scorecard on all of the Administration's housing recovery programs so the overall effort can be judged in its totality rather than piecemeal. "Viewing the Administration's efforts through a single lens fails to capture the full scope and results of our efforts to date," he told the MBA. Secretary Donovan offered few details on the forthcoming Ginnie Mae single loan program, but he did say that the GSE has the technology and ability to allow lenders to deliver single loans that would eventually be pooled with other loans into a Ginnie Mae security. Currently, community banks and rural lenders must either sell their production to aggregators or hold loans on their books "at a substantial cost and risk" until they have enough volume to create a pool large enough to sell to Ginnie Mae. Under the new initiative, they will be able to deliver what "technically" amounts to single-loan pools on a daily basis that Ginnie Mae will subsequently place into a multi-lender pool. "It will be interesting to see how (the program) works," said Rob Couch, a former HUD general counsel who left the agency in the last months of the Bush Administration. "But it sounds pretty creative to me."