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Ginnie Mae Announces Changes to VA Refis

Ginnie Mae veteran lending policyIn a bid to further protect veterans from predatory lending, Ginnie Mae,  a government corporation that attracts global capital into the housing finance system to support homeownership for veterans and low- to moderate-income homeowners, recently issued an All Participants Memorandum (APM). The APM announced the implementation of changes to pooling eligibility requirements for Department of Veteran Affairs' (VA) insured or guaranteed mortgages under the "Loan Seasoning for Ginnie Mae Mortgage-Backed Securities," provision. These changes affect security issuances on or after June 1, 2018, but do not otherwise affect the guarantee or composition of MBS issued before that date.

Under the APM, a refinance loan insured or guaranteed by the VA is eligible for the lender's securities only if the note date of the refinance loan must be on or after:

  1. The date is 210 days after the date on which the first monthly payment was made on the mortgage being refinanced;
  2. Or the date on which six full monthly payments have been made on the mortgage being refinanced.

Refinances that do not meet the condition defined in the APM are ineligible for inclusion in any new pool or loan package in the Ginnie Mae I or Ginnie Mae II MBS Program, including refinances that closed prior to the date of this announcement.

Ginnie Mae is engaging with issuers to implement a cure for pools that have been submitted with non-compliant loans. The lender expects that the law will be effective in helping curb abuses that have been identified in connection with certain refinance programs utilized by veterans.

Ginnie Mae MBS programs directly support housing finance programs administered by the Federal Housing Administration, the Department of Veterans Affairs, the HUD Office of Public and Indian Housing and the Department of Agriculture Rural Housing Service. Ginnie Mae is the only MBS to carry the explicit full faith and credit of the United States Government.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.

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