Ginnie Mae announced that it anticipates creating an All Participants Memorandum (APM) in the next two weeks to address liquidity issues related to the impacts of COVID-19.
The program is called a Pass-Through Assistance Program (PTAP) and lenders with a P&I shortfall may request Ginnie Mae advance the difference between available funds and the scheduled payment to investors.
“This PTAP will be effective immediately upon publication of the APM for Single Family program issuers, with corresponding changes made to Ginnie Mae’s MBS Guide in due course,” a release says. “We anticipate publishing PTAP terms for HMBS (reverse mortgage) and Multifamily issuers shortly thereafter.”
Ginnie Mae states the advancement of funds by the agency to an issuer as a result of disaster declaration by the President of the United State would be considered an “event of default” under its programs.
However, because the current environment is not limited to one area, the advancement of P&I through to PTAP will be considered an event of default.
Issuers will be required to sign an agreement with Ginnie Mae and must repay the advance between a specific time period.
Ginnie Mae said borrowing under the PTAP should be a “last resort” to alleviate the liquidity shortage faced by issuers of Ginnie Mae.
“PTAP’s purpose will be to support the forbearance and loss mitigation programs of our insuring agency partners (FHA, VA, and USDA) by minimizing potential disruption in the mortgage servicing market so that those federal mortgage insurance and guarantee programs can be administered efficiently and with maximum help to borrowers,” a release states. “Ginnie Mae will choose to make these advances only where doing so will further the program mission and the American taxpayers who stand behind it.”
Mortgage Bankers Association President and CEO Bob Broeksmit commends the announcement by Ginnie Mae and said it would allow many servicers the ability to help consumers impacted by coronavirus through mortgage payment forbearance.