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Ginnie Mae Servicer Liquidity Facility Expanded

Ginnie Mae announced an All Participants Memorandum (APM) on Friday, expanding its servicer assistance program in response to the spread of COVID-19. 

The APM introduces a new version of the existing Pass-Through Assistance Program (PTAP) for servicers facing a temporary liquidity shortfall related to coronavirus. 

Ginnie Mae states the application of the PTAP to the  COVID-19 National Emergency allows servicers to apply for assistance meeting their contractual obligations to make “timely and full principal and interest payments” due to mortgage-backed securities (MBS) holders without being held in default.

“This assistance is intended to minimize disruptions in the mortgage servicing and MBS capital markets as borrower forbearance and loss mitigation programs are implemented to provide relief to homeowners affected by the COVID-19 National Emergency,” the release states. 

Funds advanced by Ginnie Mae will bear a fixed-rate of interest. The rate will apply to a months’ pass-through assistance to servicers will be posted on Ginnie Mae’s website. 

“This is an extraordinary and last resort option for Issuers in these unprecedented times, that will enable them to continue to serve homeowners and renters in America who rely on the government mortgage programs financed by Ginnie Mae,” said Ginnie Mae Principal EVP Seth Appleton. “As important, this program underscores Ginnie Mae’s commitment to ensure timely payment of scheduled principal and interest to investors holding our MBS in all market conditions.”

Ginnie Mae previously announced the approval of the inclusion of a facility to advance funds under its Acknowledgement Agreement Program. 

The agreement states Ginnie Mae has permitted a Note Securitization (NS) structure, which was developed in 2016 and allows for the securitization of servicing cash flows through a trust. 

A release from Ginnie Mae says this structure has been “strongly supported” by institutional investors that lacked a vehicle for investing in mortgage servicing rights (MSRs). 

Five of Ginnie Mae’s top 11 issues—based on February issuance volume—use the NS structure. 

“Owning and servicing MSRs is a capital-intensive proposition, and the more avenues that exist for private capital to flow into the system on attractive terms, the easier it becomes to fulfill our mission of bringing global capital into the US housing market, while minimizing risk to the taxpayer,” Appleton said. “We are pleased to have been able to finalize this transaction, because it represents another step forward in the improvement of the liquidity supply for the housing finance system.”

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.
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