Ginnie Mae to Reform Document Custody Policies and Management

Today, Ginnie Mae announced its plans to thoroughly update program requirements and infrastructure in relation to loan documents that serve as collateral for securitized pools of loans.

Together, Drayne said Ginnie Mae intend to engage issuers, document custodians and other stakeholders in a dialogue about how to most effectively update the program requirements and infrastructure relating to pool collateral.

“We plan to take a thoughtful approach and expect that this will be a multi-year effort,” said Drayne.

Ginnie Mae’s SVP of Issuer and Portfolio Management, Michael Drayne noted that the government corporation will use four “guiding principles” as it undertakes a comprehensive review and reform of the policies and procedures relating to the management of pool collateral via third party document custodians.

The government organization realized the need for reform after the finiancial crisis and the unprecedented level of Mortgage Servicing Rights (MSR) transfer requests in recent years, Drayne added.

“Every one of the nine million loans in Ginnie Mae pools is secured by a collateral loan file,” said Drayne. “As our business has grown, and the ownership of so many of the underlying MSRs has changed hands since the financial crisis, it has become even more critical to ensure that our program for managing this documentation evolves to meet changing circumstances and take advantage of technological progress.”

Ginnie Mae’s “Guiding Principles:”

1) Policy: Current policies will be re-examined to consider whether they adequately reflect and mitigate actual risks and the current and foreseeable state of available technology.

2) Integration: Document custody functions and information should be more closely integrated into Ginnie Mae’s systems.

3) Loan Level: Information about the status of pool collateral should be managed at the loan level, not merely the pool level.

4) Enforcement: The methods by which Ginnie Mae enforces compliance with its policies will be re-examined and harmonized with its broader practices for managing issuer relations.