The economic impact of the COVID-19 pandemic has proven substantial, especially for the mortgage finance industry. Leaders across the state and federal level have implemented foreclosure moratorium policies to alleviate the financial hardships borrowers now face. Measures designed to assist borrowers, however, have left mortgage servicers facing a swath of potential consequences. In an effort to aid issuers and lenders as well, Ginnie Mae has begun the process of implementing new assistance programs and revised some of its existing policies. Below is a more fulsome discussion of Ginnie Mae’s actions thus far.
Pass-Through Assistance Program
On March 27, 2020, Ginnie Mae announced it fully anticipated implementing a Pass-Through Assistance Program (PTAP) within the next two weeks. Through the PTAP, issuers with shortfalls with respect to principal and interest payments may request that Ginnie Mae advance the difference between available funds and the scheduled payment to investors. Ginnie Mae will be implementing the PTAP for single-family issuers initially and expects PTAP terms for reverse mortgage and multifamily issuers to be published shortly thereafter. The PTAP will be effective immediately upon the publication of an All Participants Memorandum (APM), and corresponding changes to Ginnie Mae’s MBS Guide will be made in due course.
Ginnie Mae stressed, however, that the PTAP should be a “last resort” financing option for any Ginnie Mae issuers facing liquidity shortages. The PTAP’s purpose will be to support the forbearance and loss mitigation programs of Ginnie Mae’s issuing agency partners (the Federal Housing Administration, the Veterans Administration, and the United States Department of Agriculture) by minimizing potential disruptions in the mortgage servicing market. The desired result is that, through the PTAP, those federal mortgage insurance and guarantee programs can be administered efficiently and with maximum help to borrowers. Therefore, Ginnie Mae stated that it will only make advances through the PTAP where doing so furthers the intended purpose.
In an APM published on March 25, 2020, Ginnie Mae is temporarily allowing for the electronic execution and transmission of form HUD 11711A (Release of Security Interest) and form HUD 11711B (Certification and Agreement). Ginnie Mae will approve interim lenders and issuers to execute forms HUD 11711A and HUD 11711B using electronic signatures, but signatures must, in all cases, be performed, affixed, or reflected as to allow a person reading the form to identify the name, title, and business name of the signatory. Any forms HUD 11711A and HUD 11711B signed electronically may be transmitted electronically between interim lenders, issuers, and document custodians, provided that the forms are maintained in PDF format and document custodians are able to reproduce a printed copy of those PDF files to be included in the relevant physical pool file, or upon Ginnie Mae’s request. Once the COVID-19 crisis has been mitigated, or Ginnie Mae directs otherwise, issuers will be responsible for delivering forms HUD 11711A and HUD 11711B, bearing wet signatures, to document custodians for completion of final certification.
Annual Audited Financial Statement Deadline Extension
Additionally, in a separate APM published on March 25, 2020, Ginnie Mae extended the due date for Annual Audited Financial Statements to April 30, 2020, for those lenders with a December fiscal year end. Ginnie Mae noted that if lenders can complete the Annual Audited Financial Statements within 90 days of fiscal year end, they are encouraged to do so.
The measures discussed above will not be the extent of Ginnie Mae’s response to the COVID-19 pandemic and the pandemic’s effects on the mortgage finance industry. Ginnie Mae stated that it is expediting its digital collateral initiative and, “in the near future,” expects to publish information about forbearance of sanctions for violations of liquidity and delinquency standards attributable to the COVID-19 crisis. Groups in the mortgage finance industry are calling for additional measures, however, because Ginnie Mae’s plans do not address advances associated with loans backing Fannie Mae, Freddie Mac, or private-label securities, nor will it address advances of taxes and insurance on loans backing Ginnie Mae securities. A more thorough discussion of these concerns can be found here. As Ginnie Mae continues to issue new guidance, we will update this page accordingly.
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