Drane noted that the conditions and scope of use of the new pool type will ultimately be determined by the Federal Housing Administration (FHA) and the State and Indian Housing Administration (PIH) under the Department of Housing and Urban Development (HUD) of the Department of Housing. Veterans Affairs (VA) and Rural Development of the United States Department of Agriculture (USDA), whose programs are the backbone of loans in the Ginnie Mae pools.
“Ginny Mae has been an integral part of the interagency response to foreclosure for homeowners facing financial hardship as a result of COVID-19,” said Alanna McCargo, senior advisor to HUD minister Marcia Fudge. “Last year’s problems require meaningful solutions to help people stay in their homes, which was a priority for Minister Fudge. As interest rates rise, this 40-year feature will give homeowners more room to cut payments. Ginny Mae’s move today demonstrates a commitment to a more balanced and equitable housing finance system and demonstrates the critical role that the agency plays in supporting government mortgage programs in the secondary market. ”
John Getchis, senior vice president of capital markets for Ginnie Mae, added that the product has a custom pool design (single loan and a minimum pool size of $ 25,000), which will allow issuers to control its formulation and maximize market prices.
“We think the market will find value in the securities backed by these loans,” Getchis said. “We wanted to provide a pooling structure that would allow issuers to obtain this value, thereby increasing their ability to provide homeowners with the most reliable options while maintaining respect for investor capital. By choosing an individual pool, which is a MBS with a single issuer, market makers and institutional investors will be aware of the composition of the pool and the respective issuer – two important factors that determine the market value. “