Recent concerns about churning mortgages to veterans that are securitized for the Government National Mortgage Association have been addressed by recently passed legislation.
Last week, President Donald J. Trump signed into law S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Among the new law’s provisions is a prohibition of Ginnie Mae guaranteeing mortgage-backed securities containing certain loans guaranteed by the Department of Veterans Affairs.
The government-owned entity discussed the new requirements Wednesday in
All Participant Memorandum 18-04.
According to the notice, VA refinances will only be eligible for pooling if the note date is at least six full monthly payments after the original loan was refinanced and 210 days after the date that the first monthly payment on the refinanced mortgage was made.
The new requirements address concerns raised by
first by the government-owned corporation in 2016. Ginnie warned a small group of suspect issuers earlier this year about churning issues.
Today’s notice indicated that mortgage-backed securities guaranteed on or after June 1 are impacted by the changes.
“Ginnie Mae understands that some Issuers have already certified pools and loan packages for June 2018 issuances, which may contain loans that do not meet the seasoning requirements implemented by the act and reflected on this memorandum,” the statement said. “Ginnie Mae’s Office of Issuer and Portfolio Management will be contacting any impacted issuers ahead of the June 1st issuance date to provide additional guidance on curing any pools or loan packages that have become defective as a result of the recently enacted statutory prohibition.”
