Issuers of mortgage-backed securities on behalf the Government National Mortgage Association are subject to new requirements when there are significant corporate events.
In all, the Washington-based company revealed four updates to its
requirements for notification and prior approval of changes in issuer business status.
Ginnie Mae noted that the changes are expected to impact many of its issuers’ business operations and improve operational efficiency for both issuers and Ginnie alike.
The updates were outlined in
APM 15-14, according to a notice issued on Sept. 1 and announced Tuesday.
When an issuer becomes the subject of a material adverse change in its relationship with any banking agency, the Federal Deposit Insurance Corp., the Consumer Financial Protection Bureau or a state regulatory agency — written notice needs to be provided to Ginnie. This is in addition to notices already required for adverse changes in business relationships with other agencies such as Fannie Mae, Freddie Mac and the Federal Housing Administration.
Changes have been made to
notification deadlines for the submission of documents to the government-owned corporation both before and after a merger. With the changes, issuers are now required to advise Ginnie, in writing, at least 60 days before a planned merger to allow Ginnie enough time to approve or deny the surviving entity’s continued participation in the MBS program. When the surviving entity is not an approved issuer, Ginnie requires 90 days’ notice to determine whether approval will be granted.
After a merger is complete, required documentation must be received within 30 days. Previously, issuers had to submit documentation at least 30 days prior to a merger.
The definition of a change in ownership or control of an issuer or guarantor — which had been a change in ownership in 20 percent of the stock or other ownership interest — has been changed to align with the Statement of Financial Accounting Standards No. 57 issued by the Financial Accounting Standards Board. When the FASB threshold has been met, Ginnie wants to be notified 30 days prior to the change, while required documentation must be received within 30 days after the merger.
But Ginnie noted that the
number of legal and financial documents required during a merger or a change of ownership or control has been reduced.
Finally, the housing finance agency will need written notice at least 30 days prior to the expected date of a transfer of assets.
Impacted assets include those that are “a principal element of the issuer’s business assets related to the origination, underwriting or servicing of mortgage loans without the transfer of accompanying liabilities.” The transfer of non-Ginnie mortgage servicing rights, however, are excluded from impacted assets.
“The housing finance industry is continuing to evolve in response to changes in the economic and regulatory environment, and Ginnie Mae must evolve with the industry,” Ginnie Mae Senior Vice President of Issuer and Portfolio Management Michael Drayne said in the notice. “Our rapid increase in volume, coupled with the growing complexity of the business operations of our issuers, means that Ginnie Mae must be very responsive as it continues to support the industry.”
The new requirements are immediately effective.
