The Government National Mortgage Association has imposed restrictions on refinances of home loans guaranteed by the Department of Veterans Affairs.
In 2016, Ginnie Mae changed its program rules to address the rapid refinance and churning of VA mortgages. But the problem still persisted.
Then, prompted by criticism from Sen. Elizabeth Warren (D-Massachusetts), it formed a task force with VA to further address the issue.
On Thursday, the government-owned corporation announced restrictions for streamline and cashout refinances being pooled into Ginnie Mae I Single Issuer Pools and Ginnie Mae II Multiple Issuer Pools.
According to Washington-based Ginnie, VA refinances can only be placed in its pools if six monthly payments have been made on the underlying loan and the refinance occurs no earlier than 210 days after the first monthly payment is made on the initial loan.
In addition, to be eligible for Ginnie Mae pools, mortgages must meet the requirements for a fully underwritten rate-term refinance under rules set forth by the respective federal housing program or benefit administrator.
Ginnie said it is actively monitoring the pooling activity of issuers to identify behavior that violates these changes. Issuers that are found to violate the new policy will be subject to sanctions.
The new requirements become effective on April 1, 2018.
