Changes at the Government National Mortgage Association are intended to smooth the warehouse lending process and ease servicing transfers.
Ginnie Mae has limited the circumstances under which it can refuse a servicing transfer to an issuer’s creditor, according to a bulletin released Tuesday. The company also provided clarification about servicing transfers.
Ginnie said that changes to its acknowledgement agreement — which lays out the legal rights and responsibilities of Ginnie, its issuers and creditors of the issuers when a Ginnie Mae servicing portfolio is pledged as collateral for a loan — will make it simpler to honor servicing pledges and permit the transfer of related servicing rights.
The Washington, D.C.-based firm is responding to issuer concerns about the difficulty of pledging servicing portfolios.
The updates were part of the move by the government-owned corporation to increase liquidity for consumer lending, Ginnie President Ted Tozer said in the bulletin.
Another change eliminates the requirement that a stand-by issuer be named at the time the agreement is executed. Now a creditor has the opportunity to identify an approved Ginnie issuer to assume the portfolio when the portfolio needs to be transferred.
“In exchange for limiting its ability to refuse a transfer of servicing, Ginnie Mae requires the creditor to accept the portfolio,” according to the statement.
In an attempt to help warehouse lending arrangements to proceed more smoothly, Ginnie said that it recently issued guidance clarifying creditor rights when mortgages are pledged prior to securitization.
The updated acknowledgement agreement provides additional flexibility to creditors that are not Ginnie issuers. It also eliminates obstacles that prevent smooth servicing transfers.
“The updated agreement offers additional flexibility to warehouse lenders, while still protecting Ginnie Mae’s interests as the guarantor of the securities,” Tozer stated in the news release.
