Issuers of Ginnie Mae mortgage-backed securities will need to modify their disclosure practices on adjustable-rate mortgages.
The government-owned corporation is modifying its eligibility requirements as a result of an increase in the ARM look-back period required by the Consumer Financial Protection Bureau.
Issued in February 2013, the CFPB’s regulation increased the look-back period on ARM adjustment dates to 45 days from 30 days.
A Federal Register filing by the Department of Housing and Urban Development characterized “look-back period” as “The number of days prior to the interest change date on which the index value is selected.”
Loans insured by the Federal Housing Administration and mortgages guaranteed by the Department of Veterans Affairs are impacted by the CFPB’s requirements, according to All Participant Memorandum 14-12 from Ginnie.
Since the Washington-based company guarantees MBS backed by FHA and VA loans, ARMs backing its MBS must provide for a 45-day look-back period on the interest rate adjustment date to be eligible for pooling.
Thirty-day look-back periods will be acceptable until Jan. 9, 2015.
After that, 45 days will be required. These loans can be pooled in issuances beginning April 1, 2015.
“Issuers are strongly encouraged to monitor their pipelines closely to ensure pooling eligibility,” the memorandum stated.
