Ginnie to Speed Mortgage-Backed Securities

Issuers of Ginnie Mae-backed securities can expect another round of procedural changes and technologically based improvements designed to ease the Ginnie security-issuance process even further.

The changes are scheduled to be announced as the agency puts into effect another batch of issuance-related rule changes that the Government National Mortgage Association implemented in July.

Ginnie officials had promised that the July improvements would reduce the administrative burden on institutions that issue mortgage-backed securities, and so far issuers say Ginnie seems to be living up to that promise.

"We promised people a July 1 delivery date (for our streamlining rule revisions) and we've made good on that promise," Kevin Chavers, Ginnie Mae senior vice president, said in an interview. "But it's just a part of a larger reengineering effort that we'll outline during the Mortgage Bankers Association conference in San Diego in October.

Mr. Chavers said issuer applications had increased recently. He attributed the rise in part to the July policy changes.

Most of the policy alterations slated for an October unveiling are being held close to the vest, but Mr. Chavers did say changes to Ginnie's issuer eligibility rule were planned. Ginnie issuers are now required to be FHA and Fannie Mae approved.

George Anderson, who will become Ginnie's vice president of customer service within a month, said this rule, as written, sometimes caused conflicts because some lenders were only FHA- or Freddie Mac-approved. Ginnie is now close to completing revised regulations, Anderson said.

Another change will allow issuers to work with a single Ginnie agent. Mr. Chavers said the new policy will help foster a familiarity between Ginnie and the issuer and should help preempt issuance problems that stem from unfamiliarity with certain accounts.

Chavers said more streamlining measures were planned for Ginnie multifamilies and most other revision plans involved technological improvements. Whether the new round of revisions will have the same impact as July's changes is unclear. But lenders were impressed by the July changes, and many have already put them into effect. An outline of some of those changes follows:

Master agreements. Fewer papers to sign and a faster issue process were the inspirations for the master agreement process. Under the program, issuers could eliminate much of the paperwork required by Ginnie by completing most forms as part of a one-time master agreement, thus eliminating most duplication. The program becomes mandatory in January.

New issuance help desk. Misplaced or omitted dates on pool documents are relatively minor errors, but that kind of miscue sometimes prevents lenders from delivering late-cycling pools on time. In July, Ginnie began allowing its agent, Chemical Bank, to correct those errors for lenders rather than bundling the entire package up and sending it back.

Immediate issuance and transfer. At the request of lenders, Ginnie now plans to allow lenders to issue securities and transfer servicing simultaneously. Issuers had regarded Ginnie's servicing transfer system as cumbersome and impractical. Under that system, issuers were forced to retain servicing for 90 days before transfer, making for a terribly inefficient servicing flow system. It was so unpopular that it actually dissuaded some lenders from issuing Ginnie securities.

"We're doing this on a test basis, and we currently have four issuers," Mr. Anderson said, noting that the system now more closely resembles Fannie Mae and Freddie Mac programs.

Shorter multi-issuer process. Ginnie decided to reduce its approval wait time for multi-issuers to five days, down from eight. And lenders are enthused. Previous time-consuming rules were often prohibitive. Lenders worried about missing their delivery deadlines. Those that did miss, particularly with multi-issuer Ginnie IIs, had limited options - find a portfolio lender interested in buying whole loans or go to the borrower and rework the closing. Neither was popular. The multi-issuer program might have had more life if the requirements weren't so stringent.

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