WASHINGTON Ginnie Mae this week presented itself to credit unions as an additional way to sell their mortgages on the secondary market, with a new conduit it is issuing with the Federal Home Loan Bank of Chicago.
The new conduit product, called "MPF Government Mortgage-Backed Securities," will provide mortgage lenders, particularly smaller institutions that currently lack direct access to the secondary mortgage market, a new option when creating mortgage products for their home-buying customers or members, according to Ginnie Mae.
Lenders will be able to choose whether to retain or release servicing on the government loans they originate, and they will have a reliable channel for selling their loans that removes hurdles low-volume originators face in today's competitive market, Ginnie Mae said.
Ginnie Mae President Ted Tozer on Monday told NAFCU Congressional Caucus attendees that he wants to see more credit unions look to the government sponsored enterprise, a sister to Fannie Mae and Freddie Mac, for their secondary mortgage market needs. Ginnie Mae, formerly the Government National Mortgage Association, only guarantees securities backed by single-family and multifamily loans insured by government agencies, including the FHA, Department of Veterans Affairs, the Department of Housing and Urban Development’s Office of Public and Indian Housing and the Department of Agriculture’s Rural Development.
“We have more than $1.4 trillion in mortgage-backed securities outstanding now,” Tozer said, “and we want to see federal credit unions interested in mortgage lending participate with Ginnie Mae.”
The Ginnie Mae bonds initially will be made available to participating members of the FHLB of Chicago in Illinois and Wisconsin before being rolled out more broadly next year.
The Federal Home Loan Bank of Chicago provides the administrative and operational support for the Mortgage Partnership Finance Program, which allows credit unions and banks to sell fixed-rate, conventional conforming loans into the secondary mortgage market.
With the new authority granted by its regulator, the Federal Housing Finance Agency, the Federal Home Loan Bank of Chicago will now be able to purchase government-insured loans, hold these loans on-balance sheet, and then pool them into securities guaranteed by Ginnie Mae which may then be sold to investors. Ginnie Mae guarantees more than $1.4 trillion of mortgage-backed securities and the vast majority of government loans are placed in Ginnie Mae MBS. Access to the Ginnie Mae program is critical for government loan originators.
"We are committed to supporting the mortgage activities of community lenders across the country that are members of the Federal Home Loan Banks," said Matt Feldman, president of the FHLB of Chicago. "This product will allow participating members to be more competitive in their communities and to provide them better pricing to enhance access to affordable mortgage financing in the communities they serve."
"This effort is an important move toward satisfying a critical strategic initiative of Ginnie Mae to find a way to expand access to our program to small lenders," said Ginnie Mae’s Tozer.
