Ginnie Mae to use natural disaster program to help struggling mortgage servicers

Changes to be implemented within next two weeks

TRD NATIONAL /
Mar.March 31, 2020 02:30 PM
Ginnie Mae principal executive vice president Seth Appleton (Credit: Wikipedia Commons; MHS)

Ginnie Mae principal executive vice president Seth Appleton (Credit: Wikipedia Commons; MHS)

Nonbank mortgage lenders, who are bracing for a massive cash crunch as borrowers across the country seek loan forbearance because of the coronavirus crisis, are set to get some relief thanks to a government program reserved for natural disasters.

Ginnie Mae, an agency within the Department of Housing and Urban Development that guarantees more than $2 trillion worth of mortgage-backed securities, plans to implement a pass-through assistance program through which it will advance principal and interest payments to investors on behalf of servicers who are short on cash.

“We have heard from our issuer and servicing partners that borrower forbearance arrangements that are nationwide in scope could place an enormous strain on issuers,” Ginnie Mae senior official Seth Appleton wrote in a blog post Friday. “Please know that we are taking action to address these concerns and potential liquidity challenges faced by Ginnie Mae issuers.”

The necessary changes to the program will be implemented within two weeks, Appleton wrote. Under existing rules, the advancing of funds due to a natural disaster is considered an event of default — which will not be the case for coronavirus-related advances.

Loans guaranteed by Ginnie Mae tend to have a much higher risk profile than Fannie Mae or Freddie Mac loans, and are expected to require more forbearance as the U.S. faces a severe economic crisis. Fannie and Freddie have also announced relief measures for landlords struggling to make mortgage payments.

Mortgage industry leaders have praised Ginnie’s move, but former Ginnie head Ted Tozer called it a “band-aid,” noting that a funding facility is still needed from the Federal Reserve and Treasury to aid servicers of other types of government-backed mortgages. [WSJ] — Kevin Sun


Related Articles

arrow_forward_ios
Scott Sandelin, Ben Potts, Michelle Bernstein, Felix Bendersky and Aaron Butler (Beaker & Gray, Twitter, F&B, Linkedin)

Restaurants, bars in a “scary situation” as restrictions ramp up

Restaurants, bars in a “scary situation” as restrictions ramp up
Map of priciest condo sales and Oceanside Fisher Island (Credit: Google Maps and Redfin)

Miami condo sales flatten at the end of June

Miami condo sales flatten at the end of June
Photo illustration of Ron DeSantis (Getty, iStock)

DeSantis announces $250M rental, mortgage assistance fund

DeSantis announces $250M rental, mortgage assistance fund
Developers are still holding off on starting new construction projects

South Florida construction starts plummet again in May

South Florida construction starts plummet again in May
Dan Kodsi and Legacy Hotel & Residences

For future pandemics, Miami Worldcenter plans $60M health center

For future pandemics, Miami Worldcenter plans $60M health center
Pending sales and closings were down in May throughout the tri-county region (iStock)

South Florida home sales cut in half in May

South Florida home sales cut in half in May
Map of priciest condo sales and Bayview Fisher Island unit 5342 (Google Maps, Compass. JJW Construction)

Miami condo sales dollar volume continues to drop

Miami condo sales dollar volume continues to drop
Donald Trump with Trump International Golf Club (Credit: Isaac Brekken/Getty Images and Palm Beach Post)

Trump golf club in West Palm seeks rent relief, citing shutdowns

Trump golf club in West Palm seeks rent relief, citing shutdowns
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...