MReport March 2018

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zZ TH E M R EP O RT | 63 SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Ginnie Mae Asks Lenders to Address 'Churning' The government corporation looks to lenders to take corrective action to protect veterans and first-time homeowners. G innie Mae, the govern- ment-owned corpora- tion that attracts global capital into the housing finance system, has notified a small number of issuers in the Ginnie Mae multi-issuer mortgage- backed security (MBS) pool to take steps to address churning in its MBS program. Ginnie Mae's efforts in this area have been designed to keep mortgage rates affordable for veterans and first- time homebuyers, as well as to preserve the liquidity of the security around the globe. "We have an obligation to take necessary measures to prevent the lend - ing practices of a few from impairing the performance of our multi-issuer securi - ties, and thus raising the cost of home- ownership for mil- lions of Americans," said Michael Bright, EVP and COO at Ginnie Mae. Issuers who have been notified are expected to deliver a corrective action plan that identifies immedi - ate strategies to bring prepayment speeds in line with market peers. In the event issuers are unable to demonstrate a path to improved performance, they would be restricted from accessing Ginnie Mae's multi-issuer pools. "By addressing the anomalous performance of a few lenders, Ginnie Mae is acting to protect veterans, the broader Ginnie Mae program, the American taxpayer and the consumers we serve. We expect issuers receiving these notices to respond quickly, pro - duce a corrective action plan and come into compliance with our program," Bright said. "Churning" is a process where a lend - er solicits an existing borrower to refi- nance their current mortgage for a better offer with a different or the same investor. Some lenders use this practice to refinance a loan multiple times and generate profits for lenders. This notice from Ginnie Mae comes on the heels of its recent announce - ments on changes to its APM 17-06, Pooling Eligibility for Refinance Loans and Monitoring of Prepay Activity, and APM 18-02, Risk Parameters Applicable to Single Family Issuers pro - grams. "We are focusing on outliers that are harming Ginnie Mae's pro- gram, not at issuers that genuinely help support responsible lending," Bright said. "The vast majority of our issuers fall squarely in the lat - ter category, and we look forward to continuing to work with them to provide refinance opportuni- ties to veterans, rural communi- ties, and low to moderate-income homeowners." FHFA's Goals: Liquidity, Stability, and Access in Housing Finance The regulator of Fannie and Freddie released its plan for the next four years. T he Federal Hous- ing Finance Agency (FHFA) released its strategic four-year plan from 2018 to 2022 reflecting the agency's priorities as the regulator of the Federal Home Loan Banks (FHLBank) and as conservator of Fannie Mae and Freddie Mac. The agency's strategic plan centers around three key goals—ensuring safe and sound regulated entities; ensure liquidity stability, and ac - cess in housing finance; and man- aging the ongoing conservatorships of Fannie Mae and Freddie Mac. To ensure the liquidity, stability and access in housing finance, the agency will look at ensuring liquidity in mortgage markets, promote stability in the housing finance markets and expand hous - ing finance for qualified financial institutions of all sizes across the U.S. and for qualified borrowers. FHFA plans to achieve these goals by promoting actions by the GSEs to maintain liquidity in the single-family secondary market for purchase money and refinance mortgages; ensuring the FHLBanks continue to provide advances in a safe and sound manner in support of member liquidity; monitor access to mort - gage credit; supporting multifam- ily housing needs with a focus on the affordable and underserved segments of the market; and collaborating with other federal regulators to identify and address risk and other emerging issues. To ensure safe and sound regulated entities the FHFA plans to assess the safety and sound - ness of their operations of the FHLBank system, identify risks and set expectations for strong risk management, and require timely remediation of risk management weaknesses for FHLBanks. It plans to achieve these targets through initiatives that include off-site anal - ysis of key risk areas to strengthen supervision, identify supervisory concerns and monitoring emerging risks, industry trends, supervisory standards, and macro-economic market conditions. To manage its ongoing con - servatorship of the GSEs, FHFA plans to preserve and conserve as- sets of the GSEs, reduce taxpayer risks from GSE operations, and build, implement, and operate a new single-family securitization infrastructure and implement the single security initiative. "We have an obligation to take necessary measures to prevent the lending practices of a few from impairing the performance of our multi-issuer securities, and thus raising the cost of homeownership for millions of Americans." —Michael Bright, EVP and COO, Ginnie Mae

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