Ginnie Mae Enhances LMI Disclosure, Accommodating Investor Interest in ESG
In early February 2023, as part of its broader mission to support and sustain the financing of affordable single family and multifamily housing for all Americans, Ginnie Mae further refined its focus on social responsibility in the mortgage-backed security (MBS) market by launching an enhanced Low-to-Moderate Income (LMI) disclosure as part of its Ginnie Mae MBS program.
By way of background, in 2021, in an effort to accommodate investor interest in investment strategies focused on environmental, social, and governance (ESG) and to further support home ownership initiatives in underserved and lower-income communities, Ginnie Mae launched a required disclosure metric to provide investors with information supporting their sustainable investing decisions and solutions. This ESG data provided pool-level aggregate information about the number of loans and Unpaid Principal Balance (UPB) dollars that are in areas defined as low- and moderate-income by the Department of Housing and Urban Development (HUD). The disclosure aggregates to the pool level the number of loans, % of loans, UPB dollars, and % of UPB dollars across low- and moderate-income areas applicable to the pool. In addition, in 2022, with respect to multifamily MBS, Ginnie Mae began including “affordability of rents” in pool-level data and, to identify properties with environmentally friendly designs such as energy-efficient windows, began identifying “green” pool-level data.
This newly announced data disclosure will augment the 2021 geographical disclosure data by also including the disclosure of the number of underlying loans made to LMI borrowers, the percentage of loans that are LMI loans, the UPB of LMI loans, and the percentage of the UPB for LMI loans as compared to the total pool of UPB. LMI households are classified according to the Federal Financial Institutions Examination Council Median Family Income Report Tables corresponding with the time of loan origination. These disclosures will be provided at the aggregate pool level for Federal Housing Administration (FHA) and US Department of Veterans Affairs (VA) loans originated in and after 2012. The data will include the prior month’s activity, meaning that the current month’s originations are excluded. LMI data will not be provided for loans that have undergone a streamlined re-finance, as borrower income data is not collected for this program. In addition, the new data is only provided on the monthly MBS Single-Family Pool Supplemental File, not on the Daily or Monthly New Issuance Pool Supplemental Files.
We expect this heightened focus on ESG disclosure to continue and are available to further discuss these disclosure requirements.
