Ginnie Mae Restricts Long-Time Legitimate Business Activity of Mortgage Servicers

Ginnie Mae’s newly imposed restriction on repooling of reperforming forborne loans yet again penalizes servicers acting as essential service providers in the continuing efforts to protect mortgagors facing financial hardship due to COVID-19. In issuing APM-20-07 on June 29, 2020, Ginnie Mae decided to further protect investors from the potential enhanced prepayment risk resulting from early pool buyouts of forborne loans. This protection, however, comes at the expense of servicers. By restricting servicers from relying on long-standing, legitimate business activity—early pool buyouts coupled with the repooling of reperforming loans—Ginnie Mae has elected to deem a routine activity as inappropriate because it is unnecessary and, gosh, may produce a profit.

This Of Special Interest provides more context on the new APM, possible reasoning behind Ginnie Mae’s change in position and what it means for issuers.

This article was first published in and is reproduced with the kind permission of HousingWire.

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