Ginnie Mae warns of rising prepayments

Ginnie Mae On Wednesday, the company issued its first warning in a while about prepayment rules, noting that “certain elements of its plans” have increased.

The Department of Housing and Urban Development, the guarantor of the market for large government mortgage-backed securities, told issuers in an online announcement that it could take action if the activity exceeds permitted limits.

“This may include necessary sanctions,” Genie warned in its notes and press announcement.

The warning comes as a change in the direction of monetary policy has left interest rates below last year’s peak, stimulating There’s been some prepayment activity lately.

Historically, Genie’s biggest concern has been serial refinancing Securitized Mortgage Loans Partially Guaranteed by the Department of Veterans Affairs At the loan level.

Genie supports housing for U.S. veterans, first-time homebuyers and seniors and sells bonds it guarantees to domestic and foreign investors.

In other news, the company recently held its first Latin American investor roundtable in an effort to expand this client base.

Julia Gordon, administrator of the Federal Housing Administration, said one of the takeaways from Genie’s event in partnership with the Inter-American Development Bank was that the two regions’ mortgage markets share some common concerns.

“Despite differences in how our housing finance systems are structured, we all face similar challenges such as natural disasters, affordability and underserved populations,” Gordon said in a release.

Genie and other U.S. institutions have recently been producing large amounts of securities to sell to investors.

In a report to global market participants, Ginnie Mae found that the total issuance of U.S. institutional real estate mortgage investment pipelines recently reached the highest level since April 2022.

Ginnie Mae, Fannie Mae and Freddie Mac totaled $26.2 billion in single-family, multifamily and reverse mortgage loan issuances in this category in February. Geely alone contributed US$14.9 billion to REMIC issuance, the highest issuance volume since February 2022.

Ginnie had a market share of 55% in February, and it has accounted for the majority of REMIC’s monthly issuance volume since November.

REMICs are backed by whole loans, or MBS, and allocate mortgage cash flows to serve a broader range of investor needs in ways not possible with typical pass-through securities.

Meanwhile, according to another report released last month, Geely’s MBS issuance totaled US$30.9 billion in February, up from US$28.1 billion the previous month. Its outstanding portfolio increased to $2.54 trillion in February from $2.53 trillion in January.

Geely’s monthly MBS issuance volume experienced a period of decline from a peak of $89.7 billion in April 2021 to a low of $24.2 billion in February 2023, but has since rebounded slightly, rising to a maximum of $39.2 billion Last June.

The market is watching whether seasonal home buying will lift MBS issuance to this level again this year. Based on data to date, Genie MBS issuance volumes are slightly ahead of 2023 overall.

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