New Ginnie Mae MSR-related note transactions continue to emerge

KBRA this week rated a new series of service-linked maturity notes issued by Freedom Mortgage, a master trust issuer, in line with Ginnie Mae The market is getting more attention.

FMC GMSR Issuer Trust’s Series 2024-SAT1 Notes are backed by certificates representing Ginnie Mae’s participating interests Mortgage Servicing Rights. Rights include service income and the right to early reimbursement.

The rating agency assigned the deal a low-end investment grade of BBB-, with features including the ability to transfer services in the event of Freedom Mortgage defaulting.

The rating is slightly lower than what a similar Pennymac exchange received last month. KBRA assigns a BBB rating to Pennymac GMSR Issuer Trust’s Series 2024-GT1 Notes.

Pennymac and Freedom are both major players in the Ginnie Mae market.Ginnie Mae is a subsidiary of other public entities such as federal housing administration and Department of Veterans Affairs return.

Richey May Consulting Director Seth Sprague said during a recent webinar that the landscape for Ginnie repairs has changed recently and is receiving more market attention.

This is partly due to a significant increase in advances on 6.5% coupons when interest rates fell in the fourth quarter of last year, which typically reflects activity on 7% mortgages.

“Is this an opportunity or a threat. It depends on which side of the house you’re on,” he said. “If you have services and you don’t have the ability to take them back, that’s a threat to you. If you have the ability to take them back, it’s an opportunity.”

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