With many borrowers now taking advantage of nationwide forbearance programs as they struggle to make their monthly mortgage payments, Ginnie Mae announced today that it will take action to ensure liquidity in the mortgage-backed securities market during the coronavirus pandemic.
“We have heard from our issuer and servicing partners that borrower forbearance arrangements that are nationwide in scope could place an enormous strain on issuers” of MBS, wrote Ginnie Mae’s Seth Appleton in a blog post. “This strain would be caused by the immediate need to advance required pass-through payments to investors, or other entities entitled to receive payments, and the later reimbursement of those advances by borrowers or the agencies who insure the loans (HUD, VA and USDA under the Ginnie Mae program).”
Accordingly, the GSE will “within the next two weeks” stand up a pass-through assistance program through which issuers could request an advance from Ginnie Mae to address funding shortfalls and enable them to continue making scheduled payments to investors. The blog post noted that borrowing under the PTAP should be done as a last resort, and that “Ginnie Mae will choose to make these advances only where doing so will further the program mission and the American taxpayers who stand behind it.”