The Government National Mortgage Association (“Ginnie Mae”) recently published APM 20-12, an All Participant Memorandum (“memorandum”), detailing new restrictions for the pooling eligibility of London Interbank Offered Rate (“LIBOR”) indexed adjustable-rate mortgage (“ARM”) loans. The memorandum states that Ginnie Mae is implementing plans to transition away from LIBOR “while minimizing disruption to the Mortgage-Backed Securities (“MBS”) Program and its participants.”
LIBOR-indexed Single-Family Forward ARM loans will no longer be eligible for pooling into any Ginnie Mae I or Ginnie Mae II security effective with security issuances dated on or after January 1, 2021. This restriction includes pool types “C RL”, “C FL”, “C SL”, “M RL “, “M QL”, “M TL”, “M FL”, “M FB”, “M SL”, and “M XL”.
The January effective date also applies to adjustable-rate Home Equity Conversion Mortgage (“HECM”) loans with a LIBOR index, which will no longer be eligible for any HECM MBS pool type, including pools “C AL” and “C ML”. The memorandum states that “LIBOR-based adjustable-rate HECM loans that are not securitized as of January 1, 2021, will be ineligible for pooling without regard to their date of origination or the date in which the corresponding FHA case number was assigned.”
Ginnie Mae has updated Chapter 26 and Chapter 35 of the MBS Guide to reflect these changes.
Additionally, the memorandum provides that Ginnie Mae is ready for the creation of “Single-Class MBS collateralized by pools containing Secured Overnight Financing Rate (“SOFR”) ARM and HECM loans that are authorized by insuring agencies.”
DocMagic will continue to monitor for updates as LIBOR is phased out across the mortgage industry. If you have any questions regarding this article, please contact DocMagic’s Compliance Department.
