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Ginnie Mae II MBS Program Description

What are Ginnie Mae II Mortgage-Backed Securities?

The Ginnie Mae II MBS program was introduced in 1983 in response to the changing demands of the secondary mortgage marketplace.

Ginnie Mae II MBS are modified pass-through mortgage-backed securities for which registered holders receive an aggregate principal and interest payment from a central paying agent.

Ginnie Mae II MBS have become useful tools for "pipeline" management for our issuers. They also provide additional flexibility and liquidity. For example, Ginnie Mae II securities permit greater flexibility with respect to loan characteristics: coupon rates on the underlying mortgages can vary between 25 and 75 basis points above the interest rate on the pool for pools issued on or after July 1, 2003 and between 50 and 150 basis points for pools issued before July 1, 2003. Multiple-issuer as well as single-issuer pools are permitted under the program.

The Ginnie Mae II MBS also allows small issuers who do not meet the dollar requirements of the Ginnie Mae I MBS program to participate in the secondary mortgage market. In addition, the Ginnie Mae II MBS permits the securitization of adjustable rate mortgages (ARMs).

The Ginnie Mae II MBS have a central paying and transfer agent that collects payments from all issuers and makes one consolidated payment, on the 20th of each month, to each security holder.

An issuer may participate in the Ginnie Mae II MBS either by issuing custom, single-issuer pools or through participation in the issuance of multiple-issuer pools. A custom pool has a single issuer that originates and administers the entire pool.

A multiple issuer pool typically combines loans with similar characteristics. The resulting pool backs a single MBS issue and each participant is responsible for administering the mortgage loans that it contributes to the pool. The securitization provisions are set forth in detail in the Ginnie Mae MBS Guide (Ginnie Mae Handbook 5500.3).

 

Ginnie Mae II Key Program Provisions

There are 5 programs within Ginnie Mae II, each representing a different type of mortgage. Under each type, both the custom pool and multiple issuer pool approaches are permissible. Any one pool must consist of only one of the following mortgage types:

  • Single-family level payment mortgages (FHA, VA, or RHS loans)
  • Single-family graduated payment mortgages (FHA or VA)
  • Single-family growing equity mortgages (FHA or VA)
  • Manufactured home loans (FHA or VA)
  • Single-family adjustable rate mortgages (FHA or VA).

Interest Rates on Mortgages: Loans with different interest rates, within one-half percent range in pools issued after July 1, 2003 and within a one percent range in pools issued before July 1, 2003, may be included in the same pool or loan package, except in the manufactured home loan program where a different rule is applicable.

Minimum Sizes of Pools and Loan Packages:

  • Single-family level payment mortgages
      bullet Custom pools: $1 million (may be $25,000 if issued in connection with a Local or State
      housing bond financing program. If this pool is ever traded in the secondary market, the
      securities must be sold with a letter stating that the underlying mortgages were a part of a
      mortgage revenue bond program and the security holder may experience different prepayment
      characteristics, than is customary).
      bullet Loan packages: $250,000
  • Graduated payment mortgages
      bullet Custom pools: $500,000
      bullet Loan packages: $250,000
  • Growing equity mortgages
      bullet Custom pools: $500,000
      bullet Loan packages: $250,000
  • Manufactured home loans
      bullet Custom pools: $350,000
      bullet Loan packages: $250,000
  • Adjustable rate mortgages
      bullet Custom pools: $500,000 ($250,000 if the pool was rejected for a multiple issue in the
      preceding month)
      bullet Loan packages: $250,000

Minimum Denominations: The original principal or face amount of the certificate issued, and reissues and exchanges thereof, shall be in denominations of not less than twenty-five thousand dollars ($25,000), or if larger, in denominations which are multiples of one dollar ($1.00).

 

Ginnie Mae Fees (partial listing of principal fees):

  • Application fee for approval as an issuer
  • Application fee for commitment authority from Ginnie Mae to guarantee securities
  • Guaranty fee payable to Ginnie Mae monthly by issuer based upon the remaining principal balance of pools and loan packages outstanding
  • Certificate registration fee for each certificate issued which is reregistered
  • Transfer fee for transfers of issuer responsibility.

 
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