Ginnie Mae Provides Additional Compliance Guidance for Seasoning Provisions

In their All Participant Memorandum (APM) 19-03 (Additional Compliance Guidance for Seasoning Provisions Announced in APM 18-04), Ginnie Mae responds to inquiries about compliance with APM 18-04 (Eligibility of VA Refinance Loans under the Economic Growth, Regulatory Relief, and Consumer Protection Act, S.2155).  In particular, APM 19-03 addresses questions regarding various refinancing scenarios.  Chapter 24 of the Ginnie Mae MBS Guide (Ginnie Mae 5500.3, Rev. 1), as amended by APM 19-03, became effective March 29, 2019.

Refinance scenarios addressed in APM 19-03, which clarify whether they are subject to the seasoning requirements described in APM 18-04, include:

• Loans Refinancing Mortgages Without a VA Guaranty;
• Re-Performing Refinance Loans;
• Modified Loans;
• Loans Refinancing Non-Mortgage Debt;
• Loans Refinancing Mortgages Without Scheduled Monthly Payments; and
• Permanent Financing Construction Loan.

In APM 19-03, Ginnie Mae reiterates its expectation that Issuers will implement processes and quality controls, including, if necessary, adding internal underwriting, quality control, and documentation processes/requirements, to ensure compliance with the seasoning requirements in connection with VA-guaranteed refinance loans delivered to Ginnie Mae for securitization purposes.  Ginnie Mae further states that, “[i]f an Issuer cannot precisely calculate the seasoning of the mortgage being refinanced, then it should not pool the loan. Any Issuer that has pooled VA-guaranteed Refinance Loans that are[] subject to, but not compliant with[,] the Seasoning Requirements must process the corresponding buyouts immediately.”

For additional information regarding APM 18-04, please see WBK’s federal industry news article dated June 6, 2018.