Law Enacted to Fix GNMA Eligibility Gap for Certain VA Loans

The President recently signed into law the Protecting Affordable Mortgages for Veterans Act of 2019 (S.1749), which confirms Ginnie Mae eligibility for certain mortgage loans that were in the pipeline when Congress imposed seasoning requirements on refinance loans destined for Ginnie pools in 2018. 

In 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) changed certain seasoning requirements for refinance transactions guaranteed by the VA, as well as eligibility requirements for Ginnie Mae with respect to such loans.  As a result, there were some loan applications that were in the pipeline prior to May 25, 2018, that were eligible for the VA guaranty, but may not have been eligible for inclusion in Ginnie Mae securities.  WBK reported on these concerns at the time. 

S.1749 addresses those concerns by amending the National Housing Act to remove a provision that previously prohibited Ginnie Mae from guaranteeing securities backed by VA-guaranteed loans that did not meet the revised criteria under S.2155.  S.1749 also restores the calculation of the 210-day seasoning period to its previous form, such that the seasoning period will begin on the first payment due date of the prior loan, rather than the date that the borrower made the first payment.

S.1749 took effect on July 25, 2019.