The U.S. Department of Housing and Urban Development (HUD) announced on Monday morning an extension to Ginnie Mae’s digital collateral program and an increase to fees servicers can charge on assumable mortgages, aiming to bring more efficiency and affordability to the housing market.
“The past four years have placed a series of stressors on the market, which have been exacerbated by long-standing gaps in housing supply,” Adrianne Todman, HUD’s acting secretary, said on stage during Mortgage Bankers Association (MBA) Secondary & Capital Markets Conference held in New York. “Elevated interest rates have been a challenge across financial markets, and the housing market is no exception.”
In an interview with HousingWire during the conference, Todman said that the HUD will soon double the fee servicers can charge for processing, underwriting, and closing a transaction that includes a loan assumption. Currently, the fee can only go up to $900.
“I want to see this as soon as next month,” Todman said.
According to Todman, the industry has been asking for years for HUD to be helpful on assumable mortgages, which “is a complex transaction that she has “come to understand that sometimes the juice is not worth the squeeze.”
There was a “hue and cry,” Todman said. However, the “time has come, with higher interest rates, to take a look at all the things that we can do,” she added.
Trade groups commended the HUD acting secretary for the initiative.
“Long a CHLA priority, this change is crucial to allowing lenders to recoup their costs of a loan assumption, which can facilitate significant mortgage savings for homebuyers by using existing lower rate FHA mortgage loans,” Scott Olson, executive director at the Community Home Lenders of America (CHLA) said in a prepared statement.
Digital collateral
Todman also announced that Ginnie Mae will permit the securitization of digital collateral into the same pools as its traditional paper collateral, which is expected to increase liquidity and participation in the program. The commingling will be effective with June 1, 2024 issuances.
“This significant milestone for our digital collateral program marks Ginnie Mae’s continued efforts to modernize our mortgage-backed securities (MBS) program,” Sam Valverde, Ginnie Mae’s acting president, said in a statement. “As the housing finance industry continues to evolve, we remain committed to using technology to support Issuers, borrowers, and the taxpayer.”
In July 2020, Ginnie Mae first implemented its digital collateral program amid an industry request for optimization and alignment with policies and practices. However, Ginnie permitted digital collateral in digital-only pools or loan packages.