Ginnie Mae boots 3 VA lenders from mortgage bond programs

Continues crackdown of VA loan churning

Ginnie Mae announced late Friday that it is booting three Department of Veterans Affairs mortgage lenders from its main securities programs.

The company said that in the interest of providing additional clarity and transparency to its mortgage-backed securities investors, it announced it restricted VA single-family guaranteed loans pooled by three VA lenders: Freedom Mortgage, SunWest Mortgage and NewDay USA.

All three issuers are restricted from including VA single family guaranteed loans in Ginnie Mae I securities or Ginnie Mae II multi-issuer securities.

Freedom and SunWest will be restricted started July 1, 2018 through January 1, 2019, while NewDay’s restriction began April 1, 2018 and concludes October 1, 2018.

The conclusion date assumes that by the specified date, an issuer has demonstrated, to Ginnie Mae’s satisfaction, that prepayment speeds are substantially more in-line with those of equivalent multi-issuer cohorts, and such improved performance is sustainable.

The lenders will remain approved Ginnie Mae issuers and remain authorized to pool FHA and RHS single family insured mortgages in all eligible Ginnie Mae pool types.

Thursday, Ginnie Mae announced new requirements for its VA refinance loans as it continues to fight to protect service members from predatory lending.

In the second half of last year, Ginnie Mae announced that it was launching an investigation into mortgage lenders that were aggressively targeting service members and military veterans for quick and potentially risky refinances of their mortgages.

Then, early this year, Ginnie Mae announced that it was warning a “small number” of lenders to get their VA refinance programs under control, or they will no longer be allowed to participate in Ginnie Mae multi-issuer mortgage-backed securities.

In April, Ginnie Mae followed through on that threat and booted NewDay USA and Nations Lending from its primary mortgage bond program.

[Update] After being booted from the program, Nations Lending submitted a response letter to Ginnie Mae providing a detailed description of the steps it had taken to address the prepayment speed issue, and was therefore reinstated to the program. Continued access to Ginnie Mae II multi-issuer pools is conditioned in part on Nations Lending maintaining compliance with the prepayment speed requirements.

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