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Ginnie Mae removes loanDepot’s VA loan restrictions

Reinstates lender's ability to participate in all bond programs

After nearly six months of being restricted from participating in some of Ginnie Mae’s mortgage bond programs as part of the agency’s crackdown on lenders for Department of Veterans Affairs loan churning, loanDepot is back in the game.

Ginnie Mae announced Friday that it has removed the mortgage bond restrictions it placed on loanDepot earlier this year.

Back in January, Ginnie Mae limited loanDepot to Ginnie Mae II custom pools for VA single-family guaranteed loans after the agency found that loanDepot’s prepayment speeds on VA loans may have been out of sync with the rest of the industry.

The government’s investigation into VA loan churning began nearly two years ago when the Department of Housing and Urban Development, Ginnie Mae, and the VA began looking into whether certain lenders are aggressively targeting service members and military veterans for quick and potentially risky refinances of their mortgages.

The investigation led to some lenders being booted from Ginnie Mae’s primary mortgage securities platforms, and other lenders, like loanDepot, being restricted for questionable conduct.

Ginnie Mae, like Fannie Mae and Freddie Mac, is a mortgage bond issuer, but focuses specifically on securitizing pools of government-backed mortgages insured by the VA, the Federal Housing Administration, and other agencies, so issues related to refinancing VA loans would affect Ginnie Mae mortgage-backed securities.

But now, loanDepot has apparently addressed its practices and Ginnie Mae is satisfied that the lender has things under control.

Therefore, loanDepot is now allowed to participate in the Ginnie Mae I and Ginnie Mae II multi-issuer securities programs.

“The removal of such a restriction is based on the Issuer having demonstrated to Ginnie Mae’s satisfaction that (a) its prepayment speeds are substantially in-line with those of equivalent multi-Issuer cohorts, and (b) such improved performance is sustainable,” the agency said in a statement.

According to the agency, loanDepot is eligible to participate in all bond programs for loans effective for July 1, 2019, issuance.

"While we were disappointed with Ginnie’s original decision, we have partnered with Ginnie Mae in an open and transparent fashion to be able to return to full participation in multiple issuer pools," loanDepot Chief Capital Markets Officer Jeff DerGurahian said in a statement. "However, most importantly, despite the restrictions, we have remained steadfast in our commitment to serve the Veteran community and have never wavered in proudly serving United States Veterans fairly and responsibly."

[Update: This article is updated with a statement from loanDepot.]

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