Amherst Securities: Number of modified, reissued Ginnie Mae loans remains high

The level of Ginnie Mae loans modified and reissued in mortgage-backed securities remains high but probably won’t increase in 2011 from this year, according to one MBS broker-dealer. Amherst Securities said reissuance of Ginnie mortgages may be lower next year because “as more modified loans redefault and are bought out again, maybe they are less likely to be modified and repooled a second time.” Ginnie Mae guarantees timely payment of principal and interest on federally insured loans to investors of mortgage-backed securities. Brian Landy, Amherst senior vice president, also said mortgage servicers may be less aggressive at buyouts, preferring to leave delinquent loans in existing pools, as interest rates move away from generational lows. He said changes to mortgages made this year through the federal Home Affordable Modification Program aren’t easily compared to other vintages, although “you might think those would perform better, but it’s unclear that many of these have been done.” “I do think 2010 modified loans’ worse credit performance will ‘overcome’ the better credit performance of 2010 new originations, in particular for the large Ginnie II pools,” Landy told HousingWire. Write to Jason Philyaw.