Both government-sponsored enterprises and Ginnie Mae addressed their biggest critics Monday: the consumers.
All three firms insist they have effectively tackled issues such as purchase uncertainty, merging security pools and the single-securitization platform.
The uncertainty surrounding the future of Ginnie Mae’s role as well as Fannie Mae and Freddie Mac’s dominance in housing has kept the firms on their toes, while trying to convince consumers that a world post-conservatorship will be as painless as possible.
The hottest topic at the panel during the Mortgage Bankers Association Secondary Conference was the concept of merging Ginnie Mae I and Ginnie Mae II programs. The proposal is to eliminate Ginnie Mae I securities and elevate Ginnie Mae II to a state of To-Be-Announced market eligibility.
"We’re looking at all options and trying to facilitate a painless transfer from Ginnie Mae I pools to Ginnie Mae II pools," said Ted Tozer, president of Ginnie Mae.
As a result, the goal is to modernize Ginnie Mae’s securitization platform and establish the merger within the next six to nine months, Tozer explained.
Meanwhile, Paul Mullings, senior vice president and interim head of the single-family business at Freddie Mac, said the biggest task the firm is taking on remains the issue of purchase uncertainty.
To that extent, the announcement of the Federal Housing Finance Agency pulling back on the loans the GSEs can purchase is an example of purchase certainty.
Beginning Jan. 10, 2014, the enterprises will no longer purchase a mortgage that is subject to the ability-to-repay rule if it's not fully amortizing, has a loan term longer than 30 years or includes points and fees in excess of 3% of the total loan amount.
"We’re working hard to complete our assessment of this rule and give you a follow up on this program later on this summer. In addition, the reps and warrants that went into effect in January should add to your level of certainty and boost your confidence," Mullings said.
With the ever-changing landscape of the secondary market, there are major areas under going transformation, including originations, representation and warranties as well as the future state of housing.
The refinance market is beginning to contract with the expected amount of loans originated in 2013 to account for roughly 63%, compared to 74% last year, noted Zach Oppenheimer, senior vice president of Fannie Mae.
Additionally, total originations will account for $1.1 trillion in 2014.
Meanwhile, both GSEs assured consumers will not feel any immediate impact from the single-securitization platform, given that the platform will gradually begin to contribute to the market.
"Rather than working separately, it made sense for the enterprises to work together underneath the five modules outlined: data validation, security issuance, disclosure, master servicing and bond administration," Oppenheimer said.
He added, "These practices will provide value for the industry moving forward."
Mullings echoed Oppenheimer, but went a step further to ensure consumers that the main goal of the Common Securitization Platform is to create "an infrastructure that can be accessed by multiple competitors to support more competition in the market."