Ginnie Mae Approves Private Market Servicer Liquidity Facility
Ginnie Mae, Washington, D.C., announced it approved inclusion of a servicing advance financing facility under its Acknowledgment Agreement program.
Ginnie Mae has permitted a Note Securitization structure, developed in 2016, and allows for securitization of servicing cash flows through a trust. It said this structure has been strongly supported by institutional investors that previously lacked a vehicle for investing in mortgage servicing rights. Five of Ginnie Mae’s top 11 Issuers (by February issuance volume) use the NS structure.
As a result of the current transaction, PennyMac Financial Services Inc. will be able to access financing for servicing advances through the NS trust. This transaction represents the first time that the NS Structure, which was originally designed to provide financing based on the value of the MSRs as a whole, has been expanded to separately finance the advanced payments that a servicer makes in connection with individual loans in its MBS pools. Separate financing for servicing advances under government-insured mortgage lending has been much more difficult for the private market to supply than for conventional loans.
“Owning and servicing MSRs is a capital-intensive proposition, and the more avenues that exist for private capital to flow into the system on attractive terms, the easier it becomes to fulfill our mission of bringing global capital into the US housing market, while minimizing risk to the taxpayer,” said Ginnie Mae Principal Executive Vice President Seth Appleton.