Ginnie Mae Outlines Plan to Fight Housing Costs, Boost Housing Supply
Ginnie Mae on Wednesday said it will take on a larger role in HUD’s efforts to fight rising housing costs and boost housing supply, releasing a Fact Sheet outlining its efforts to drive liquidity toward equitable and affordable housing.
“The United States is facing a historic shortage of affordable housing. This crisis drives up inflation and burdens family budgets. Tackling inflation and rising costs for families is a top economic priority for the Biden-Harris Administration,” the fact sheet said.
In May, The Biden Administration released a Housing Supply Action Plan, outlining administrative and legislative actions that will lower housing prices, close the housing supply shortfall in five years, and create hundreds of thousands of affordable housing units in the next three years. The Housing Supply Action Plan taps Ginnie Mae to play an innovative role in increasing affordable housing by making the Risk Share Program permanent and moving its operations from the U.S. Department of Treasury to Ginnie Mae.
“There’s a role we can play in affordable housing and housing supply issues,” said a senior Ginnie Mae official, speaking on background during a conference call on Wednesday.
A summary of the fact sheet appears below:
Ginnie Mae Mortgage-Backed Security Program
Under the Ginnie Mae Mortgage-Backed Securities program, single- and multi-family loans insured or guaranteed by government housing finance programs are pooled and sold to investors, creating liquidity and lowering the cost of loans for borrowers.
Single-Family MBS Program
Since 2021, Ginnie Mae has guaranteed more than 3.8 million single-family mortgages, ensuring that millions of Americans benefit from affordable mortgage financing. 1.2 million single-family mortgages went to first time homebuyers; 1.6 million single-family mortgages went to military veterans; 242,000 single-family mortgages went to Hispanic borrowers; 229,000 single-family mortgages went to Black borrowers.
Multi-Family MBS Program
Ginnie Mae’s mission of supporting affordable housing and promoting stable communities extends to ensuring that decent rental units remain accessible. Ginnie Mae said a critical part of that effort is facilitating construction and renovation of multi-family housing such as apartment buildings, hospitals, nursing homes, assisted-living facilities, and other housing options. By guaranteeing pools of multi-family loans that are sold to investors in the global capital markets, Ginnie Mae enables lenders to reduce mortgage interest rates paid by property owners and developers. In addition, these projects stabilize and bring jobs to communities across the country.
“With its capacity and knowledge of housing markets, Ginnie Mae is well positioned to do more to help alleviate our nation’s affordable housing crisis,” Ginnie Mae said. “To that end, Ginnie Mae must continue to explore new avenues for reaching underserved communities who need support in meeting their affordable housing needs.”
Multi-Family Risk Share
In September 2021, FHA and Treasury partnered to relaunch the Federal Financing Bank-Risk Share Initiative to expand access to capital for state and local housing finance agencies. In the Housing Supply Action Plan, the Biden Administration, in conjunction with FHA and Treasury, proposed making the Risk Share Initiative a permanent program at HUD within the Ginnie Mae MBS ecosystem. This move would enhance stability, increase liquidity for mortgage lending, provide the benefit of Ginnie Mae’s guaranty, and ultimately increase housing supply,” Ginnie Mae said.
Expanding Ginnie Mae’s Securitization Guaranty to Mission-Driven Community Lenders
In the first quarter, Ginnie Mae started a CDFI Working Group to engage with CDFIs across the country and learn more about their business model and challenges. In July 2022, in conjunction with Ginnie Mae, HUD launched a CDFI Task Force to develop recommendations on administrative actions to expand support and secondary market access through Ginnie Mae. To encourage and assist CDFIs to become FHA-approved lenders, FHA is increasing its trainings for CDFIs.
Last week, Ginnie Mae issued All Participant Memorandum (APM) 22-08: Institution-wide Capital Requirements and Program Risk Parameters, amending its capital requirements for federally insured credit unions and HFAs. Ginnie Mae recognizes that capital requirements imposed by federal prudential regulators strengthen credit unions and ensure they are well capitalized. Ginnie Mae’s exemption of HFAs from its capital requirements acknowledges the reduced risk that HFAs pose as instrumentalities of the states.
“These changes to Ginnie Mae’s institution-wide capital requirements accomplish two things: they harmonize Ginnie Mae’s program requirements with standards enforced by federal credit union regulators and reflect the unique financial status of HFAs and credit unions who play critical roles in supporting community-based lending, particularly in underserved areas,” Ginnie Mae said.
Ginnie Mae Title I RFI
The Housing Supply Action Plan includes a commitment to “deploy new financing mechanisms to build and preserve more housing where financing gaps currently exist,” and calls out manufactured housing, including the portion of it financed by personal property loans. Ginnie Mae and FHA are considering policy enhancements for FHA’s Title I Manufactured Home Loan Program to encourage increased lender participation.
To do so, Ginnie Mae and FHA have published a Request for Information. The purpose of this RFI is to solicit input from stakeholders to assist in the evaluation of current program policies and identify opportunities to implement adjustments that will better address housing shortage and affordability issues with respect to manufactured housing.
However, Ginnie Mae officials said some of these efforts would require approval by Congress. “We would ask for that,” the official said.