Earlier in March, Ginnie Mae, a government-owned corporation that guarantees specific mortgage backed-securities (MBSs), announced they would be stepping in to help servicing companies float mortgage payments for qualified loans in forbearance. This includes loans issued by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Department of Housing and Urban Development’s (HUD) Office of Public and Indian Housing, and the Department of Agriculture Rural Housing Service (USDA).
Their efforts are not going unnoticed. A press release issued by Ginnie Mae on May 8 stated the corporation broke a new record for MBS issuance in April 2020, creating $63.81 billion in MBSs and helping more than 246,000 homeowners and renters with financing assistance. This record-breaking issuance of MBSs increased their total outstanding principal balance for all MBS to $2.149 trillion, an $87 billion increase from April of 2019.
Ginnie Mae currently guarantees MBSs through two entities:
- Ginnie Mae I MBS, in which security holders receive separate principal and interest payments on each of their certificates secured by single-family, multifamily, and manufactured homes and construction loans.
- Ginnie Mae II MBS, where security holders receive an aggregate of principal and interest payments from a central paying agent.
April's issuance was comprised of "$61.04 billion of Ginnie Mae II MBS and $2.78 billion of Ginnie Mae I MBS, which included $2.48 billion of loans for multifamily housing," according to the press release.
Why It Matters
This continued issuance of MBSs by Ginnie Mae is helping the markets continue to operate as normal, allowing for new securities to be purchased and backing loans for security holders in a time of uncertainty plagued by high liquidity concerns for lending institutions and servicing companies.