10.01.2019 Version 1
Ginnie Mae
Basics Workbook
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TABLE OF CONTENTS
Ginnie Mae Basics Workbook Introduction
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3
Ginnie Mae Overview
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4
A. Ginnie Mae Mission
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4
B. Ginnie Mae History
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4
C. Ginnie Mae Statute
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5
D. Ginnie Mae Regulations
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5
E. Ginnie Mae in a Nutshell
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6
F. Knowledge Check – Ginnie Mae Overview
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8
Ginnie Mae Mortgage Backed Securities Overview
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10
A. What is a Mortgage Backed Security?
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10
B. What is Ginnie Mae MBS?
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10
C. What is Ginnie Mae Guaranty? 10
D. Ginnie Mae Model of Risk Distribution on Defaulted Issuer Portfolios 11
E. Knowledge Check – Ginnie Mae Mortgage Backed Securities 13
Differences Between Ginnie Mae and the Government Sponsored Enterprises 14
A. Ginnie Mae, Fannie Mae and Freddie Mac 14
B. Fannie Mae and Freddie Mac Model of Risk Distribution 15
C. Knowledge Check – Differences Between Ginnie Mae and the GSEs 16
Ginnie Mae Programs 17
A. Single-Family Program 17
B. Multifamily Program 17
C. HMBS Program 17
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D. Manufactured Housing Program
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18
E. Program Requirements
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18
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I. Ginnie Mae Master Agreements
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II. Guaranty Agreement
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III. What Constitutes an Event of Non-Compliance
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IV. Prospectus
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19
F. Knowledge Check – Ginnie Mae Programs
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20
Ginnie Mae Products
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21
A. Single-Class Securities
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21
I. Ginnie Mae I 21
II. Ginnie Mae II 22
III. Multiple-Issuer Pools (MIPs) 22
IV. Ginnie Mae I and II MBS Expanded Comparison 24
B. MultiClass Securities 25
I. Platinum Securities 25
II. REMIC Securities 25
III. Stripped Mortgage Backed Securities 26
C. Knowledge Check – Ginnie Mae Products 27
Issuer Responsiblities 28
A. Knowledge Check – Issuer Responsibilities 29
Appendix 30
A. Knowledge Check Answers 30
B. Commonly Used Terms (Acronyms) 31
C. References & Resources 31
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The purpose of the Ginnie Mae Basics Workbook
(Workbook) is to provide new Issuers and new
employees of existing Issuers a fundamental
understanding of Ginnie Mae before they attend in-
person Issuer training. The Workbook is designed as
a foundational tool to orient new employees to Ginnie
Mae programs, policies and procedures and improve
participants’ readiness for in-person training. This
Workbook includes Ginnie Mae’s mission, history, and
basic Mortgage-Backed Securities (MBS) information
along with information on Ginnie Mae’s MBS programs
and products. In-person Issuer training will make
reference to the topics covered in this Workbook.
After each section of the Workbook, there are
Knowledge Check questions. These Knowledge
Checks are designed to help readers learn and retain
the information in this Workbook. The test is an open
book test where readers can search the Workbook
for the correct answers. The answer key for all the
Knowledge Check questions is included at the end of
the Workbook in the Appendix.
One
INTRODUCTION
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A. Ginnie Mae’s Mission
Ginnie Mae’s mission is to bring global capital into the
housing nance market — a system that runs through
the heart of our nation’s economy — while minimizing
risk to the taxpayer.
For 50 years, Ginnie Mae has worked to make
affordable housing a reality for millions of Americans
through providing liquidity and stability, serving as
the principal nancing arm for government loans and
ensuring that mortgage lenders have the necessary
funds to provide loans to consumers. Ginnie Mae
delivers mortgage securitization programs for
mortgage lenders and attractive offerings for
global investors.
Ginnie Mae developed the nation’s rst MBS in
1970. It is the only federal agency tasked with the
administration and oversight of an explicit, paid-for,
full faith and credit guaranty on MBS. Even in difcult
times, an investment in Ginnie Mae MBS has proven
to be one of the safest an investor can make, as
evidenced by the demand for these securities from
investors worldwide.
B. Ginnie Mae History
Although created and established in 1968, the genesis
of Ginnie Mae can be traced back to the Great
Depression, when historically high unemployment rates
led to an unprecedented wave of loan defaults. When
the surge in home foreclosures further depressed
housing values and the nation’s overall economy,
Congress passed the National Housing Act of 1934
(Act), a key component of the New Deal. The Act
created the Federal Housing Administration (FHA) to
help resuscitate the U.S. housing market and protect
lenders from mortgage default. As a national mortgage
loan insurance program, it gave greater incentive
to banks, building and loan associations, and other
institutions to make loans to everyday Americans.
Two
GINNIE MAE OVERVIEW
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The Act was amended in 1938 to charter the Federal
National Mortgage Association, or Fannie Mae, to
create a secondary mortgage. Fannie Mae’s role was
to buy FHA insured loans from lenders, providing
liquidity to support the ow of credit. The Housing and
Urban Development Act of 1968 subsequently split
Fannie Mae into two separate corporations: Fannie
Mae, to purchase conventional (non-U.S. government-
insured or government-guaranteed) mortgages that
conformed to specic underwriting standards, and the
Government National Mortgage Association or Ginnie
Mae, whose full faith and credit guaranty would provide
liquidity to lenders while broadening the market for
mortgage loan investment beyond portfolio ownership.
These loans are insured or guaranteed by the FHA, the
U.S. Department of Housing and Urban Development’s
(HUD) Ofce of Public and Indian Housing (PIH),
the U.S. Department of Veterans Affairs’ (VA) Home
Loan Program for Veterans, the U.S. Department of
Agriculture’s (USDA) Rural Development Housing, and
Community Facilities Programs and Rural Development
Guaranteed Rural Rental Housing Program (RD).
Ginnie Mae remains a self-nancing, wholly owned
U.S. Government corporation within HUD.
Today, Ginnie Mae remains the primary nancing
mechanism for all government-insured or government-
guaranteed mortgage loans. Historically, with
mortgage rates and availability of funds varying by
region and since it was nearly impossible to sell
individual mortgages on the secondary market, banks
customarily had to retain mortgages. This obstacle
signicantly limited the number of new loans that could
be originated. To combat this, in 1970, Ginnie Mae
developed the very rst MBS, which allowed for many
loans to be pooled and used as collateral in a security
that could be sold in the secondary market. With a
guaranty for the timely receipt of Principal and Interest
(P&I), MBS can be attractive investments for investors
worldwide. The MBS supports housing nance by
channeling investment capital from markets all over
the globe for use in lending to support neighborhoods
across the nation. Ginnie Mae’s role from the
beginning has been to provide access to capital for
affordable housing for millions of Americans.
For more information about how Ginnie Mae continues
to fulll its mission and role, please read the latest
annual report, nancial statements, and report to
Congress on our Budget & Performance webpage.
C. Ginnie Mae Statute
Ginnie Mae’s statutory authority is derived from Title III
of the National Housing Act, 12 U.S.C. 1716 et seq.
Ginnie Mae’s statute established Ginnie Mae as a
government corporation. This statute grants Ginnie
Mae the authority to guarantee securities and exempts
Ginnie Mae securities from Securities and Exchange
Commission registration requirements.
The statute gives Ginnie Mae MBS the backing of the
full faith and credit of the U.S. Government, grants
Ginnie Mae the authority to collect fees and sets
ceiling on the guarantee fee. It also provides the
authority to implement the Multiclass program.
The statute enables Ginnie Mae to extinguish Issuer
interests pursuant to a default and provides Ginnie
Mae the authority to impose civil money penalties.
D.Ginnie Mae Regulations
As a government corporation, Ginnie Mae and its
programs are governed by a set of regulations
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published in the Code of Federal Regulations at Title
24, Part 300-400:
Ginnie Mae’s regulations describe the Agency, explain
its creation and status, outline its area of operations,
as well as discuss the authority granted to its ofcers.
The regulations grant Ginnie Mae the right to appoint a
power of attorney, to make exceptions to its rules and
requirements as well as to audit the books or records
of any Issuer, mortgage servicer or trustee, etc.
Ginnie Mae’s regulations dene the characteristics of
Ginnie Mae securities and establish parameters for the
MBS programs.
The regulations establish general programs participant
requirements and sets pool parameters. They also
direct programs participants to the terms of the Ginnie
Mae Mortgage Backed Securities Guide (the MBS
Guide), and the Guaranty Agreement.
E. Ginnie Mae in a Nutshell
The availability of Ginnie Mae MBS helps provide
access to credit for middle- and lower-income
Americans, many of whom are rst-time homebuyers,
through federally insured mortgage programs. By
securitizing these loans into MBS, explicitly guaranteed
by the full faith and credit of the U.S. Treasury (the
only MBS with this kind of backing from the U.S.
Government), Ginnie Mae lowers the cost of mortgage
funding and passes along the savings to support
housing and homeownership in American communities.
What: Ginnie Mae guarantees investors timely
payment of P&I due on MBS issued under
Ginnie Mae’s programs. The MBS must be
backed by mortgage loans that are guaranteed
or insured by the U.S. Government (FHA, PIH,
VA, and USDA). Ginnie Mae currently manages
a portfolio of $2 trillion.
Why: Ginnie Mae provides the guaranty to attract
domestic and global capital to the nation’s
housing nance markets as well as to improve
the ability to trade mortgage investments.
Together, these actions increase the availability
of funds for mortgages, and consequently benet
rst-time homeowners as well as low- and
moderate-income borrowers. Because Ginnie
Mae has been able to leverage the government
guaranty at minimal cost and risk to the federal
government, it has dramatically lowered the
cost of housing for the 12 million households
currently nanced by government-insured loans.
Ginnie Mae Statute,
12 U.S.C. 1716 et seq.
Ginnie Mae Regulations,
24, CFR 320-350. 11
MBS Program
Agreements
MBS
Program
Forms
MBS
Prospectus
Ginnie Mae
Guaranty Agreement
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Ginnie Mae nances a variety of borrowers, including
many Americans who may decline to apply for or have
difculty qualifying for conventional loans, for example:
How: Ginnie Mae provides the framework and
infrastructure needed by approved entities
(Issuers) to pool loans and loan packages as
collateral for an MBS that will carry the Ginnie
Mae guaranty. Issuers obtain the right to issue
MBS carrying Ginnie Mae’s guaranty, by entering
into a Guaranty Agreement with Ginnie Mae,
First-time home buyers
Veterans
Borrowers with lower down payment loans
Borrowers with lower FICO credit scores
Borrowers with lower incomes
Borrowers with higher debt to income ratios
Borrowers with smaller loan balances
Borrowers in rural or other areas where credit
access is limited
which requires Issuers to pay a monthly guarantee fee
and abide by a set of requirements detailed in the
MBS Guide.
Ginnie Mae’s Six Core Functions
Ginnie Mae facilitates the creation of mortgage
securities by lender/servicer Issuers who create pools
of loans that are converted to securities and purchased
by investors the world over. Ginnie Mae’s role is to:
1. Establish requirements for the MBS program.
2. Approve, support and monitor Issuers and servicers.
3. Maintain the infrastructure through which MBS
are issued.
4. Provide loan-level information about pools to
investors and analysts.
5. Remit P&I to investors.
6. Support Multiclass securities formed from MBS.
Ginnie Mae also manages the assets of defaulted
Issuers that are Ginnie Mae program participants.
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F. Knowledge Check – Ginnie Mae Overview
QUESTION #1
What is Ginnie Mae’s mission?
QUESTION #2
What act created and established Ginnie Mae?
Choose one.
a. National Housing Act of 1934.
b. The 1938 amendment to the National Housing Act.
c. The Housing and Urban Development Act of 1968.
d. The development of the nation’s rst MBS in 1970.
QUESTION #3
Ginnie Mae is the primary nancing mechanism for
all government-insured or government-guaranteed
mortgage loans. Which government agencies insure
or guarantee these loans? Choose all that apply.
a. Federal Housing Administration
b. Ofce of Public and Indian Housing
c. U.S. Department of Veterans Affairs
d. U.S. Department of Agriculture
QUESTION #4
Mark if the statement below is an authority granted
by Ginnie Mae’s Statute or a Ginnie Mae Regulation.
#
1
3
2
Statement
It describes the Agency, explains its
creation and status, outlines its area
of operations, as well as discusses the
authority granted to its ofcers.
It grants Ginnie Mae the authority to
guarantee securities and exempts
Ginnie Mae securities from Securities
and Exchange Commission
registration requirements.
It gives Ginnie Mae MBS the backing
of the full faith and credit of the U.S.
Government, grants Ginnie Mae the
authority to collect fees and sets ceiling
on the guarantee fee.
Statute Regulation
5
7
4
6
8
It established Ginnie Mae as a
government corporation.
It establishes general programs
participant requirements and sets
pool parameters.
It denes the characteristics of Ginnie
Mae securities and establishes
parameters for the MBS programs.
It grants Ginnie Mae the right to appoint
a power of attorney, to make exceptions
to its rules and requirements as well as to
audit the books or records of any Issuer,
mortgage servicer or trustee, etc.
It enables Ginnie Mae to extinguish
Issuer interests pursuant to a default
and provides Ginnie Mae the authority to
impose civil money penalties.
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QUESTION #5
Ginnie Mae guarantees investors the payment of P&I
due on MBS issued under Ginnie Mae’s programs.
Ginnie Mae’s guaranty is backed by the full faith and
credit of the U.S. Government. What are some of the
major benets of Ginnie Mae’s guaranty? Choose all
that apply.
a. It lowers the costs of mortgage funding and
passes along the savings to support housing and
homeownership in American communities.
b. It enables Ginnie Mae to buy loans and issue its
own securities to nance a variety of buyers many of
which may have difculty getting and keeping a loan
including rst time home buyers, minority borrowers,
and borrowers with low down payments or low credit
scores, etc.
c. It attracts domestic and global capital to the nation’s
housing nance markets, improves the ability to
trade mortgage investments and increases the
availability of funds for mortgages.
d. It increases the availability of funds for mortgages
but increases the costs of mortgage funding.
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A. What is a Mortgage Backed Security?
MBS are bonds secured by real estate loans such as
home mortgage loans or other residential property loans.
A mortgage lender can create MBS by using a pool of
loans, usually with similar characteristics, as collateral
for an MBS. This means that the MBS that is created
from these loans will provide payments to an investor
that are derived from the payments made by borrowers
of the underlying mortgages (MBS collateral). Note that
the payments made to the investor may not always be
directly dependent on the mortgage payments made by
the borrower.
For example, a mortgage lender can pool together
mortgage loans with an aggregate principal balance of
$10 million, and through securitization, proceed to create
and issue an MBS with a face value of $10 million. The
MBS that is created would also provide the investor with
P&I for the life of the security. Lenders that engage in
this securitization process are referred to as “Issuers”
because, in addition to originating or acquiring mortgage
loans, they are now also issuing securities.
B. What is a Ginnie Mae MBS?
A Ginnie Mae MBS is an MBS that is assembled and
issued in conformance with Ginnie Mae guidelines that
(1) carries the Ginnie Mae Guaranty and (2) that is
backed only by mortgage loans that are guaranteed or
insured by a Federal Agency (FHA, VA, PIH, or USDA).
C. What is the Ginnie Mae Guaranty?
The Ginnie Mae Guaranty states that an Issuer can
obtain from Ginnie Mae, for a specic MBS, a guaranty
that the investor will receive the timely payments of
all P&I due on the security regardless of whether the
borrower, lender, or servicer are able to make monthly
payments. Ginnie Mae’s guaranty is backed by the full
faith and credit of the United States.
The Ginnie Mae guaranty allows mortgage lenders to
obtain a better price for their mortgage loans in the
secondary mortgage market. The lenders can then use
the proceeds to make new mortgage loans available.
Without this liquidity, lenders would be forced to keep
loans in their own portfolio, greatly reducing the number
of new loans they could make.
Three
GINNIE MAE MORTGAGE BACKED SECURITES OVERVIEW
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Ginnie Mae
Corporate Resources
of Issuer/Servicer
Relative Loss Position
Ginnie Mae Model of Risk Distribution on Defaulted Issuer Portfolios
Last Dollar
Loss
First Dollar
Loss
Losses
D.Ginnie Mae Model of Risk Distribution on
Defaulted Issuer Portfolios
The provision of Ginnie Mae’s federal government
guaranty is supported by a structural protection and
attention to risk management that minimize the extent to
which the guaranty is acted upon.
Ginnie Mae’s business model puts it in a “fourth loss”
position as a federal backstop, behind three other
layers of capital, thereby minimizing direct government
exposure to nancial risk from the MBS guaranty.
As a practical matter, the government guaranty would
come into play only if the private sector Issuer failed.
In order, the loss positions include:
1. Homeowners’ equity.
2. Capital of Ginnie Mae credit enhancers (FHA, PIH, VA,
USDA).
3. Balance sheet of Ginnie Mae Issuers, who are
responsible for on-time remittance of P&I if borrowers
don’t make mortgage payments on time.
4. An Issuer fails, and Ginnie Mae steps in to cover
payments to Investors.
Government Agency
Insurance
Homeowner
Equity
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Ginnie Mae’s model — in which it facilitates the creation
of mortgage securities by a varied network of mortgage
lender/servicers but does not itself buy or sell loans
or issue MBS — effectively minimizes risk to the
government and taxpayers.
In the ve decades since Ginnie Mae’s creation, housing
markets and interest rates have risen and fallen, and
Ginnie Mae’s products have evolved. But Ginnie Mae’s
pursuit of its mission has never faltered, surviving
recessions and a variety of market changes. Its revenues
have always been more than enough to pay for losses,
and over the years it has retained its standing as a
protable, self-sustaining government corporation.
Ginnie Mae’s stability and exibility in any kind of market
has come into even clearer relief in the years since the
nancial crisis of 2007-2008 and ensuing recession.
Ginnie Mae sustained no annual losses during this
time. In fact, the corporation’s market share of MBS
has skyrocketed from a low of four percent in 2005 to a
peak of 31 percent in recent years, making it the second
largest guarantor of MBS after Fannie Mae, as measured
by amount of outstanding securities. This period also saw
a substantial increase in the number of institutions that
participate in the MBS program, and a broadening of the
range and size of these participants.
During this market-share surge, Ginnie Mae has
expanded service with minimal disruption. Its efcient
operating structure leverages highly experienced staff
and services procured from private sector rms to
maintain reliable operations and invest in modernization
and improvement. This demonstrates Ginnie Mae’s
scalability to grow as needed to meet market needs, now
and in the future.
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E. Knowledge Check – Ginnie Mae Overview
QUESTION #6
What is an MBS and how is it created?
Write a short answer.
QUESTION #7
What are the characteristics of Ginnie Mae’s MBS
Program? Choose all that apply.
a. Ginnie Mae buys and sells loans, issues MBS and retains
forms of recourse against their servicer/seller.
b. Ginnie Mae’s MBS market share has skyrocketed from a
low of four percent in 2005 to a peak of 31 percent in recent
years, making it the second largest guarantor of MBS after
Fannie Mae, as measured by the amount outstanding.
c. Ginnie Mae MBS contain only mortgage loans that are
insured by a Federal Agency (FHA, VA, PIH, and USDA)
and Ginnie Mae guarantees that the investor (i.e. the
purchaser of the security) will receive all payments of P&I
due on the security regardless of whether the borrower,
loan guarantor (FHA, VA, PIH, USDA), lender or servicer
are able to make monthly payments.
d. Ginnie Mae’s MBS Program facilitates the creation of
mortgage securities by a varied network of mortgage lender/
servicers but does not itself buy or sell loans or issue MBS.
QUESTION #8
For Ginnie Mae’s Model of Risk Distribution on Defaulted
Issuers Portfolios, write the number for the loss order
next to each loss position.
a.____ Balance sheet of Ginnie Mae Issuers, who are
responsible for on-time remittance of P&I if borrowers
don’t make mortgage payments on time.
b.____ An Issuer fails, and Ginnie Mae steps in to cover
payments to Investors.
c.____ Capital of Ginnie Mae credit enhancers (FHA, PIH,
VA, USDA).
d.____ Homeowners’ equity.
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A. Ginnie Mae, Fannie Mae and Freddie Mac
Ginnie Mae’s business model differs from the
Government-Sponsored Enterprises (GSEs), Fannie
Mae and Freddie Mac, which also package loans into
mortgage securities that are sold to investors.
Ginnie Mae differs from Fannie Mae and the Federal
Home Loan Mortgage Corporation or Freddie Mac
because it does not itself issue the securities it
guarantees, nor does it buy or sell loans or maintain
a retained HMBS or loan portfolio, which means it
operates with a much smaller balance sheet and no
debt. Moreover, an active program of counterparty risk
management guards against the possibility of an Issuer
failure and mitigates losses to the government when such
failures do occur.
Its business model and conservative accounting practices
has protected Ginnie Mae from interest rate risk and
credit risk.
This means that even in difcult times, an investment in
Ginnie Mae MBS is one of the safest an investor
can make.
Fannie Mae and Freddie MacGinnie Mae
Explicit Guaranty to Investors Implicit Guaranty to Lenders and Investors
Government-Insured Loans
(FHA, VA, PIH and RD)
Conventional Loans
MBS Only MBS and Whole Loan Portfolio
Issuer/Servicer Risk
Borrower Credit Risk, Interest Rate Risk
and Servicer Risk
Four
DIFFERENCE BETWEEN GINNIE MAE AND
THE GOVERNMENT SPONSORED ENTERPRISES
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Fannie Mae/
Freddie Mac
Relative Loss Position
Last Dollar
Loss
$
First Dollar
Loss
Losses
Private Mortgage
Insurance
Homeowner
Equity
Fannie Mae and Freddie Mac will issue MBS and retain
forms of recourse against their servicer/seller while
Ginnie Mae doesn’t operate as the Issuer until the Issuer
has defaulted.
B. Ginnie Mae, Fannie Mae and Freddie Mac
Model of Risk Distribution
Fannie Mae and Freddie Mac use a different risk
distribution model than Ginnie Mae. Fannie Mae and
Freddie Mac MBS are not covered by government
agency insurance. When mortgages in their portfolio
default they cannot turn to the FHA, VA or USDA as a
source of capital to cover the default. If losses associated
with mortgage defaults cannot be covered by Private
Mortgage Insurance, Fannie Mae and Freddie Mac must
make P&I payments to investors out of their own capital.
In order, the loss positions include:
1. Homeowners’ equity.
2. Private Mortgage Insurance comes into effect.
3. Fannie Mae and Freddie Mac are responsible for
covering mortgage losses.
When a Ginnie Mae Issuer defaults, Ginnie
Mae steps into the Issuers’ shoes to fulll its
responsibilities.
At that point, all losses on the portfolio that could
have been attributed to the Issuer are passed
onto Ginnie Mae.
This includes losses arising from insufcient
recovery under insuring/guaranteeing agency
claims.
In general, by the time the risk is passed onto
Ginnie Mae, Ginnie Mae has no recourse against
the Issuer.
For those reasons, Ginnie Mae has to set
standards based on its own risk tolerance, not
the risk tolerance of the Issuer of record.
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_____________________________________________
_____________________________________________
C. Knowledge Check – Differences Between
Ginnie Mae and the GSEs
_____________________________________________
_____________________________________________
QUESTION #9
_____________________________________________
Very simply, how is Ginnie Mae similar to Fannie Mae and
Freddie Mac and how is it different? Write a short answer.
QUESTION #10
For Fannie Mae and Freddie Mac’s Model of Risk
Distribution on Defaulted Issuers Portfolios, write the
number for the loss order next to each loss position.
In order, the loss positions include:
a.____ Fannie Mae and Freddie Mac are
responsible for covering mortgage losses.
b.____ Homeowners’ equity.
c.____ Private Mortgage Insurance comes into
effect.
QUESTION #11
If mortgages in their portfolio default, can Fannie Mae and
Freddie Mac turn to the FHA, VA or USDA as a source of
capital to cover the default?
Yes or No.
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Unlike other entities, Ginnie Mae does not originate or invest in
mortgage loans directly. Rather, Ginnie Mae is the guarantor of
securities issued by approved lenders who participate in
our programs.
A. Single-Family Program
Ginnie Mae’s Single-Family Program is the conduit for
government mortgage lending to the world-wide capital
markets. This program allows borrowers in government
programs to reap the benets of the full faith and credit of the
United States by adding liquidity into the market in order to
lower their borrowing costs.
The Single-Family program is based on single family loans
which are secured by properties made up of one to four units
in a single structure. The majority of Ginnie Mae securities are
backed by Single-Family mortgages originated through the
FHA, VA, RD, and PIH insurance programs.
B. Multifamily Program
Since the creation of the Multifamily Program in 1971, Ginnie
Mae has guaranteed more than $300 billion in Multifamily
MBS. Ginnie Mae’s mission of supporting affordable housing
and promoting stable communities extends to ensuring that
decent rental units remain accessible. A critical part of that effort
is facilitating the construction and renovation of Multifamily
housing such as apartment buildings, hospitals, nursing
homes, assisted-living facilities, and other housing options.
By guaranteeing pools of Multifamily 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.
C. HMBS Program
In addition to traditional mortgages, Ginnie Mae’s expanding
Home Equity Conversion Mortgage (HECM) securities
program provides capital and liquidity for FHA-insured reverse
mortgages, an essential nancial solution for a growing number
Five
GINNIE MAE PROGRAMS
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of senior citizens. HECM loans can be pooled into HECM
mortgage-backed securities (HMBS) within the Ginnie Mae II
MBS program. They also can serve as collateral for Real Estate
Mortgage Investment Conduits (REMIC) backed by
HMBS (H-REMICs).
With continued investor interest in HECM-backed securities,
signicant efforts have been made to support market demand
for reverse mortgages. The structure and support that Ginnie
Mae has brought to this market has increased its liquidity, which
translates into better execution on the securities and, ultimately,
lower costs for the growing population of senior citizens.
D. Manufactured Housing Program
Ginnie Mae’s Manufactured Housing Program provides a
guaranty for mortgage loans insured by FHA for the purchase
of a new or used manufactured home. This program provides
liquidity in the market that in turn lowers costs for borrowers.
The Manufactured Housing Program works in conjunction with
the FHA Manufactured Housing Loan Modernization
Act of 2007 and the Housing and Recovery Act of
2008. The Modernization Act was developed to address the
diminishing market for the earlier version of the Title I Program.
The limited nature of this program left low- to moderate-income
borrowers with no adequate nancing options for manufactured
housing. Following FHA’s modernization of the program,
Ginnie Mae also made updates to the Title I Program to offer a
securitization vehicle for manufactured housing that is backed
by the U.S. Government.
E. Program Requirements
I. Ginnie Mae Master Agreements
1. After being admitted to the MBS Program, Issuers are
required to execute a Resolution of Board of Directors and
Certicate of Authorized Signatures, form HUD-11702, or
its equivalent, to identify the individuals who have the right
to bind the Issuer.
2. Next, Issuers execute a set of Master Agreements. Some
agreements require approval from Ginnie Mae before
becoming effective. The Master Agreements must be
executed by a signatory on the form HUD-11702 and must
be updated annually or as changes occur.
3. The Master Agreements include:
• HUD-11707 Master Servicing Agreement (requires
Ginnie Mae Approval).
• HUD-11709 Master Agreement for Servicer’s P&I
Custodial Account.
• HUD-11709-A Automated Clearing House Debit
Authorization.
• HUD-11715 Master Custodial Agreement (requires
Ginnie Mae Approval).
• HUD-11720 Master Agreement for Servicer’s Escrow
Custodial Account.
4. The Master Agreements are collected and maintained by
Ginnie Mae’s Pool Processing Agent (PPA), Bank of New
York (BNYM).
5. Ginnie Mae’s Master Agreements are executed
electronically through the Master Agreements Management
System (MAMS) in the Ginnie Mae Enterprise
Portal (GMEP).
II. Guaranty Agreement
Ginnie Mae requires Issuers to execute a Guaranty Agreement
upon pooling and securitization. Under the Agreement,
Issuers transfer all rights, titles, and interests in the underlying
mortgages to Ginnie Mae.
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The Agreement binds Issuers to comply with all Ginnie Mae
program requirements as described in the MBS Guide. The
MBS Guide, together with the Guaranty Agreement, set
forth the requirements for participation in Ginnie Mae’s MBS
programs, events of default, and the consequences associated
with non-compliance.
III. What Constitutes an Event of Non-Compliance
The Ginnie Mae Guaranty Agreement lists the following 10
egregious program violations that are examples of non-
compliance events:
1. Failure of Issuer to timely remit P&I payment to Security
Holders.
2. Notice by the Issuer to Ginnie Mae for an advance of funds.
3. Any other act or omission by the Issuer that results in an
untimely payment.
4. Any notication to Ginnie Mae by the Issuer that it cannot
meet its payment obligation.
5. Any impending or actual insolvency of the Issuer.
6. Any change in an Issuer’s business status that may result
in an inability to carry out its obligations.
7. Any unauthorized use of custodial funds.
8. Any withdrawal or suspension of FHA mortgagee status or
Fannie Mae/Freddie Mac seller/servicer status.
9. Any submission of false reports, statements or data, or any
act of dishonesty or breach of duciary duty to Ginnie Mae.
10. Any failure of the Issuer to observe or comply with any of
the terms and provisions of the Guaranty Agreement or the
MBS Guide.
IV. Prospectus
Issuers must prepare the appropriate standard form prospectus
for presentation to each prospective purchaser for all pools
submitted to Ginnie Mae using the paper submission process.
Issuers must provide disclosure documents for each
security type.
For pools and loan packages submitted through the electronic
submissions process, including all Multiple-Issuer Pools
(MIP), the PPA will prepare the prospectus and provide a
copy to the Issuer. The Issuer must present the prospectus to
each prospective purchaser as an offer to sell securities. The
prospectus must set forth the facts, essential data and potential
risks of the investment.
Prospectus are designed to help an investor make an informed
decision. No security of any Issuer may be sold in the primary
market unless a prospectus is given to the initial purchaser or
is sent to the initial purchaser under such circumstances that it
would normally be received prior to any payment of all or any
part of the purchase price of the security.
Ginnie Mae provides prospectuses for its securities on its
Disclosure webpage.
To see the prospectus, investors need to enter the pool number
or CUSIP number on the webpage.
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#
1
3
2
4
Statement
Facilitates the construction and renovation of apartment buildings, hospitals,
nursing homes, assisted-living facilities, and other housing options. By
guaranteeing pools of 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.
Provides a guarantee for mortgage loans insured by FHA for the
purchase of a new or used manufactured home.
Provides capital and liquidity for FHA-insured reverse mortgages, an essential
nancial solution for a growing number of senior citizens.
Used for residential mortgages which are secured by properties made up of one to
four units in a single structure. The majority of Ginnie Mae securities are backed by
this program originated through the FHA, VA, RD, and PIH insurance programs.
Single-
Family
Multi-
Family
HMBS
Manufactured
Housing
QUESTION #13
Fill in the correct blank with the following words: Ginnie Mae
Master Agreements, Guaranty Agreement, Non-Compliance and
Prospectus.
a. Issuers execute a set of _______________________.
Some agreements require approval from Ginnie Mae before
becoming effective. The ____________________ must be
executed by a signatory on the form HUD-11702 and must be
updated annually.
b. Ginnie Mae requires Issuers to execute a
________________ upon pooling and securitization. Under
the _________________, Issuers transfer all rights, titles,
and interests in the underlying mortgages to Ginnie Mae.
c. Issuers must prepare the appropriate standard form
____________ for presentation to each prospective
purchaser for all pools submitted to Ginnie Mae using the
paper submission process. For pools and loan packages
submitted through the electronic submissions process,
including all Multiple-Issuer Pools (MIP), the PPA will prepare
the ________and provide a copy to the Issuer.
d. The Ginnie Mae Guaranty Agreement lists 10 egregious
program violations that are examples of ______________
events.
QUESTION #14
What are the 10 egregious program violations included in the
Ginnie Mae Guaranty Agreement?
1._______________________________________________
2._______________________________________________
3._______________________________________________
4._______________________________________________
5._______________________________________________
6._______________________________________________
7._______________________________________________
8._______________________________________________
9._______________________________________________
10.______________________________________________
F. Knowledge Check – Ginnie Mae Programs
QUESTION #12
Mark which Ginnie Mae program the statement describes.
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A. Single-Class Securities
For Single-Class securities, Ginnie Mae has created the Ginnie
Mae I Program and the Ginnie Mae II Program. The primary
distinction between the two programs being the payment
mechanism and payment date.
I. Ginnie Mae I
Ginnie Mae I MBS are modied pass-through MBS on which
registered holders receive separate P&I payments on each of
their certicates. The underlying mortgages generally have the
same or similar maturities and the same interest rate on the
mortgages. Single-Family Ginnie Mae I pools have a 50 basis
point (0.5 percent) spread between the interest rate for each
note in the pool and the security rate. The Ginnie Mae I MBS
also permits the securitization of Multifamily mortgages. Ginnie
Mae I payments are made to holders on the 15th day of
each month.
The securitization provisions are established in detail in the
MBS Guide.
Types of mortgage pools and guaranteed securities:
Single-Family level-payment mortgages
Single-Family buydown mortgages
Single-Family graduated payment mortgages
Single-Family growing equity mortgages
Manufactured home loans
Project construction loans, including Multifamily
residential, hospital, nursing home, and group
practice facility loans
Project (permanent) loans, including Multifamily
Six
Ginnie Mae Products
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II. Ginnie Mae II
The Ginnie Mae II MBS program was introduced in 1983 in
response to the changing demands of the secondary
mortgage marketplace.
Ginnie Mae II MBS are modied pass-through MBS for which
registered holders receive an aggregate P&I payment from a
Central Paying Agent (CPA).
Ginnie Mae II MBS have become useful tools for “pipeline”
management for our Issuers. They also provide additional
exibility and liquidity. For example, Ginnie Mae II securities
permit greater exibility with respect to loan characteristics:
coupon rates on the underlying mortgages can vary between
25 and 75 basis points above the interest rate on the pool for
pools issued on or after July 1, 2003 and between 50 and 150
basis points for pools issued before July 1, 2003. MIP as well as
Single-Issuer Pools are permitted under the program.
The Ginnie Mae II MBS also allows small Issuers who do not
meet the dollar requirements of the Ginnie Mae I MBS program
to participate in the secondary mortgage market. In addition, the
Ginnie Mae II MBS permits the securitization of Adjustable Rate
Mortgages (ARMs).
The Ginnie Mae II MBS have a Central Paying and Transfer
Agent (CPTA) that collects payments from all Issuers and
makes one consolidated payment, on the 20th of each month,
to each security holder.
An Issuer may participate in the Ginnie Mae II MBS either by
issuing custom, Single-Issuer pools or through participation in
the issuance of MIP. A custom pool has a Single-Issuer that
originates and administers the entire pool.
A MIP typically combines loans with similar characteristics. The
resulting pool backs a single MBS issue and each participant
is responsible for administering the mortgage loans that it
contributes to the pool. The securitization provisions are set
forth in detail in the MBS Guide.
There are ve programs within Ginnie Mae II, each representing
a different type of mortgage. Under each type, both the custom
pool and MIP approaches are permissible. Any one pool must
consist of only one of the following mortgage types:
III. Multiple-Issuer Pools (MIPs)
A Ginnie Mae II MIP is a single-pool in which one or more
Issuers participate. The mortgages submitted by each
participating Issuer are referred to as a loan package. The
combined loan packages are used to form the pool that will
back a single issuance of securities.
An Issuer that pools a loan package designates at the time
of submission that it wishes to participate in a MIP. If Issuer A
submits an eligible loan package and designates it for a MIP for
a specied issue date and at a specied interest rate, and no
other Issuer submits a loan package for the same issue date
and interest rate, a MIP will be formed consisting of only Issuer
A’s single loan package.
Single-Family level-payment mortgages (FHA,
VA, or RD loans)
Single-Family graduated payment mortgages
(FHA or VA)
Single-Family growing equity mortgages (FHA
or VA)
Serial Notes
Single-Family adjustable rate mortgages (FHA
or VA)
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Most MIPs, however, have two or more participating Issuers.
Each participating Issuer originates and is responsible for
administering only the loan package that it submits and for
marketing securities in an amount equal to the original principal
amount of the loan package that it contributes to the MIP.
Each security issued in connection with the formation of a MIP
is backed by all of the mortgages in the pool and not merely by
the loan package submitted by the Issuer that marketed that
particular security.
Towards the end of the month, the MIP security is nalized
and each investor then owns a pro rata share of the full MIP
security. (Note: This end of month process by the PPA is called
“aggregation” or “rollup.”)
The rst payment due security holders will be made 50 days
from the issuance date for loans pooled in MBS securities and
then every month thereafter, on the 20th.
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IV. Ginnie Mae I and II MBS Expanded Comparison
Description Ginnie Mae I MBS Ginnie Mae II MBS
Issuer
Guaranty
P&I
Minimum Certicate Size
Pool Types
Ginnie Mae-approved Mortgage Lender.
Timely payment of P&I.
Paid monthly to securities holders.
$25,000; $1,000 for Multifamily Construction
Loans; $1 increments.
• Single-Family Level-Payment Mortgage.
• Single-Family Graduated Payment
Mortgage.
• Single-Family Growing Equity Mortgage.
• Single-Family Buydown Mortgage.
• Manufactured Housing.
• Serial Notes.
• Multifamily Construction Loan.
• Multifamily Project Loan.
• Single-Family Level-Payment Mortgage.
• Single-Family Graduated Payment
Mortgage.
• Single-Family Growing Equity Mortgage.
• Single-Family Adjustable Rate Mortgage.
• Manufactured Housing.
• Buydown Mortgages.
Ginnie Mae-approved Mortgage Lender.
Timely payment of P&I.
Paid monthly to securities holders.
$25,000; $1 increments.
Underlying Mortgages
Guarantor
Payment Date
Maturity
Minimum Pool Size
Interest Rate on Underlying Mortgages
Government-insured and -guaranteed Loans
(FHA, VA, RD, PIH).
Ginnie Mae
15th of the month.
Maximum 30 years for Single-Family;
40 years for Multifamily.
$1,000,000 (Single-Family);
$250,000 (Multifamily).
All mortgages in a pool have the same
interest rate (except manufactured
housing pools).
Government-insured and -guaranteed Loans
(FHA, VA, RD, PIH).
Ginnie Mae
20th of the month.
Maximum 30 years.
$250,000-$1,000,000
depending on pool type.
Mortgages in a pool may have interest rates
that range from 25 to 75 basis points.
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B. Multiclass Securities
Ginnie Mae’s Multiclass Securities Program includes the Ginnie
Mae REMIC, Platinum, and Stripped MBS program. The intent
of the Multiclass Securities Program is to further increase the
liquidity of Ginnie Mae securities in the secondary
mortgage market.
I. Platinum Securities
A Ginnie Mae Platinum security is formed by combining Ginnie
Mae MBS into a new single security. Platinum Securities
can be constructed from xed rate underlying Ginnie Mae
Securities that have uniform coupons and original terms to
maturity. WAC ARM Platinum securities currently do not meet
To Be Announced (TBA) eligibility. Platinum Securities can also
be constructed from Ginnie Mae ARM securities through the
Weighted Average Coupon (WAC) ARM program. WAC ARM
Platinum securities currently do not meet TBA eligibility.
Ginnie Mae Platinum Securities provide MBS investors with
greater market and operating efciencies. Investors owning
smaller pools of Ginnie Mae MBS can combine new or
existing MBS into larger Ginnie Mae Platinum pools. A Ginnie
Mae Platinum security may be used in structured nancings,
repurchase transactions, and general trading.
Ginnie Mae Platinum Securities are issued under the Ginnie
Mae Multiclass Securities Program, providing an important
adjunct to Ginnie Mae’s MBS program. Ginnie Mae requires that
the pool of Ginnie Mae MBS underlying a Ginnie Mae Platinum
pool consists entirely of Ginnie Mae I MBS or entirely of xed-
rate Ginnie Mae II MBS. In both cases, the securities must have
the same pool type, coupon rate and delivery eligibility. Both
30-year and 15-year Ginnie Mae MBS Certicates are eligible
for Ginnie Mae Platinum pools. Ginnie Mae Platinum pools
can be created from seasoned or current MBS production;
depositors can contribute entire or partial pools of Ginnie Mae
MBS certicates.
Ginnie Mae guarantees the timely payment of P&I on each
Ginnie Mae Platinum pool. This guaranty is backed by the full
faith and credit of the U. S. Government. In exchange for Ginnie
Mae’s guaranty of the Ginnie Mae Platinum pool, a guarantee
fee is charged.
Ginnie Mae Platinum’s Trade Good Delivery for
TBA Transactions
Subject to relevant Securities Industry and Financial Markets
Association guidelines, 30-year Ginnie Mae Platinum
securities are good delivery against 30-year Ginnie Mae TBA
transactions, even if the underlying Ginnie Mae MBS have
a current remaining term to maturity of less than 28 years.
Similarly, 15-year Ginnie Mae Platinum securities are good
delivery against 15-year Ginnie Mae TBA transactions. Ginnie
Mae Platinum securities trade good delivery against TBA
transactions because they are identical to Ginnie Mae MBS for
administrative and operational purposes.
II. REMIC Securities
REMICs direct P&I payments from underlying MBS to classes
with different principal balances, interest rates, average lives,
prepayment characteristics and nal maturities.
Ginnie Mae Platinum securities increase
marketability and liquidity for relatively illiquid
MBS pools, which, when combined, still meet
PSA “good delivery” guidelines.
Ginnie Mae Platinum pool processing costs for
investors, for monthly P&I payments, are lower
due to the fact that multiple MBS pools are
combined into one larger pool.
Prepayment variation for Ginnie Mae Platinum
securities may be less than the MBS due to the
diversication of the underlying mortgages.
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REMICs allow investors with different investment horizons,
risk-reward preferences and asset-liability management
requirements to purchase MBS tailored to their needs.
Unlike traditional pass-throughs, the P&I payments in REMICs
are not passed through to investors pro rata; instead, they are
divided into varying payment streams to create classes with
different expected maturities, differing levels of seniority or
subordination or other characteristics. The assets underlying
REMIC securities can be either other MBS or whole
mortgage loans.
Ultimately, REMICs allow Issuers to create securities with short,
intermediate and long-term maturities, exibility that in turn
allows Issuers to expand the MBS market to t the needs of a
variety of investors.
III. Stripped Mortgage Backed Securities
Stripped Mortgage-Backed Securities (SMBS), which will be
sold from time to time in one or more series, represent interests
in separate Ginnie Mae SMBS Trusts. Ginnie Mae guarantees
the timely payment of P&I on each class of SMBS.
Each Trust will be comprised primarily of:
Each series will be issued in two or more classes. Each class of
securities of a series will evidence an interest in future principal
payments and/or an interest in future interest payments on the
Trust assets included in the related Trust. The Trust created for
each issue of SMBS will be classied as a Grantor Trust.
Fully modied pass-through mortgage-backed
certicates as to which Ginnie Mae has
guaranteed the timely payment of P&I pursuant
to the Ginnie Mae I Program or the Ginnie Mae
II program;
Certicates backed by Ginnie Mae MBS
candidates as to which Ginnie Mae has
guaranteed the timely payment of P&I pursuant
to the Ginnie Mae Platinum Program;
REMIC or comparable mortgage certicates; or
Previously issued Ginnie Mae guaranteed
SMBS, in each case, evidencing interests
in Trusts consisting primarily of direct or
indirect interests in Ginnie Mae Certicates,
as further described in the related Offering
Circular Supplement.
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C. Knowledge Check – Ginnie Mae Products
QUESTION #15
Complete the Table for Single-Class Ginnie Mae I and Ginnie
Mae II MBS products
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
Description
Statement
#
#
Ginnie Mae II
REMIC
Stripped
MBS
Ginnie Mae I
Platinum
Payment Date
This type of security direct P&I payments from underlying MBS to classes with different
principal balances, interest rates, average lives, prepayment characteristics and
nal maturities.
This type of security is formed by combining Ginnie Mae MBS into a new single
security. They can be constructed from xed rate underlying Ginnie Mae Securities
that have uniform coupons and original terms to maturity.
This type of security, which will be sold from time to time in one or more series,
represent interests in separate Ginnie Mae Trusts. Each series will be issued in two
or more classes. Each class of securities of a series will evidence an interest in future
principal payments and/or an interest in future interest payments on the Trust assets
included in the related Trust.
This security allows Issuers to create securities with short, intermediate and long-term
maturities, exibility that in turn allows Issuers to expand the MBS market to t the
needs of a variety of investors.
Unlike traditional pass-throughs, the P&I payments of this security are not passed
through to investors pro rata; instead, they are divided into varying payment streams
to create classes with different expected maturities, differing levels of seniority or
subordination or other characteristics.
Ginnie Mae requires that the pool of Ginnie Mae MBS underlying this type of pool
consists entirely of Ginnie Mae I MBS or entirely of xed-rate Ginnie Mae II MBS.
In both cases, the securities must have the same pool type, coupon rate and
delivery eligibility.
These securities provide MBS investors with greater market and operating efciencies.
Investors owning smaller pools of Ginnie Mae MBS can combine new or existing MBS
into larger Ginnie Mae pools. This security may be used in structured nancings,
repurchase transactions, and general trading.
Maturity
Interest Rates
Minimum Pool Size
1
1
3
3
5
7
6
5
Minimum Certicate
2
2
4
4
QUESTION #16
What is a Ginnie Mae MIP?
QUESTION #17
Complete the Table for Multiclass Platinum, REMIC and
Stripped MBS products.
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Seven
ISSUER RESPONSIBILITIES
For each Ginnie Mae pool or loan package, there may be only
one Issuer of record. The Issuer is fully responsible for the
administration of the securities and the servicing of the
pooled mortgages.
The Issuer’s responsibilities include, but are not limited to:
1. Acquiring or originating eligible mortgages and forming
eligible pools or loan packages. (See the MBS Guide
Chapter 9 for mortgage, pool, and loan package
eligibility requirements.)
2. Establishing and maintaining proper P&I and escrow
custodial accounts and, if elected or required,
disbursement and clearing accounts for the pools and
loan packages (see the MBS Guide Chapter 16 for
information on such accounts), and handling properly
all payments and other funds pertaining to the pooled
mortgages. Issuers must also establish and maintain a
central P&I custodial account.
3. Obtaining an eligible Document Custodian. All documents
for a pool or loan package must be held by one
Document Custodian.
4. Providing the required loan, pool, and loan package
documents to the Document Custodian.
5. While custodial documents are in the Issuer’s possession,
maintaining such documents in compliance with the same
document safekeeping standards that apply to
Document Custodians.
6. Marketing or holding the securities backed by the pool or
loan package.
7. Servicing the mortgages in the pool or loan package or,
where permitted by the MBS Guide, contracting with a
subservicer to service them.
8. Administering the outstanding securities:
(a) Ginnie Mae I MBS Program - Under the Ginnie Mae I
MBS Program: the Issuer must make timely payment of all
amounts due to security holders of certicated securities,
and make available, in a designated account (which may
be the central P&I custodial account described in the next
paragraph), to the depository, as security holder of all
book-entry securities, all amounts due in respect of such
book-entry securities and to the CPTA the guarantee fee
due to Ginnie Mae.
(b) Ginnie Mae II MBS Program - Under the Ginnie Mae II
MBS Program: the Issuer must make available to the
CPTA in the central P&I custodial account all amounts
due to security holders and the guaranty fee due to Ginnie
Mae. Under both programs administering the outstanding
securities, the Issuer must use its own resources to cover
shortfalls in amounts due to security holders or to Ginnie
Mae resulting from insufcient collections on the
mortgage collateral.
9. Submitting required monthly, quarterly, and other reports
and certications to Ginnie Mae.
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A. Knowledge Check – Issuer
Responsibilities
QUESTION #18
Mark True (T) or False (F) for each question.
1. The Issuer is responsible for servicing the mortgages in the
pool or loan package or, where permitted by the MBS Guide,
contracting with a subservicer to service them.
2. The Issuer is responsible for acquiring or originating eligible
mortgages and forming eligible pools or loan packages.
3. The Issuer is responsible for providing the required
loan, pool, and loan package documents to the
Document Custodian.
4. When administering outstanding securities, only the Ginnie
Mae II MBS program requires the Issuer to use its own
resources to cover shortfalls in amounts due to security
holders.
5. The Issuer is only required to submit quarterly reports to
Ginnie Mae.
6. The Issuer is fully responsible for the administration of the
securities and the servicing of the pooled mortgages.
7. The Issuer is responsible for marketing or holding the
securities backed by the pool or loan package.
8. While custodial documents are in the Issuer’s possession,
the Issuer must maintain such documents in compliance with
the same document safekeeping standards that apply to
Document Custodians.
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Eight
APPENDIX
Question #1. Answer: To bring global capital into the housing
nance market while minimizing risk to the taxpayer. To make
affordable housing a reality for millions of Americans through
providing liquidity and stability, serving as the principal nancing
arm for government loans and ensuring that mortgage lenders
have the necessary funds to provide loans to consumers.
Question #2. Answer: c.
Question #3. Answer: all: a-d.
Question #4. Answers: 1 – regulation, 2 – statute, 3 – statute,
4 – regulation, 5 – statute, 6 – regulation, 7 – regulation, 8 –
statute.
Question #5. Answers: a and c.
Question #6. MBS are bonds secured by real estate loans
such as home mortgage loans or other residential property
loans. A mortgage lender can create MBS by using a pool of
loans, usually with similar characteristics, as collateral for an
MBS. This means that the MBS that is created from these loans
will provide payments to an investor that are derived from the
payments made by borrowers of the underlying mortgages
(MBS collateral). Note that the payments made to the investor
may not always be directly dependent on the mortgage
payments made by the borrower.
Question #7. Answers: b, c and d.
Question #8. Answers: a – 3, b – 4, c – 2, d – 1.
Question #9. Answer: Fannie Mae, Freddie Mac and Ginnie
Mae all package loans into mortgage securities that are sold to
investors. Ginnie Mae differs from Fannie Mae and Freddie Mac
because it does not itself issue the securities it guarantees, nor
does it buy or sell loans, which means it operates with a much
smaller balance sheet and no debt. Fannie Mae and Freddie
Mac will issue MBS and retain forms of recourse against their
servicer/seller while Ginnie Mae doesn’t operate as the Issuer
until the Issuer has defaulted. Other information from this
paragraph can also apply.
Question #10. Answers: a – 3, b – 1, c – 2.
Question #11. Answer: No.
Question #12. Answers: 1 – HMBS, 2 – Multifamily, 3 –
Single-Family, 4 – Manufactured Housing.
Question #13. Answers: a – Ginnie Mae Master Agreements,
b – Guaranty Agreement, c – Prospectus, d – Non-Compliance.
Question #14. Answers: See the list of events of non-
compliance on page 19.
Question #15. Answers: Ginnie Mae I: 15th of the month.
Maximum 30 years for Single-Family; 40 years for Multifamily.
All mortgages in a pool have the same interest rate (except
manufactured housing pools). $25,000; $1 increments.
$1,000,000 (Single-Family); $25,000 (Multifamily).
Ginnie Mae II: 20th of the month. Maximum 30 years.
Mortgages in a pool may have interest rates that range from
25 to 75 basis points. $25,000; $1 increments. $250,000-
$1,000,000 depending on pool type.
Question #16. Answers: A Ginnie Mae MIP is a single-pool
in which one or more Issuers participate. The mortgages
submitted by each participating Issuer are referred to as a loan
package. The combined loan packages are used to form the
pool that will back a single issuance of securities. Each security
issued in connection with the formation of a MIP is backed by all
the mortgages in the pool even though each participating Issuer
is responsible for only the loan package that it submits.
Question #17. Answers: 1 – REMIC, 2 – Platinum, 3 –
Stripped MBS, 4 – Platinum, 5 – REMIC, 6 – Platinum, 7 –
REMIC.
Question #18. 1. Answer: T, 2. Answer: T , 3. Answer: T
4. Answer: F – Under both the programs (Ginnie Mae I MBS
program and Ginnie Mae II MBS program), the Issuer must use
its own resources to cover shortfalls in amounts due to security
holders or to Ginnie Mae resulting from insufcient collection on
the mortgage collateral., 5. Answer: F – Issuers are required to
submit monthly, quarterly, and other reports and certications to
Ginnie Mae., 6. Answer: T, 7. Answer: T, 8. Answer: T
A. Knowledge Check Answers
Ginnie Mae Basics Workbook 10.01.2019 Version 1
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B. Commonly Used Terms (Acronyms)
C. References & Resources
These references and resources provide useful information
about Ginnie Mae.
Name NameAcronym Acronym
Adjustable Rate Mortgages
Mortgage Backed Securities
Guide
Central Paying Agent
Principal and Interest
Federal Natonal Mortgage
Associaton
Community Facilities Programs
and Rural Development
Guaranteed Rural Rental
Housing Program
Federal Housing Administration
Stripped Mortgage-Backed
Securities
Government-Sponsored
Enterprise
Department of Veterans Affairs
Public and Indian Housing
Home Equity Conversion
Mortgage-Backed Securities
Department of Housing and
Urban Development
Bank of New York Mellon
Multiple-Issuer Pool
Central Paying and Transfer
Agent
Pool Processing Agent
Federal Home Loan Mortgage
Corporation
Real Estate Mortgage
Investment Conduit
Government National Mortgage
Association
U.S. Department of Agriculture
Home Equity Conversion
Mortgages
Weighted Average Coupon
To Be Announced
Real Estate Mortgage
Investment Conduits backed
by Home Equity Conversion
Mortgage-Backed Secuirities
Mortgage Backed Securities
ARM
MBS GuideCPA
P&IFannie Mae
RD
FHA
SMBS
GSE
VA
PIH
HMBS
HUD
BNYM
MIPCPTA
PPA
Freddie Mac
REMIC
Ginnie Mae
USDA
HECM
WAC
TBA
H-REMICs
MBS
The Ginnie Mae Website
Ginnie Mae at 50
Ginnie Mae’s Statute - Title III of the National
Housing Act, 12 U.S.C. 1716 et seq
Ginnie Mae Regulations - Title 24, Part 300-
400
The Ginnie Mae Mortgage Backed
Securities Guide
The Ginnie Mae Mortgage Backed
Securities Guide Appendices
Single Family Monthly Reporting Workow
Timeline
Multifamily Monthly Reporting Workow
Timeline
