Residential: At Ginnie Mae Summit, housing leaders focus on the future

Housing leaders are looking into making major changes in the way Ginnie Mae operates.

The future of the agency and the larger housing landscape were discussed earlier this month at the 2019 Ginnie Mae Summit in Washington, D.C. Housing leaders, including regulators and representatives of government-sponsored enterprises (GSEs), industry groups and financial institutions, were among those who attended.

“There was a lot of discussion about where Ginnie Mae is heading over the next year,” said Stephanie Schader, Vice President of The Collingwood Group, a Situs company. “The agency is completely rethinking the management of its programs.”

The annual event comes as Ginnie Mae is halfway through executing its Ginnie 2020 plan and regulators are preparing their framework for housing finance reform, as tasked by a White House memo in March. Representatives from the Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), the Federal Housing Finance Agency (FHFA), the Department of Veterans Affairs (VA), the U.S. Department of Agriculture (USDA), Freddie Mac, the Urban Institute, the Housing Policy Council and the Mortgage Bankers Association discussed the rise of non-bank lenders and servicers, government lending challenges and modernization.

“The evolving makeup of bank versus non-bank lenders remains at the forefront of industry discussions,” said Schader.

Secretary Ben Carson said HUD, along with Ginnie Mae, was evaluating the appropriate level of capital and liquidity a non-bank issuer should hold. FHFA Director Mark Calabria said the share of mortgages made by non-bank lenders sold to government-backed programs has doubled from 30% in 2013 to 60% in 2019. As FHFA examines similar counterparty and liquidity risks for the GSEs, Calabria said, “Our goal is to ensure that originations have the financial strength to continue lending through any market or stressed environment.”

Ginnie 2020, published last year, outlines Ginnie Mae’s plan to modernize its mortgage-backed securities (MBS) program strategically to keep up with technological changes in the mortgage industry. Maren Kasper, Ginnie Mae Acting President, said the association plans to be more transparent than ever, communicating “how we’re thinking about today, the future and how we’re planning for that.”

The summit discussed Ginnie Mae’s new approach to managing counterparty risk. Panels also addressed Ginnie Mae’s current initiatives on modernization, looking specifically at the work of the Securities Operations Team and Enterprise Data and Technology Team.

The issue of housing finance reform was, of course, a hot topic. The White House memo requires HUD, Ginnie Mae and other federal agencies to develop plans for administrative and legislative reforms to modernize, strengthen and preserve affordable housing finance.

“As we move forward, we will determine how broadly new policies should apply,” Carson said during the summit. “Our review in this space also presents an opportunity to increase engagement with other federal partners and state regulators and coordinate our efforts.”

“It’s remarkable to see how much has changed in the mortgage landscape since Ginnie Mae’s last summit,” said Schader. “Judging by the momentum we saw at this year’s event, I think we can expect to see even more developments by this time next year.”

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