Ginnie Mae Policy Overview Stephanie Schader Program Development Manager NCSHA Annual Conference January 15, 2015

Ginnie Mae Overview Ginnie Mae’s mission is to attract capital from the global capital markets into the U.S. housing industry. We do this via the administration of a mortgage-backed securities (MBS) program dedicated to mortgage loans that are insured by government agencies (FHA, VA, USDA RD, HUD PIH). Through the MBS program, loans are pooled and converted to securities that are guaranteed, via Ginnie Mae, by the U.S. Government. There are currently over $1.5 trillion of securities outstanding. Ginnie Mae is a government-owned corporation, located within HUD.

Program Development Group New unit within Ginnie Mae dedicated to updating and maintaining program policies contained in the MBS Guide and announced through All Participants Memoranda (APMs) Guidance revisions made with stakeholder input Aim to make guidance clear and intuitive for program users Work extensively with other areas of Ginnie Mae: Office of Securities Operations — Systems modernization projects and policy implementation Office of Capital Markets — Disclosures and investor outreach Office of the President – Coordinate policy implementation and announcements with broader Administration policy goals Work closely with the Insuring Agencies (FHA, VA, USDA RD, and HUD PIH) as well as CFPB and FHFA Often broader market regulation changes must be reconciled with our program Aim to inform and make transition as seamless as possible for Issuers Ginnie Mae has grown tremendously in the last 6 years, we significantly increased staff across the organization. Introduce myself, a little of my background, Tell you a little about what I and my team do at Ginnie Mae Guide Policy -update and/or revise policies by issuing APMS to align with current needs of the program and its participants, which includes both Issuers and Investors (See bullet 2) -Together with the Senior Policy Advisor, work closely with the Insuring/Guaranteeing agencies to ensure we can accommodate policy updates and ensure liquidity for agency mortgages, for instance FHA HECM Stabilization initiative. Also, communicate with CFPB and FHFA on a regular basis.

Recently Published Policy Revised SCRA reimbursement requirements to allow the DoD Database (DMDC) Status Reports to be used in lieu of Military Orders, greatly streamlining the process for Issuers and borrowers (APM 14-13) Implemented changes to pooling eligibility requirements to accommodate the 45-day ARM look-back period required by CFPB regulation (APM 14-12) Clarification of the Buyout requirements for Delinquent loans that is more closely aligned with industry norms, is consistent with the securities prospectus, and facilitates the loan modification process Loans due but unpaid for three (3) consecutive months are eligible (MBS Guide 18-3(B)(1)) Partial payments received from borrowers do not reset the clock Based on the application of payments received SCRA -Ginnie Mae reimburses Issuers for the interest forgiveness provided to servicemembers under the SCRA. Our prior policy required copied of the borrowers’ Military Orders, which can be difficult for servicers to obtain. -but recently, we were able to obtain an opinion from the Department of Defense that allowed us to accept the DMDC (Defense Manpower Database C___) Report in lieu of orders. ARM Lookback -Per CFPB regulation, ARM loans originated on or after 1/10/15, must have a 45 day lookback. Loans with 30 day eligible for pooling through March Beginning April new lookback required. Determining this policy, took into consideration time for Issuers to manage pipelines, structure and marketability of securities. Were finally able to resolve a particularly thorny issue with the clarification of our buyout policy for DQ loans. Old: even if a loan was more than 90 days delinquent, any payment from the borrower would restart the clock, so to speak New: if the loan is due but unpaid, for 3 consecutive months it is eligible. Important to balance the needs of investors and Issuers, --investors monitor prepayment speeds, or the rate at which principal is returned to Investors, closely. --issuers need to be able to buy out loans for modification. Examples

Recently Published Policy Cont’d Buyout Policy Examples No Payment Received   January February March April Payment Due $1,000 Eligible for buyout Amount Paid $0 Last Paid Installment December On the first example, this is the simplest scenario. The borrower stops making payments altogether and goes from current to 90 days delinquent. In this case the borrower misses January February and march installments, making the loan eligible for buyout April 1. In the second example, if the borrower was already past due, and made a payment, it is applied to the oldest unpaid installment due, and the loan rolls 60 days DQ, if the borrower make no other payment the loan is eligible May 1, or one month later than the above example. For contrast, under the old policy, the clock would reset, and the Issuer would have to restart the 90 day period. Payment Received in the Amount Due   January February March April May Payment Due $1,000 Eligible for buyout Amount Paid $0 $1,000* Last Paid Installment December *A payment in the full amount of the installment advances the last paid installment by one month

Recently Published Policy Cont’d Revised Net Worth and Liquidity Requirements for Single-Family Issuers Single-Family Issuer Minimum Net Worth: Minimum adjusted net worth requirement of $2,500,000 plus 0.20% (20 basis points) of the Issuer's total effective outstanding single-family obligations has been increased to $2,500,000 plus 0.35% (35 basis points) of the Issuer's total effective outstanding single-family obligations. Single-Family Issuer Minimum Liquidity: Minimum liquid assets requirement of 20% of required net worth has been changed to the greater of $1,000,000 or 0.10% (10 basis points) of the Issuer's outstanding single-family securities the ho 1Total effective Single-Family outstanding obligations equal the sum of: 1) all Single-Family Ginnie Mae securities outstanding, 2) available commitment authority to issue new Single-Family pools, and 3) total Single-Family pools funded. using market continues to transform, Help!!

Recently Published Policy Cont’d Issuers Approved for more than one Program Minimum Net Worth and Liquidity: Issuers participating in more than one program type (Single-Family, Multifamily, Manufactured Home, and/or HECM MBS) will have to meet a minimum adjusted net worth and liquid assets requirement equal to or greater than the sum of the minimum requirements for all the program types in which the Issuer is approved to participate, as opposed to the highest program requirement. Issuer Demonstrated Participation Requirement: Issuers must demonstrate participation by issuing, acquiring, or subservicing Ginnie Mae MBS in the program(s) for which they are approved in the preceding 18 months. An Issuer which fails to demonstrate participation, may request an extension of time in order to comply with the requirement, pending Ginnie Mae approval.

New Requirements Effective Dates: .   New Requirements Effective Dates: Beginning January 1, 2015, applicants seeking Issuer approval are required to meet the new requirements. Beginning January 1, 2015, in order for a new Pool Issuance for Immediate Transfer (PIIT), or MSR bulk transfer, arrangement to be approved, the acquiring Issuer has to meet the new requirements. Program specific net worth and liquidity (if applicable) requirements currently in place for the Multifamily, Manufactured Home, and HECM MBS programs remain unchanged. Institution-wide capital requirements also remain unchanged. Beginning January 1, 2015, Issuers must demonstrate active participation in the program in order to maintain program eligibility. 1Total effective Single-Family outstanding obligations equal the sum of: 1) all Single-Family Ginnie Mae securities outstanding, 2) available commitment authority to issue new Single-Family pools, and 3) total Single-Family pools funded.

New Requirements Respond to Transforming Housing Market As the housing market has changed, so has the * YTD = July 2014

Currently in Development Issuer Operational Performance Profile (IOPP) – will measure an Issuer’s operational and default performance against its peers Enables Issuers to better compare their performance to Ginnie Mae’s expectations Provides Issuers with a framework and methodology to gauge their effectiveness within a predetermined set of metrics Bolsters internal consistency in monitoring business activities across the broad community of Ginnie Mae Issuers and establishes basis for providing constructive feedback to Issuers Additional Guidance on Pool Issuance for Immediate Transfer (PIIT) Transactions Eligibility requirements Process for requesting approval FHLB Chicago Conduit Illinois and Wisconsin HFA members able to apply with FHLB Chicago now Working on enabling other FHLBs’ members to participate Servicing Retained and Servicing Released loan sales available Members sell to FHLB Chicago, which then issues Ginnie Mae-guaranteed MBS

Contact Information Stephanie Schader Program Development Manager Stephanie.a.schader@hud.gov (202) 475-7876