Ginnie Mae MBS Guide (5500.3, Rev. 1) Chapter 14 — Pool and Loan Package Administration — General
Ginnie Mae effective dates: 2018-01-05 to 2021-07-28 · 23 dated sections · MBS Guide 5500.3, Rev. 1
Each section below carries Ginnie Mae's own effective date. The Guide is amended
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GNMA MBS Guide Chapter 14 — pool / loan-package administration servicing standards hierarchy, life-of-pool record keeping, security-holder payment duty, custodial-account requirements, delinquency / defective- loan handling, fire and extended insurance, IRS reporting, conflict of interest, audit access, pool maturity / termination.
Verbatim regulatory text
Verbatim provisions from Ginnie Mae MBS Guide (5500.3, Rev. 1) Chapter 14 — Pool and Loan Package Administration — General — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Ginnie Mae MBS Guide Ch. 14, Part 2 — Servicing Standards
An Issuer must service pooled mortgages and mortgages related to pooled Participations in accordance with (A) any applicable FHA, VA, RD, or PIH regulation or requirement, (B) to the extent not inconsistent with (A), this Guide, as amended or supplemented from time to time, and any applicable statute implemented, or instruction issued, by Ginnie Mae, and (C) to the extent not inconsistent with (A) or (B), practices generally accepted in the mortgage lending and servicing industries. Requirements with respect to pool or loan package administration apply to the Issuer pursuant to the applicable Guaranty Agreement (see Appendices III-15 through III-20 and, III-23 through III-27), which, among other things, requires compliance with this Guide. The Issuer must be thoroughly familiar with the requirements of the applicable Guaranty Agreement. No Issuer or subcontract servicer may, without the written permission of Ginnie Mae, remove a loan, whether pursuant to a substitution or otherwise, from a pool or loan package or reduce a balance on a pooled loan for any reason not specifically authorized in the applicable Guaranty Agreement or in this Guide.
Ginnie Mae MBS Guide Ch. 14, Part 2 — Servicing Standards
An Issuer must service pooled mortgages and mortgages related to pooled Participations in accordance with (A) any applicable FHA, VA, RD, or PIH regulation or requirement, (B) to the extent not inconsistent with (A), this Guide, as amended or supplemented from time to time, and any applicable statute implemented, or instruction issued, by Ginnie Mae, and (C) to the extent not inconsistent with (A) or (B), practices generally accepted in the mortgage lending and servicing industries. Requirements with respect to pool or loan package administration apply to the Issuer pursuant to the applicable Guaranty Agreement (see Appendices III-15 through III-20 and, III-23 through III-27), which, among other things, requires compliance with this Guide. The Issuer must be thoroughly familiar with the requirements of the applicable Guaranty Agreement. No Issuer or subcontract servicer may, without the written permission of Ginnie Mae, remove a loan, whether pursuant to a substitution or otherwise, from a pool or loan package or reduce a balance on a pooled loan for any reason not specifically authorized in the applicable Guaranty Agreement or in this Guide.
Ginnie Mae MBS Guide Ch. 14, Part 3 — Record Keeping
The Issuer must retain records for each pool or loan package of mortgages for the life of the pool or loan package. These records must accurately reflect the application of each monthly installment, the amounts paid directly to security holders of certificated Ginnie Mae I MBS, the amounts made available to the depository, as security holder of all book-entry Ginnie Mae I MBS, and to the CPTA for use in making payments to the security holders of Ginnie Mae II MBS, and any unrecovered advances. The Issuer must maintain for the life of a mortgage records of all disbursements for taxes, insurance premiums, and all other expenses. The Issuer must also retain all canceled checks and bank statements pertaining to the mortgages in accordance with FHA, VA, RD, or PIH requirements and practices generally accepted in the mortgage lending and servicing industries. These records may be in the form of microfilm or other acceptable documentation. Failure to maintain all required records will constitute an act of mismanagement and grounds for Ginnie Mae to declare an Issuer in default. Issuers that acquire pools or loan packages will be responsible for the pool or loan package records, as noted above, for the period from the issue date of the pool or loan package to the pool or loan package transfer date and thereafter.
Ginnie Mae MBS Guide Ch. 14, Part 1 — Overview of Chapter
This chapter describes the responsibilities of an Issuer in servicing mortgage pools and loan packages and the related securities. The chapter describes the servicing standards that govern the discharge of these responsibilities. Summaries are included of certain servicing matters addressed more fully in MBS Guide, Ch. 15 through 20, including payments to security holders, custodial accounts, pool, loan package, and loan accounting and reporting, mortgage delinquency and default, reporting remaining principal balances, and maturity or termination of pools. Additional requirements related to the administration of HMBS pools are found in MBS Guide, Ch. 35.
Ginnie Mae MBS Guide Ch. 14, Part 4, § A — Full and Timely Payment
The Issuer is obligated under the Ginnie Mae I MBS Program to make timely monthly payments of principal and interest to the security holders of certificated securities of record as prescribed in the securities, in the applicable Guaranty Agreement, and in this Guide. Under the Ginnie Mae I MBS Program, the Issuer also is obligated to make available good funds adequate to enable the depository, as security holder of all book-entry securities, to pay itself timely monthly payments of principal and interest on such securities, as prescribed in the applicable Contractual Agreement or Guaranty Agreement, as the case may be, and this Guide. Under the Ginnie Mae II MBS Program, the Issuer is obligated to make available funds adequate to enable the CPTA to make timely monthly payments of principal and interest to the security holders of record, as prescribed in the applicable Contractual Agreement or Guaranty Agreement, as the case may be, and in this Guide. The Issuer must make these payments or these funds available without regard to whether the Issuer will be able to recover such amounts from liquidation proceeds, insurance proceeds, or otherwise. Payments to security holders are discussed more fully in MBS Guide, Ch. 15 and 35.
Ginnie Mae MBS Guide Ch. 14, Part 4, § B — Elements of Monthly Payments
The monthly payment to MBS security holders consists of three elements, as applicable: interest, scheduled principal, and unscheduled recovery of principal, each computed as described in MBS Guide, Ch. 15, Part 4 and Ch. 35, Part 11.
Ginnie Mae MBS Guide Ch. 14, Part 4, § C — RPBs and Determination of Principal Payments
Each month the Issuer must pay to security holders of certificated Ginnie Mae I MBS, make available to the depository, as security holder of all book-entry Ginnie Mae I MBS and make available to the CPTA for payment to security holders of Ginnie Mae II MBS, principal equal to the difference between the RPB reported in the prior month and the RPB reported in the month of payment. The reporting of RPBs and their use in determining principal payments are discussed in MBS Guide, Ch. 19 and Ch. 17, Part 4, § D, respectively.
Ginnie Mae MBS Guide Ch. 14, Part 4, § D — Advances of Principal Interest
If necessary to cover shortfalls in collections, the Issuer must advance its own funds in order to ensure that timely payment of all amounts due security holders is made. Advances are discussed more fully in MBS Guide, Ch. 15, Part 2, § E and Part 3, § C.
Ginnie Mae MBS Guide Ch. 14, Part 5 — Custodial Accounts
Issuers must segregate the cash flow from the pooled mortgages and mortgages related to pooled participations by maintaining separate custodial accounts for principal and interest, taxes and insurance, and other escrows. Each Ginnie Mae I MBS Program Issuer must maintain a central P&I custodial account (which may be the same central P&I custodial account described in the next paragraph) from which (i) the depository, as security holder of all book-entry securities, may transfer funds by ACH transaction for payments on such securities and (ii) the CPTA shall withdraw funds by ACH transaction for the payment of the Ginnie Mae guaranty fee. Each Ginnie Mae II MBS Program Issuer must maintain a central P&I custodial account from which the CPTA may transfer funds, by ACH transaction, for the payment of security holders and the Ginnie Mae guaranty fee. The custodial accounts must satisfy all of the requirements of the related Master Agreement for Servicer’s Principal and Interest Custodial Account, form HUD 11709 (Appendix III-2) and Master Agreement for Servicer’s Escrow Custodial Account form HUD 11720 (Appendix (III-3), and the applicable Guaranty Agreement, including the requirement that the accounts be insured by the FDIC or the NCUA. Custodial account requirements are discussed more fully in MBS Guide, Ch. 16. If necessary to cover shortfalls in collections from mortgagors, the Issuer must advance its own funds to make tax and insurance payments when due. This advance obligation is discussed in MBS Guide, Ch. 5, Part 2, § J and Ch. 16, Part 5, § A.
Ginnie Mae MBS Guide Ch. 14, Part 6, § A — Accounting Requirements
All Issuers must comply with the pool, loan package, and loan accounting requirements, which are discussed more fully in MBS Guide, Ch. 17.
Ginnie Mae MBS Guide Ch. 14, Part 6, § B — Monthly Pool and Loan Package Reporting Requirements
Each Issuer must report by the 2nd business day of each month, for each of its pools and loan packages regardless of type. Instructions for submitting the RFS Issuer Monthly Report of Pool and Loan Data can be found in Appendix VI-19. These reports, the methods for submitting them, and the process for correcting them are discussed more fully in MBS Guide, Ch. 17.
Ginnie Mae MBS Guide Ch. 14, Part 6, § C — Monthly Reporting Requirements
Each Issuer must submit loan level data on a monthly basis, and this data must reconcile with RFS Issuer Monthly Report of Pool and Loan Data (Appendix VI-19), for the applicable reporting month. This is discussed more fully in MBS Guide, Ch. 17.
Ginnie Mae MBS Guide Ch. 14, Part 7 — Reporting Remaining Principal Balances
The Issuer’s obligation to report RPBs to Ginnie Mae monthly, the use made of the RPBs, and the methods for reporting and correcting RPBs are discussed in MBS Guide, Ch. 19 and 35.
Ginnie Mae MBS Guide Ch. 14, Part 8, § A — Servicing and Repurchase of Delinquent Loans
The Issuer must service delinquent mortgages and manage foreclosure or assignment procedures in accordance with the standards described in MBS Guide, Ch. 14, Part 2 and Ch. 18. Special requirements that apply to Home Equity Conversion Mortgage Loans can be found in MBS Guide, Ch. 35. The Issuer’s right to purchase certain delinquent loans is described in MBS Guide, Ch. 18, Part 3, § B.
Ginnie Mae MBS Guide Ch. 14, Part 8, § B — Acceptable Delinquency Rates
Issuers must maintain delinquency rates on outstanding pools below the threshold levels described in MBS Guide, Ch. 18.
Ginnie Mae MBS Guide Ch. 14, Part 8, § C — Failure to Maintain Acceptable Delinquency Rates
If an Issuer fails to maintain delinquency rates on outstanding pools or loan packages below the applicable threshold levels, Ginnie Mae may impose on the Issuer sanctions that are described in MBS Guide, Ch. 18.
Ginnie Mae MBS Guide Ch. 14, Part 8, § D — Defective Loans
(1) Definitions The term “Defective Mortgage” means a mortgage or loan: (a) that cannot be insured or guaranteed by an agency of the Federal Government named in Section 306(g)(1) of the National Housing Act; (b) that has been refused by the insuring or guaranteeing agency; (c) for which federal agency insurance or guaranty has been withdrawn; (d) for which, in the case of GNMA MBS II Single Family Level Payment MBS and H4H mortgage loans, FHA is prohibited from paying insurance benefits, whether or not the mortgage is insured; or (e) that does not comply with the terms of the related securities, including, for example, a single family mortgage or manufactured home loan that has not been insured or guaranteed by an agency of the Federal Government named in Section 306(g)(1) of the National Housing Act. Delinquency is not considered a defect except as provided in MBS Guide, Ch. 9, Part 2, § E or, in the case of H4H mortgage loans, to the extent that such delinquency prohibits FHA from paying insurance benefits. (2) Issuer Responsibilities for Defective Loans (a) Loan Substitution. If a single family mortgage or manufactured home loan is found to be defective within 120 calendar days after the Issue Date of the securities, then the Issuer must cure the defect or replace the mortgage or loan in the pool or loan package with a substitute mortgage or loan prior to the expiration of the 120 day period, except that Project loans, construction loans, and Home Equity Conversion Mortgage (HECM) loans are ineligible for loan substitutions and must be bought out as provided in subsection (b), below. A substitute mortgage or loan must satisfy the following requirements: (i) Pool eligibility requirements: Except as set forth below, it must satisfy all of the eligibility requirements in the Guide or terms of the securities that it would have had to meet had it been properly included in the related pool initially. (ii) Maturity date: Its maturity date may not be later than the maturity date of the related Ginnie Mae MBS. (iii) Remaining principal balance: At the time of replacement, its remaining principal balance may not be greater than the remaining principal balance of the mortgage, according to the pool and security records, to be replaced. If its remaining principal balance is less than the remaining principal balance of the mortgage or loan to be replaced, the Issuer must, as applicable, include the pro rata portion of such difference in the next payment made to the security holders of the related securities. Within the first 120 calendar day from the Issue Date of a security, Issuers must prioritize efforts to cure loan defects that arise from missing federal mortgage insurance or guaranty. Ginnie Mae will refrain from enforcing the loan substitution requirement for any single family mortgage or manufactured home loan that (i) is defective solely because it does not comply with the terms of the securities because it has not been insured or guaranteed by an agency of the Federal Government named in Section 306(g)(1) of the National Housing Act, and (ii) is not otherwise defective under elements (a) – (e) of the definition of Defective Mortgage in MBS Guide, Ch. 14, Part 8, § D(1). Ginnie Mae may act, at any time, to enforce the loan substitution requirement if it determines, in its sole discretion, that an Issuer is not prioritizing efforts to cure defects or for other good cause. Immediately upon receiving notice or being deemed to have notice that Ginnie Mae, in its sole discretion, will no longer refrain from enforcing the loan substitution requirement for any single family mortgage or manufactured home loan that is defective solely because it has not been insured or guaranteed, the Issuer shall become subject to the loan substitution requirement in the Guaranty Agreement (b) Mandatory Loan Buyouts. After the 120 day period, loan substitution is not allowed, and the Issuer (including an Issuer with a Representations and Warranties Agreement) must either cure the defect or request approval to buy the Defective Mortgage out of the pool(s) or loan package by depositing into the Central P&I Custodial Account an amount, from the Issuer’s own funds, that will reduce to zero the portion of the outstanding principal balance of the related securities attributable to the Defective Mortgage. The cure or buyout approval request, as applicable, must occur by the earlier of the final certification due date for the corresponding pools(s) or loan packages or thirty days from discovery of the defect. If a project or construction loan is found to be defective, regardless, of the time of discovery, the Issuer must cure the defect or buy out the loan. (c) Notice and Approval Requirements. The Issuer must notify in writing Ginnie Mae’s Office of Issuer & Portfolio Management (see Addresses) of any mortgage found to be defective. The Issuer must receive Ginnie Mae’s written approval prior to any substitution for or buyout of a Defective Mortgage from a pool. A request to buy out a Defective Mortgage must be submitted in accordance with the Form Letter for Loan Repurchase (Appendix VI-2).
Ginnie Mae MBS Guide Ch. 14, Part 9 — Other Pool and Loan Package Administration Requirements
In addition to the requirements described above, the Issuer agrees to perform, and is responsible for, the following functions:
Ginnie Mae MBS Guide Ch. 14, Part 9, § A — Pool and Loan Package Documents
The Issuer must deliver mortgage loan and pool and loan package documents to the document custodian and safeguard pool and loan package documents during their interim release by the document custodian for necessary loan administration actions. (Please See MBS Guide Chapter 13)
Ginnie Mae MBS Guide Ch. 14, Part 9, § B — Fire and Extended Insurance Coverage; Mortgage Impairment Insurance
(1) For each pooled mortgage, the Issuer must have in its possession a valid, standard policy of insurance for fire and extended coverage or comparable insurance coverage. Such policy must be in an amount equal to the RPB of the pooled mortgage or the value of the improvements less the value of the land. The policy must include a loss-payable endorsement designating the Issuer as payee. The Issuer must maintain the insurance in full force and effect to the extent that the insurance is available. For a manufactured home loan, the policy must be in an amount equal to the RPB of the loan or the value of the manufactured home, whichever is less. Each insurance policy must include a standard mortgagee clause insuring the interest of Ginnie Mae as well as that of the Issuer and the homeowner. For a multifamily loan, the policy must be in an amount equal to the RPB of the mortgage or the amount required by FHA, whichever is less. The Issuer must maintain evidence of insurance by retaining either the original policies or the information relating to the insurance policies in a medium that is accessible to Ginnie Mae. If the Issuer does not retain the original policies as evidence of insurance it must carry mortgage impairment or mortgage interest insurance. (2) If required pursuant to paragraph (1), the Issuer must maintain mortgage impairment or mortgage interest insurance that satisfies the following requirements: (a) be underwritten by an insurer currently rated B+ or better in Best’s Insurance Reports and licensed or otherwise authorized by law to conduct business in the jurisdictions where the properties are located; (b) provide coverage for the Issuer and/or Ginnie Mae; (c) provide coverage in scope and amounts at least equal to those required under MBS Guide, Ch. 2, Part 7; (d) provide for at least 30 days’ written notice to the Issuer and, if applicable, to Ginnie Mae before canceling or terminating the coverage; and (e) be approved by any regulatory authority to which the Issuer is subject, if such approval is required. In addition to all other remedies of Ginnie Mae, the Issuer will indemnify Ginnie Mae for any loss Ginnie Mae sustains due to the Issuer’s failure to verify that the required insurance is in force on the pooled loans. The Issuer’s obligation will not be limited to the amount of coverage in force under a mortgage impairment or mortgagee interest policy.
Ginnie Mae MBS Guide Ch. 14, Part 9, § C — Irs Reporting
Each Issuer is fully responsible for providing all Internal Revenue Service (IRS) reports to investors and to the IRS. To this end, Issuers must be familiar with and follow IRS fixed investment trust rules and the applicable rules regarding reporting of interest paid to security holders.
Ginnie Mae MBS Guide Ch. 14, Part 10 — Conflict of Interest
Privileged information obtained by Issuers about borrowers and mortgaged properties may not be used by Issuers in any way that could be viewed as a conflict of interest. This information may be used only as permitted under applicable state and federal law, including that regarding disclosure of credit information. For example, it is Ginnie Mae’s policy that an Issuer may not trade in securities for which the Issuer also is servicing the underlying mortgage pool or loan package based on delinquency, default, or other inside information obtained by the Issuer, because this could create a conflict of interest with the existing security holders and Ginnie Mae.
Ginnie Mae MBS Guide Ch. 14, Part 11 — Ginnie Mae Audit
The Issuer agrees that at any reasonable time, as requested by Ginnie Mae, Ginnie Mae or its designated agent may examine and audit the mortgages held by the Issuer, and all books, records, or information of the Issuer or relating to an Issuer’s pools or loan packages or its participation in the Ginnie Mae MBS Program, or bearing on the Issuer’s compliance with the requirements of the MBS Program, its management or its financial structure, including but not limited to, all mortgage documents, mortgage servicing records, mortgage records, and banking records for funds directly or indirectly related to the mortgages or the securities. Ginnie Mae also shall have the right to perform such audits on any of the Issuer’s mortgage servicers, trustees, agents or other representatives of Issuer. As a service to Ginnie Mae, various contractors conduct financial and administrative reviews of Ginnie Mae Issuers to ensure compliance with Ginnie Mae requirements. Issuers must afford all contractors and their staffs full cooperation in their conduct of these functions.
Ginnie Mae MBS Guide Ch. 14, Part 12 — Access to Records
For the purpose of audit, examination, monitoring, and evaluation of an Issuer’s compliance with the Ginnie Mae MBS Program, each Issuer must make available for inspection by Ginnie Mae or its agents, upon request, mortgage files and related documentation and other information pertinent to its operations under the Ginnie Mae MBS program. Each Issuer must ensure that any party holding mortgage files or related documentation, including a subcontract servicer, document custodian, funds custodian, or other person, has executed a written agreement with the Issuer to permit Ginnie Mae access to documents as provided above. “Mortgage files and related documentation” includes without limitation books, documents, files, papers, and other records and data, including any maintained in any database or in any data processing, storage, or retrieval system.
Ginnie Mae MBS Guide Ch. 14, Part 13 — Maturity or Termination of Pool
A pool matures on either the stated maturity date or an earlier date on which all the pooled loans have been paid to a zero balance, either by payment of monthly installments, or by prepayment in full or by purchase of the loan by the Issuer because of delinquency. The procedures to follow in the case of maturity are discussed in MBS Guide, Ch. 20, Part 2, or Ch. 35, Part 14. A pool may be terminated prior to maturity only as provided in MBS Guide, Ch. 20, Part 3, or Ch. 35, Part 14.
Operationalizing Ginnie Mae MBS Guide (5500.3, Rev. 1) Chapter 14 — Pool and Loan Package Administration — General
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