Ginnie Mae, the sole securitizer of home equity conversion mortgages (HECMs), has announced the launch of a risk management tool that will allow issuers to measure their performance against both program standards and peers.
Single-family, multifamily and HECM-backed securities (HMBS) issuers will have access to the tool, called the Issuer Operational Performance Profile (IOPP), which uses a scorecard approach to allow issuers to gauge their operational and default performance against their peers and Ginnie Mae program expectations.
The initiative, Ginnie Mae President Ted Tozer said, lays the groundwork for enhanced knowledge and issuer-driven performance improvements.
“The launch of the IOPP reflects Ginnie Mae’s ongoing commitment to increasing transparency and value for issuers, investors and other stakeholders,” Tozer said in a written statement. “We believe this new tool will help us continue to ensure that a safe, effective and government-backed channel for the flow of capital for U.S. mortgages exists, reducing risk to the taxpayer and providing much-needed capital for the government.”
The IOPP scorecard gives issuers immediate and transparent feedback on their performance in the Ginnie Mae program in the areas of issuing, pooling, servicing and collateral management on a month-to-month basis, and calibrates to their peers.
Issuers will receive an operational management score based on key metrics such as failure to report unpaid principal balance (UPB), timely reporting of UPB corrections and a compliance review metric based on findings from Ginnie Mae’s most recently completed compliance review of the issuers.
The metrics behind the delinquency management score will be based on early payment defaults, 60-day to 90-plus-day roll rates, workout effectiveness and percentage of loans in foreclosure.
The end result will be two scores for each issuer – one for operational management and one for delinquency management – both of which will be calculated and reported each month.
“The IOPP is an issuer report card, and we believe that once launched, it will help us in our work with our issuers so we can continue to provide stability to the housing finance industry and continue to meet our mission of bringing global capital into the housing finance market to provide affordable housing opportunities to millions of Americans,” Tozer said.
Through this tool, issuers will be able to better manage their own performance, ultimately decreasing operational challenges for Ginnie Mae and helping to improve the corporation’s performance. In addition, the IOPP will help drive internal consistency in monitoring the business activities across the broader population of issuers, and enable Ginnie Mae to provide constructive feedback to issuers.
Written by Emily Study