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Ginnie Mae Expands Loan Repurchase Policy for Trial Modifications

Ginnie Mae announced Friday that it will now allow issuers to repurchase loans that have have completed the required three-month trial payment plans, pursuant to loan modification parameters authorized by the Federal Housing Administration and other agencies.

By eliminating the loans that are at high risk for default, this change should serve to strengthen the performance of Ginnie Mae pools.

The new guidance, under APM 2011-13, states that applies to loans that meet the above agencies’ required trial payment plans for permanent loan modifications. FHA recently announced its trial payment requirements in Mortgagee Letter 2011-28.

If the borrower cannot complete the trial payment period, the issuer cannot buy the loan out of the pool until it has been in default for 90 days or more.

“Modified loans that have successfully completed the modification process per the insuring agencies’ requirements and have been permanently modified may be re-pooled,” said Ginnie Mae. “In order to be eligible for re-pooling, the permanently modified loan must be current as of the issuance date of the related security.”

View APM 11-13.

Written by Elizabeth Ecker