Product Enhancement Announcement
AnnieMac Home Mortgage is pleased to announce the official rollout of its GinneMae (GNMA) product line. By leveraging some of our existing relationships we now have the ability to fund quality FHA/VA loans which for one reason or another fall out of the normal secondary market channel.
A Brief Primer on GNMA
To understand what GNMA is and how it will assist in closing the high quality, government-insured loans that our investors will not purchase it might help to have some background on how using this authority differs from our normal process of selling loans directly to a conduit.
To begin please be aware that GNMA is not an investor and does not purchase loans. Instead GNMA issues an approval that a lender can achieve based upon the quality of loans it has already sold to FHA, the experience of the officers and management of the company, and the company’s Net Worth. Obtaining the approval of “GNMA Issuer” allows the lender to create mortgage-backed securities that have the backing of the Federal Government behind it and therefore can be sold to investors on the open market.
The benefit of this authority is that loans can be securitized as long as they meet agency (FHA or VA) guidelines. This removes the overlays that our investors have placed upon us. While there is no requirement for AnnieMac Home Mortgage to place overlays to these Agency guidelines there are good reasons these overlays exist. The large conduit investors (GMAC, BoA, Citi, etc) have purchased and serviced millions of loans and have factual data on which loans default at a higher rate than others and have developed their overlays to minimize this risk. The more volume you do the more risk you introduce into your portfolio so by virtue of the sheer volume the conduits service they have to place fairly broad and restrictive overlays on their product offerings to protect themselves.
Our Strategy
It is our strong belief that through a careful loan quality selection process our Credit Committee can pick and choose quality loans which would otherwise go unfunded by the conduits. This will increase our ability to service our referral partners and set ourselves apart from other lenders. This will also help us provide much needed financing to individuals who might fall outside of the conduit “box” but still be a quality borrower and/or homeowner.
