VA loans become more popular, leading to increased support for Ginnie Mae in the housing market
Ginnie Mae, the government agency that issues mortgage bonds backed by Federal Housing Administration and Department of Veterans Affairs loans, now insures more than $ 2.1 trillion in mortgages.
That figure has grown by over $ 1,000 billion over the past decade, and according to data recently released by Ginnie Mae, much of that increase is due to an increase in VA loans.
A new report from Ginnie Mae says VA loans now represent 42% of the agency’s single-family mortgage bond issuance. This figure has been increasing every year since 2009, according to Ginnie Mae.
Just 10 years ago, VA loans represented only 16.2% of Ginnie Mae’s portfolio. From there, the percentage of VA loans in Ginnie Mae’s portfolio rose to 23.3% in 2011, jumped to 32.8% in 2012, and kept increasing from there.
Now, VA loans represent over 40% of Ginnie Mae’s significant portfolio (as shown in the chart below).
As previously reported, Ginnie Mae’s overall portfolio has grown significantly since the housing crisis as more borrowers turned to FHA and VA loans, possibly due to the surrounding market conditions. Fannie Mae and Freddie mac as they recovered from the crisis.
As shown in the graph below, Ginnie Mae insured $ 880.27 billion in mortgages in 2009. This number reached the $ 1,000 billion mark in 2010 and has increased every year of this decade.
Last year, for the first time, Ginnie Mae’s portfolio exceeded $ 2 trillion, but the rise didn’t stop there.
Ginnie Mae’s portfolio has grown every month this year, surpassing $ 2.1 trillion in October, the most recent data available.
But the increase in VA loans and the increase in the overall portfolio size have not been without problems.
On the VA front, Ginnie Mae and the VA have worked for several years to deal with skyrocketing VA loan refinances that may have endangered service members and veterans alike.
For more than two years, the Department of Housing and Urban Development, Ginnie Mae and the VA investigated whether some lenders are aggressively targeting the military and veterans for quick and potentially risky mortgage refinances.
The investigation led to the expulsion of some lenders from Ginnie Mae’s major mortgage-backed securities platforms and restrictions on other lenders for questionable conduct.
Ginnie Mae has even gone so far as to issue new rules for VA loan refinances, limiting the time it takes to refinance a loan after its original date.
Ginnie Mae then issued more new rules on VA lending, removing VA-backed cash refinances with high loan-to-value ratios from her flagship stocks.
The rule revised the pooling eligibility conditions for VA refinances, creating new criteria for withdrawals with loan-to-value ratios above 90%.
Ginnie’s decision coincided with the action taken by the FHA to limit cash refinancing on loans guaranteed by the FHA.
With these rules in place, Ginnie Mae’s portfolio continued to grow and the share of VA loans continued to increase, but the agency is “committed” to a sustainable business model.
“Ginnie Mae is committed to maintaining a strong MBS program based on flexibility and reliability to meet the secondary market needs of issuers responsible for veteran loans under the VA program,” the agency said in the report. .
“Recent policy changes regarding VA mortgage eligibility bundled into our titles underscore our commitment to provide a liquid and efficient MBS product to lenders and investors that protects veteran home equity while minimizing risk to veterans. taxpayers, ”Ginnie Mae added.