Issuers Warned to Keep Prepayment Speeds in Line or Risk Sanctions


Posted To: MND NewsWire

A small group of VA approved issuers have been warned that the speed at which their loans are being prepaid makes it appear they are participating in “churning.” Ginnie Mae said on Thursday that the issuers who have been notified are expected to deliver a corrective action plan that identifies immediate strategies to bring prepayment speeds in line with those of loans issued by their peers. In January, a Ginnie Mae official testified before hearing of the House Committee on Veterans Affairs about loan churning. He told committee members that, starting in early 2016, the agency, as well as investors in its mortgage backed securities (MBS), began to note that loan prepayment rates and serial refinancings were occurring with unusual frequency among VA mortgages. Some of the prepayments were at…(read more)

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