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42 THE CHANGING FACE OF GINNIE MAE'S VA SECURITIES e Protecting Affordable Mortgages for Veterans Act of 2019, which was recently signed into law, changes the eligibility criteria of certain VA loans in Ginnie Mae Securities. According to an announcement by Ginnie Mae, it is implementing changes to pooling eligibility requirements for Department of Veteran's Affairs (VA) -insured or -guaranteed mortgages. e All Participants Memorandum (APM 19-05) issued by the government securities agency, revises the pooling eligibility requirements applicable to all VA-guaranteed refinance loans and establishes new pooling criteria for certain cash-out refinances with loan-to-value (LTV) ratios exceeding 90%. Ginnie Mae said that effective with mortgage-backed securities (MBS) guaranteed on or after November 1, 2019, High LTV VA Cash-Out Refinance Loans would be ineligible for Ginnie Mae I Single Issuer Pools and Ginnie Mae II Multiple Issuer Pools. e only exception would be in cases when the loans are "Permanent Financing Construction Loans, as defined in Chapter 24 of the MBS Guide." e new revisions to VA securities were part of advancing these objectives, Ginnie Mae said in its latest APM. As part of these changes, Ginnie Mae said that high LTV VA cash-out refinances could be pooled into Ginnie Mae II Custom Pools without restriction, provided they satisfied the seasoning and number of payment requirements. As a result of these revisions, Ginnie Mae said that its MBS pooling eligibility was moving closer to that of Fannie Mae, Freddie Mac, and the Federal Housing Administration. Ginnie Mae said that these changes continued to provide veterans who use their earned benefit access to the government- guaranteed MBS market and global investors with increased certainty in the performance of the Ginnie Mae security, "which ultimately lowers mortgage rates for all borrowers served by the program." Ginnie Mae said that the Protecting Affordable Mortgages for Veterans Act of 2019, which was signed into law by President Trump in July, revises the loan seasoning requirements and Ginnie Mae statutory changes prescribed by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. While the agency had already published an APM to implement the seasoning requirements prescribed by the 2018 Act to ensure the strength and liquidity of the MBS Program, the agency has, since then, collected "industry feedback to explore additional MBS program requirements that may have a positive impact on the performance of Ginnie Mae securities, and thereby benefit the borrowers participating in the federal housing programs we support." THE REAL DEAL WITH HOUSING AFFORDABILITY Affordability is the best it's been in over a year, according to a recent Mortgage Monitor Report from Black Knight. Ben Graboske, President, Black Knight Data & Analytics noted in the report that as a result of falling interest rates and slowing home price appreciation, affordability is the strongest it has been in 18 months. "For much of the past year and a half, affordability pressures have put a damper on home price appreciation," said Graboske. "Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped to ease some of those pressures, improving the affordability outlook considerably. In November 2018– when rising interest rates hit a seven-year high and home price growth fell by half a percent in a single month–it took 23.3% of the median household income to make the principal and interest payments when purchasing the average-priced home. As 30- year rates fell to 3.75%, that share fell to 21.3%, the lowest it's been in 18 months. According to the report, as 30-year mortgage interest rates fell to 3.75%, the share of the median monthly income needed to make principal and interest payments on the average home fell to 21.3%, a decline from 23.3% in November 2018. Black Knight noted that the decline in 30-year rates has been equivalent to a 15% increase in buying power, and the average-priced home could now be purchased for $45,000 more than last fall while keeping monthly payments the same. Additionally, improved affordability has begun to curb the strong slowing in home prices in West Coast housing markets. Black Knight notes that California went from having one of the top five home price growth rates of any state (8.6%) one year ago to second-to-last as of June 2019, at 1.3%. California affordability has improved significantly, although the state still less affordable than its long-term norms. It now requires 34% of the median income to purchase the average home in California, down from 38% in November.

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