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MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 72 March 2024 J O U R N A L rates. The December issuance includes $27.6 billion of Ginnie Mae II MBS and nearly $1.02 billion of Ginnie Mae I MBS, including approximately $902 million in loans for multifamily housing. Considering continued liquidity constraints in the reverse mortgage sector, Ginnie Mae announced that it is exploring the viability of a new securiti- zation product that would accept HECM loans with balances above 98% of FHA's Maximum Claim Amount (MCA). This new product will not change the require- ments for the existing HMBS program, where HECM loans with balances at or above 98% MCA are required to be bought out of HMBS. "Ginnie Mae remains committed to the HMBS program, which supports an important tool that enables seniors to tap into their home equity," said Alanna McCargo, President of Ginnie Mae. "This potential product exploration reflects our focus on current liquidity issues affecting the secondary mortgage market. Given the growing population of older Americans that may need to rely on home equity for financial support, continued efforts to provide stability in the secondary market are crucial to the ongoing health and access to the FHA HECM product." HUD OFFERS NEW LOSS MITIGATION OPTION T he U.S. Department of Housing & Urban Development (HUD) has issued Mortgagee Letter 2024-02, establishing the Federal Hous- ing Administration's (FHA) Payment Supplement, a new loss mitigation alter- native to a traditional loan modification. The new option is set to begin on May 1, 2024, but will become mandatory on January 1, 2025. "MBA (Mortgage Bankers Associa- tion) supports this additional tool that will allow servicers to better help strug- gling borrowers avoid foreclosure in to- day's high-interest rate environment and commends FHA for its transparency and engagement with industry stakeholders throughout the proposal process," MBA President and CEO Robert D. Broeksmit, CMB, said. HUD reports that since March 2020, mortgagees have provided nearly two million COVID-19 loss mitigation actions to borrowers. On January 30, 2023, HUD extended and expanded its COVID-19 Loss Mitiga- tion Options to provide borrowers with options to bring their mortgage current and reduce the monthly principal and interest (P&I) portion of their monthly mortgage payment to reduce the risk of re-default. The FHA offered COVID-19 Recovery Options to borrowers who were on a COVID-19 Forbearance, or borrowers who did not participate in a COVID-19 Forbearance that were 90 days or more delinquent through Octo- ber 30, 2024. "While these options have been very effective, interest rates have risen to levels significantly higher than the interest rates of many of the Mortgages in FHA's portfolio, impacting the ability of mortgagees to meaningfully assist borrowers who cannot afford to resume their regular monthly payments," said HUD in Mortgagee Letter 2024-02. Interest rates have risen once again after a slight lull. According to Freddie Mac's latest Primary Mortgage Market Survey (PMMS), the 30-year fixed-rate mortgage (FRM) averaged 6.77% for the week ending February 15, up from the previous week's reading of 6.64%. A year ago, at this time, the 30-year FRM averaged 6.32%. HUD's actions through the Pay- ment Supplement will not only assist distressed borrowers nationwide but will reduce losses to HUD's Mutual Mort- gage Insurance Fund (MMIF), which insures lenders against losses when borrowers default on their loans. "Prioritizing payment relief and reducing operational complexities were imperative, and we believe the improve- ments made following multiple rounds of feedback will ensure mortgage ser- vicers have a new effective and efficient way to help struggling borrowers stay in their homes," Broeksmit added. "As recommended, a longer implementation period of January 2025, and extend- ing the sunset date of the COVID-19 Recovery Options beyond that date, will further support servicers' implementa- tion efforts." According to Mortgagee Letter 2024-02, the Payment Supplement will combine a standalone Partial Claim to bring the mortgage current with a new Monthly Principal Reduction (MoPR) payment. This will temporarily reduce the borrower's monthly payment for a period of three years, without requiring the mortgage to be modified. After the Payment Supplement Pe- riod ends, the borrower will be respon- sible for resuming payment of the full monthly P&I amount. HUD also stated that it intends to make the Payment Supplement a permanent part of FHA's loss mitigation options and will incorporate language to do so in a future Mortgagee Letter or as an update to HUD's Handbook 4000.1. "MBA will work with FHA on the implementation of the Payment Supple- ment as well as its other loss mitigation programs, with a shared goal of assisting distressed borrowers while protecting the Mutual Mortgage Insurance Fund and ensuring secondary market certain- ty," Broeksmit said.