Ginnie Mae Announces Change to USDA Mortgage-Backed Securities Program
Ginnie Mae has announced that starting June 1, 2015, the maximum loan amount for USDA Sec. 538 loans that will be eligible for pooling into Ginnie Mae mortgage-backed securities (MBS) will be increased from 50% of total development costs to 70% of total development costs.
In the release, Ginnie Mae President Ted Tozer called the change “an important and substantial change to the program. It is a real opportunity to help the USDA ensure the continued affordability and availability of multifamily rural housing projects for low and moderate income families. Since more of the development costs will be eligible for pooling, the securities will generate additional liquidity for more multifamily projects.”
The Ginnie Mae Multifamily MBS Program allows lenders to reduce mortgage interest rates paid by property owners and developers of multifamily housing and health care facilities. The hope is that the lower interest rates will incentivize developers to pursue new construction or substantial rehabilitation projects.
USDA Rural Housing Service Administrator Tony Hernandez also heralded the announced change, stating that the “enhancements Ginnie Mae is implementing in the securitization of USDA’s 538 Multifamily loans will help us achieve our mission and help our customers through viable investments in rural America.”