The Government National Mortgage Association (Ginnie Mae) on March 6 said it will package for sale to investors pools of mortgages backed by the Federal Housing Administration's temporary higher loan limits,on April 1.
Ginnie Mae will create a new multiple-issuer security under the Ginnie Mae II Mortgage-Backed Securities Program to accommodate these loans. The move was seen as important since the securities will be backed by the U.S. Government. Private-sector mortgage-backed securities have been substantially unsaleable in the wake of the collapse of the subprime market.
"We believe it's important that Ginnie Mae support the stimulus package and create a vehicle that will improve market liquidity as soon as possible,"said Thomas R. Weakland, a Ginnie Mae acting vp. "This new security will enable more borrowers to qualify for safe, affordable FHA-insured loans, which is critically important as the mortgage industry continues to navigate the ongoing market upheaval."
All single-family loans higher than FHA's current loan limit of $362,790 will be eligible for inclusion in the new pools.
"A government-insured mortgage, coupled with the safety and liquidity of a Ginnie Mae security will greatly benefit homeowners, lenders and investors,"Weakland said.
The Economic Stimulus Act of 2008 allows FHA to insure higher balance loan through December 31, 2008.