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Ginnie Mae Cuts Servicing Fee.
The Government National Mortgage Association has revamped its 18-year-old Ginnie Mae II securities program by reducing its minimum servicing fee in a move that could lead to a similar change in the conventional market.
Ginnie Mae reduced the minimum servicing fee from 44 basis points to 19. However, lenders who prefer to receive excess servicing fees can still receive the traditional 44 basis point fee.
The change, part of a serious of reforms designed to improve pricing for the Ginnie Mae II program, may put pressure on Fannie Mae, Freddie Mac and MBS investors to reduce the servicing fee on conventional loans sold into the secondary market. Currently, Fannie Mae and Freddie Mac require a minimum servicing fee of 25 basis points.
This change by Ginnie Mae divided lenders, and the Mortgage Bankers Association did not take a position on the servicing fee issue.
But Ginnie Mae president Ronald Rosenfeld felt a reduction in the minimum servicing fee would give lenders more flexibility and hopefully improve the pricing on "odd coupon" mortgages that go into Ginnie Mae II securities.
"Historically, the program has best served those lenders that prefer to generate their greatest revenue through mortgage servicing. Now, those lenders that prefer to generate their greatest revenue through the origination of Ginnie Mae securities will also benefit," Mr. Rosenfeld said.
To make Ginnie II MBS more attractive to investors, the secondary market agency narrowed the spread on the note rates that can be included in a Ginnie Mae II single-family pool from 100 basis points to 50.
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