Gin­nie Mae’s Dig­i­tal Mort­gage Se­cu­ri­ti­za­tion Pilot Likely to Start in 2019

National Mortgage News - - Technology - By Brad Finkel­stein NMN

Gin­nie Mae is look­ing to start a pilot pro­gram to se­cu­ri­tize dig­i­tal mort­gages as early as 2019, but is­suers would not be able to com­min­gle loans us­ing tra­di­tional pa­per files in those deals.

The fed­eral agency’s com­ments are from its Gin­nie Mae 2020 re­port, the name com­ing from the year the pro­gram cel­e­brates its 50th an­niver­sary.

“The busi­ness model we en­vi­sion will al­low is­suers to se­cu­ri­tize dig­i­tal prom­is­sory notes that are ex­e­cuted on a uni­form smart doc­u­ment for­mat, with el­e­ments and spec­i­fi­ca­tions like the SMART Doc for­mat used by the govern­ment-spon­sored en­ter­prises Fan­nie Mae and Fred­die Mac,” the re­port stated.

It plans to work with the GSEs to get the ben­e­fit of their ex­pe­ri­ence with se­cu­ri­tiz­ing dig­i­tal mort­gages and to make sure its so­lu­tion can eas­ily be adopted by lenders that are us­ing sim­i­lar tech­nol­ogy for con­form­ing loans.

“We be­lieve align­ing poli­cies across fed­eral hous­ing pro­grams and devel­op­ing tech­ni­cal stan­dards are foun­da­tional steps; they will be our pri­or­ity dur­ing the ini­tial stages of our dig­i­tal col­lat­eral strat­egy,” the re­port said. “We aim to com­plete these foun­da­tional steps by 2019 and then au­tho­rize pilot pro­grams en­abling is­suers to se­cu­ri­tize dig­i­tal mort­gages, even as we con­tinue to de­velop other as­pects of our dig­i­tal col­lat­eral strat­egy.”

Main­tain­ing the liq­uid­ity of the mort­gage ser­vic­ing rights in pools that use tra­di­tional pro­cesses is one of the rea­sons for the seg­re­ga­tion of col­lat­eral. “When we con­sider the pool-level struc­ture of the MBS pro­gram, we be­lieve that al­low­ing tra­di­tional pa­per notes to be in­cluded within a pool or loan pack­age, which also con­tains dig­i­tal mort­gages, may re­duce the mar­ketabil­ity of the cor­re­spond­ing MSR,” the re­port said.

How­ever, dig­i­tal mort­gage pools will be able to go into mul­ti­ple is­suer se­cu­ri­ties, along with other pools com­prised of tra­di­tional pa­per notes. “We plan to ad­just pool and loan pack­age re­quire­ments to ac­com­mo­date var­i­ous lev­els of dig­i­tal mort­gage pro­duc­tion and will be con­sid­er­ing ad­di­tional in­cen­tives for is­suers to go dig­i­tal,” the re­port said.

In ad­di­tion, dif­fer­ences in the dig­i­tal sub­mis­sion process com­pared with that used for tra­di­tional se­cu­ri­ties col­lat­eral will not al­low the two to be mixed in a Gin­nie Mae is­suance. Dig­i­tal pools will be de­liv­ered to a des­ig­nated Gin­nie Mae elec­tronic vault and sub­ject to an au­to­mated, sys­tem­based ini­tial cer­ti­fi­ca­tion process.

Gin­nie Mae will be switch­ing from a hard Se­curID to­ken for users to make data sub­mis­sions to a soft to­ken app. Hard to­kens are phys­i­cal de­vices that need to be ac­ces­si­ble to the user and can get lost. “Soft to­kens repli­cate the se­cu­rity ad­van­tages of mul­ti­fac­tor au­then­ti­ca­tion, while sim­pli­fy­ing dis­tri­bu­tion and low­er­ing costs,” the agency said.

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