Seth Appleton on Implementation of Ginne Mae’s Key Objectives

Ginnie Mae’s Principal Executive Vice President Seth Appleton talked with Mortgage Media’s Eric Souza this morning, giving updates on what the agency is doing to meet its objectives while facing the challenges of the COVID-19 pandemic.

Their conversation covered how Ginnie Mae pivoted its Disaster Aid Plan to fit the current crisis; the implementation of Ginnie’s Pass-Through Assistance Program; the government’s coordinated response; and what the liquidity-provider is doing to further its technology modernization efforts.

Appleton said this crisis has profound national impacts on the economy, including the housing market, and emphasized the degree to which the government mobilized quickly and adapted to confront this crisis.

Listen to their conversation, and read a lightly-edited Q&A below.

MM: Can you tell us what it was like to pivot Ginnie Mae’s disaster aid plan to fit the current COVID-19 pandemic, and how has it been working?

Seth Appleton: Well, it really was a study in teamwork and collaboration. From the Secretary on down, we all pulled together very quickly. And the key objectives really were to facilitate the continued flow of principal and interest to our investors, support the underlying forbearance policies of the insuring guaranteeing agencies that we serve, mitigate servicing disruptions to borrowers who are dealing with stresses of their own right now, and minimize risk to taxpayers.

So from our initial announcement, which took place on March 27 – which was the same day the CARES Act was signed into law – to the publication of the all-participants memorandum, the MBS guide updates and the appendices, it took two weeks, which is lightning speed for government, I have learned. As you noted though, it was based on the framework of the existing Chapter 34 Disaster Assistance Program. So we did have a strong foundation from which to work, and some experience with that. But it also has some very important program features that distinguish it from that previous effort. First and foremost, it’s nationwide in scope to respond to the national emergency. And secondly, for the Pass-Through Assistance Program for COVID-19, the provisioning of assistance itself does not constitute a default in the program, which was an important distinction. So I think that those nuances have thus far, worked very well.

MM: You mentioned the Pass-Through Assistance Program. How has the implementation of that been coming along and do you see the need to go back to Congress for additional funding?

Seth Appleton: Well, it’s early stages, but so far it’s been working very well. The program is operational for the single family program, which is the vast majority of our program and it’s functioning as intended. Ginnie Mae actually would never need to return to Congress to fund the PTAP because we have access to fee-generated reserves first and foremost, but also in order to execute on our full faith and credit guarantee, we may also draw on the United States Treasury in support of our program, which includes PTAP. So we are set as far as funding is concerned.

MM: Given the new dynamics in the mortgage industry, how is Ginnie Mae working with FHFA, USDA, and the VA on a somewhat coordinated response to help out the millions of borrowers who have been impacted by COVID-19?

Seth Appleton: That’s a great question. Ginnie Mae interacts regularly with all of the other federal mortgage insurance and guarantee programs and we know that we are all a part of a larger housing finance ecosystem. So it’s really to make sure policy responses are coordinated to the greatest extent possible. Though I’ve got to recognize that each program does have its own unique mission and features. So there’s constant communication and collaboration, and we do try to align policy where we can, knowing that there will be some differences at the end of the day, just not only between FHFA and Ginnie Mae, but also within the individual insuring agencies that Ginnie Mae works with – the VA, USDA and a FHA.

MM: A lot of moving pieces. Can you tell me what is the status of e-mortgages at Ginnie Mae? Obviously, something like this would be a big help in doing business in these socially distancing times.

Seth Appleton: Absolutely. This has been an important project for a long time. We were actually at Ginnie Mae working on incorporating digital collateral into the program prior to the onset of the national emergency. That work has been accelerated given the potential increase in remote closings and other contactless processes that are needed to finalize a mortgage. We are continuing to focus on moving this forward and we do anticipate publishing guidance on this topic very soon.

MM: So there were technology modernization efforts that were outlined in the Ginnie Mae 2020 progress update. How, if at all, has that been affected by workflow disruptions due to COVID-19.

Seth Appleton: Actually, our technology modernization efforts continue according to that plan. Given the new business priority due to COVID, Ginnie’s been prudent and reassessing its priorities regularly to ensure that key staff is focused on readiness and response to the emergency. But we haven’t seen a degradation of our ability to continue to perform our day-to-day work either, including the kind of long-range technology modernization plan. So that is still an important priority also and our staff is very focused on continuing to move that down the field.

MM: How about MyGinnieMae portal? What’s the status of bringing customers in?

Seth Appleton: Well, the onboarding customers to the MyGinnieMae portal is on schedule, trainings being conducted using remote technology with some minor modifications for customers who have things like firewall issues, but it is still happening. As of April the 21st, Ginnie Mae is managing Wave Four of a schedule for the smaller single family issuers, and Waves One, Two and Three were for multifamily, larger single-family and the reverse mortgage and HECM users respectively. So Wave Five, which will begin the process for document custodians, should launch in early May. We continued to move forward on that as well, because these technology solutions are all very important for the longterm trajectory of the program, number one, but are particularly relevant given what’s going on right now in the world.

MM: Obviously, you stay on top of what’s been happening in housing news and seeing everything that’s been reported during this crisis. Is there anything that you think is being under-reported? Are there issues that you see that should be getting more attention?

Seth Appleton: That’s a great question. This is a crisis unlike one that I’ve certainly ever seen and I think most folks have ever seen because it’s really a health crisis that’s had profound national impacts on the economy, including the housing market. I think it’s been under-reported the degree to which the government has actually mobilized quickly and adapted to confront this crisis. As I mentioned earlier, HUD has moved at lightning speed for federal agency on a host of issues in the face of a rapidly-evolving situation. I will say on a broader level, mortgage servicing, and you’re certainly steeped in the subject matter, but mortgage servicing is complicated. And mortgage servicers have responsibilities to, and take direction from, a number of different parties. So it’s a topic that can be challenging to convey to consumers and the general public in a normal environment. And that communications challenge, to me, is heightened because of everything else going on right now in the world.

MM: Well, coming on and talking with us and with our listeners is hopefully going to answer some of those questions. Is there anything else that you’d like to add?

Seth Appleton: Well, I would just like to thank you for the opportunity to appear here because conveying the work that we’re doing I think is important for the market and it’s important for consumers. So thanks for the invitation.