Ginnie Mae EBO Securitization

A Market-Based Solution to Mitigate Issuer Liquidity Risk

Over the past 15 years, the growth in independent mortgage bankers’ (IMBs) market share of residential mortgage originations and servicing, particularly among issuers of Government National Mortgage Association (Ginnie Mae) mortgage-backed securities, has brought regulatory focus on the adequacy of issuer liquidity to make servicing advances during a financial crisis and/or a sustained period of increased mortgage delinquency. While IMB servicers are well-capitalized through Ginnie Mae’s counterparty standards and have developed enhanced access to diverse funding sources, additional options that can reduce liquidity strains in the event of market stress should be considered.