Ginnie Mae revealed some details Friday of a promised program aimed at assisting issuers having trouble with their obligations due to the pandemic.
"This is an extraordinary and last resort option for issuers in these unprecedented times, that will enable them to continue to serve homeowners and renters in America who rely on the government mortgage programs financed by Ginnie Mae," Seth Appleton, Ginnie Mae principal executive vice president, said in the press release.
"As important, this program underscores Ginnie Mae's commitment to ensure timely payment of scheduled principal and interest to investors."
Issuers that need assistance with remittances due April 20 will need to apply by noon in the Eastern time zone on Monday.
The head of the U.S. central bank said its emergency credit programs were not designed to prop businesses up over the long term.
Critics of the Community Reinvestment Act revamp want to freeze the rulemaking process. That would only delay financial help to New York and other hard-hit cities.
While their regions, sizes and funding streams vary, several mass transit systems underscored the dire need for additional federal funding.
As anticipated, Ginnie will offer relief through a new version of the Pass-Through Assistance Program it uses to support issuers during natural disasters. An unspecified fixed rate of interest will apply to a given month’s pass-through assistance to all issuers.
Smaller mortgage lenders were heartened by the initial details released about the program.
"The Community Home Lenders Association commends Ginnie Mae for its continued progress in putting in place its PTAP advance program, to provide a liquidity backstop to deal with the significant increase in advance demands resulting from COVID-19 and the new federal forbearance option," Scott Olson, executive director of the Community Home Lenders Association, said in a press release.
"We are particularly appreciative that there will be a fixed, uniform interest rate, so smaller lenders will be treated equally, as well the treatment in which servicers can participate without being held in default."
Ginnie plans to post the rate for financing obtained under the program online on the second business day of each month and can still declare issuers in default if they don't fulfill other responsibilities under their contracts.
