WASHINGTON, DC — The Government National Mortgage Association (Ginnie Mae) recently announced that, effective Sept. 1, it is eliminating the restriction on the size of mortgage loans guaranteed by the Department of Veterans Affairs that can be used as collateral
WASHINGTON, DC — The Government National Mortgage Association (Ginnie Mae) recently announced that, effective Sept. 1, it is eliminating the restriction on the size of mortgage loans guaranteed by the Department of Veterans Affairs that can be used as collateral for Ginnie Mae securities. Currently, Ginnie Mae limits the size of VA-guaranteed loans that can back Ginnie Mae mortgage-backed securities to the conforming loan limit of $417,000.
Approximately 30 percent of the loans that back Ginnie Mae MBS are guaranteed by the VA. Unlike the Federal Housing Administration’s program, the VA program does not include a limit on the size of the guaranteed loan.
“We expect this change will expand the availability of low-cost financing and increase home ownership opportunities for America’s veterans, particularly in high-cost areas, by encouraging lenders to make more VA loans,” said Michael J. Frenz, executive vice president of Ginnie Mae, in a press release.
For example, although 10 percent of the nation’s veterans live in California, less than one percent of the VA loans in the Ginnie Mae securities portfolio issued during the last two years were to California veterans, because loan limits were below most house prices in the state.
“Now, more than ever, America’s veterans and their families have a greater chance to make their dreams of home ownership a reality, thanks to today’s action by Ginnie Mae,” said Judith Caden, Director of Loan Guaranty Service at the VA, according to the release. “This change is another example of our joint commitment to ensure VA benefits keep pace with the needs of our veterans in today’s housing market.”
“This is an outstanding initiative that will greatly benefit veterans and their families who reside in high-cost areas, and who continue to make significant contributions to the growth and prosperity of our nation every day,” said George Lisicki, the national commander of the 2.3 million-member Veterans of Foreign Wars of the U.S. and its Auxiliaries. “This is what ‘Supporting the Troops’ is all about.”
Ginnie Mae will continue to require that the amount of cash down payment, plus the amount of the VA guaranty, equal at least 25 percent of the value of the home.
