March 28, 2020

Nixon Peabody, CARH’s General Counsel,  and CARH have been working on Section 515/538 subordination agreement “language.” Below is an update:

The CARES Act signed by President Trump Friday provides a residential mortgage forbearance for federally backed loans (section 4023) and a temporary eviction filing moratorium for rent nonpayment (section 4024).  That has led to a concern among mortgage servicers that this would require massive and immediate need to advance required pass-through payments from loans backed by HUD, VA, USDA under the Ginnie Mae program. We have reached out to Ginnie and note the Ginnie has issued a statement yesterday that states, in part:
“Ginnie Mae fully anticipates implementing within the next two weeks, via an All Participants Memorandum (APM), a Pass-Through Assistance Program (PTAP) through which issuers with a P&I shortfall may request that Ginnie Mae advance the difference between available funds and the scheduled payment to investors. This PTAP will be effective immediately upon publication of the APM for Single Family program issuers, with corresponding changes made to Ginnie Mae’s MBS Guide in due course. We anticipate publishing PTAP terms for HMBS (reverse mortgage) and Multifamily issuers shortly thereafter.”

GinneMae’s full March 27, 2020, statement: Ginnie Mae Addresses Servicer Liquidity Issues