HUD Archives: News Releases
October 23, 2002
MARTINEZ ANNOUNCES CHANGES TO HELP INSURER COMMUNITY
SUPPORT MEN AND WOMEN IN UNIFORM
Ginnie Mae will cover mortgage interest shortfall for military called to duty anywhere
WASHINGTON - Housing and Urban Development Secretary Mel Martinez announced today that Ginnie Mae, Government National Mortgage Association, the nation's guarantor of mortgage backed securities will immediately implement a policy change that will save its lenders who supported American military members following Sept 11, approximately $6 million.
Ginnie Mae is lowering lending and processing costs for its issuers by expanding its reimbursement policy under the Soldiers' and Sailors' Civil Relief Act to include all Reservists and National Guard called to active duty.
"Today's change is a prime example of how Ginnie Mae is working to meet the needs of lenders, while staying true to our mission to provide more Americans with affordable housing opportunities," Martinez said.
Effective immediately, Ginnie Mae will reimburse its mortgage lenders for the interest shortfall for Reservists and National Guard personnel called to active duty anywhere-domestically or abroad-saving lenders an estimated $6 million annually in lost interest.
"This change will allow issuers to be reimbursed for more of the interest shortfalls that they have traditionally had to absorb," explained Martinez. "Just as important, Ginnie Mae will be helping the issuer community support our men and women in uniform-whether they are here at home or abroad."
The Soldiers' and Sailors' Civil Relief Act of 1940 requires all lenders to limit the rate of interest paid on mortgage debt to 6 percent for any military personnel called to active duty.
When a homeowner is called to active military duty the lender must absorb the difference between 6 percent and the borrower's contract interest rate.
Previously, Ginnie Mae reimbursed issuers for the interest shortfall only when the borrower was called to active duty in specified areas such as Bosnia, Kosovo or Southwest Asia, as well as Afghanistan and other areas within Operation Enduring Freedom.
In honor of our nation's military, Ginnie Mae has made this policy change retroactive to September 11, 2001.
Created in 1968, Ginnie Mae, pioneered mortgage backed securities in 1970. Today, Ginnie Mae is the only guarantor of mortgage-backed securities backed by the full faith and credit of the United States government.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.
Content Archived: April 9, 2010