New Ginnie Mae MSR-related note transactions emerging

KBRA
assigned
a
rating
to
a
new
series
of
servicing-related
term
notes
from
a
master
trust
issuer
at
Freedom
Mortgage
this
week
in
line
in
a


Ginnie
Mae
market
that’s
drawing
more
focus.

The
series
2024-SAT1
notes
from
FMC
GMSR
issuer
trust
are
backed
by
certificates
that
represent
participation
interests
in
Ginnie
Mae


mortgage
servicing
rights.
Interests
include
servicing
income
and
the
right
to
advance
reimbursement.

The
rating
agency
assigned
a
low-end
investment
grade
designation
of
BBB-
to
the
transaction,
which
has
features
that
include
the
ability
to
transfer
servicing
if
Freedom
Mortgage
were
to
default.

The
rating
is
slightly
lower
than
that
received
by
a
somewhat
similar
Pennymac
transaction
last
month.
KBRA
assigned
a
BBB
rating
to
Series
2024-GT1
notes
from
Pennymac’s
GMSR
issuer
trust.

Both
Pennymac
and
Freedom
are
key
players
in
the
Ginnie
Mae
market.
Ginnie
Mae
guarantees
securitizations
of
home
loans
that
other
public
entities
like
the


Federal
Housing
Administration
and


Department
of
Veterans
Affairs
back.

Conditions
have
shifted
recently
in
Ginnie
servicing
and
it’s
been
getting
more
market
attention,
Seth
Sprague,
director
of
consulting
at
Richey
May,
said
in
a
recent
webinar.

That’s
in
part
because
when
rates
fell
in
the
fourth
quarter
of
last
year,
there
was
a
notable
pickup
in
prepayments
for
6.5%
coupons,
generally
reflecting
activity
in
7%
mortgages.

“That
is
an
opportunity
or
a
threat.
It
depends
on
what
side
of
the
house
you’re
on,”
he
said. “If
you
own
servicing
and
don’t
have
the
ability
to
recapture,
this
is
a
threat
to
you.
If
you
have
the
ability
to
recapture
it,
this
is
an
opportunity.”