We don’t fight the idea of being proactive. We have standing appointments with our dentists every six-months and get our oil changed every three months. But just as we find ourselves rescheduling those preventative appointments, lenders tend to be just as reactive with their portfolio. Leave it to the pain of 3 cavities to help spur some change.
We get that being proactive takes time and consistency, which is why we took it off our lenders hands.
Through our real-time and transparent technology, TMS leaves room for the unexpected. We expect the unexpected, so our borrowers and lenders don’t have to. When life happens and borrowers get to the point of delinquency, it’s on the subservicer to be two steps ahead, proactively working and communicating with the borrower. A full break down on our views around the D Word (no, not that word – delinquency) can be found here.
When lenders lose sight of helping borrowers get current, lenders can just as quickly lose their Ginnie Mae authority. It’s the equivalent of saying goodbye to your car after not getting an oil change for two years.
Yes, delinquencies will happen, but they are not just a part of doing business. When you break down “just a part of business” into actual numbers, there’s a very real risk that a lender could lose their Ginnie Mae authority.
To put some data behind what lenders need to watch out for, Ginnie Mae breaks down what it’s watching for. According to Ginnie Mae, it evaluates delinquency rates for Ginnie Mae pools and loan packages by three different indicators.
- DQ3+ Delinquency Ratio: Number of loans in the Issuer’s Ginnie Mae portfolio that are either in the foreclosure process or are three months or more delinquent divided by total number of loans remaining in the portfolio.
- DQ2+ Delinquency Ratio: Number of loans in the Issuer’s Ginnie Mae portfolio that are either in the foreclosure process or are two months or more delinquent divided by total number of loans remaining in the portfolio.
- DQP Delinquency Ratio: Accumulated amount of delinquent P&I payments divided by total monthly fixed installment control due the Issuer.
With these three indicators in mind, issuers are also grouped into one of two categories: those with more than 1000 active loans, and those with 1000 or fewer active loans in their Ginnie Mae portfolios. This is done for the soul purpose of establishing threshold levels for delinquencies
The chart below breaks down the threshold levels for the delinquency indicators within each category.
Think of this as the baseline for just making the team. It’s nice, but the real win here is to level up to varsity. These numbers show you how to not get dropped with the intention of never getting close enough to them to even have to worry.
Life happens and delinquencies will happen. But if a subservicer is consistently trying and proactively working with borrowers to keep them in their homes, lenders shouldn’t have to worry about losing their Ginnie Mae Authority. Consider it as free oil changes for life.