Ginnie Mae said late Friday that it is expanding the parameters for loans to be repurchased from its trusts to include those that have successfully completed a three-month trial payment period.
The policy change will strengthen the quality of loans in Ginnie trusts by eliminating those most likely to redefault.
Ginnie Mae said the new repurchase policy aligns itself better with the Federal Housing Administration's current policy on high-risk loans that have not been modified under the Home Affordable Modification Program or HAMP.
Ginnie issuers and servicers typically have to buy back defaulted FHA loans out of a Ginnie pool, modify them, and then put them back into a new pool.
One result of the policy change is that loans most likely to redefault at an early stage will not be placed into Ginnie pools.
Ginnie Mae President Ted Tozer said the change is "one of our most important efforts this year," and he hopes to "avoid the pattern of high re-defaults on modified loans."