Ginnie Mae has fewer staffers compared to other entities under the purview of the U.S. Department of Housing and Urban Development (HUD), but the company oversees key functions in managing the government’s MBS portfolios totaling roughly $2.7 trillion.
“The departures have left a gaping hole in Ginnie Mae,” the Bloomberg report said. This has raised concern about the company’s ability to perform its essential functions, particularly if the U.S. housing market endures a downturn. Delinquencies of VA and FHA loans — securitized by Ginnie Mae — are rising.
“Given Ginnie Mae’s outsize role in getting funding for mortgages from bond markets, even a small hiccup could cascade through the housing market and the broader economy,” the report said.
A source familiar with HUD’s plans previously told HousingWire that “suggestions that drastic staffing cuts will be made to Ginnie Mae are false” without elaborating further. Some larger servicers who spoke with HousingWire on Friday said that they haven’t noticed any major changes to MBS approvals at Ginnie Mae, though one smaller lender said they’ve noticed more delays than usual.
But mortgage lenders and other stakeholders have been feeling the impact of DOGE’s cuts to the company, including in an instance last week when its Average Prime Offer Rate (APOR) — which helps establish terms for new mortgage loans — abruptly disappeared. It was restored after an “industry outcry,” Bloomberg reported.
Among the cuts already experienced, the outlet said that DOGE reportedly let go of probationary employees charged with protecting mortgage lenders from cyberattacks as well as “most members of a new team working on a program that would help military service members living abroad close on mortgages without having to leave their posts.”
The former Ginnie Mae official who spoke with HousingWire said that the company has been impacted by cuts, retirements and the government’s deferred resignation program. Bloomberg’s report adds that several senior executives who took advantage of that program “will be leaving over the next two months, vacating posts overseeing risk, capital markets and security operations.”
This is all taking place against a backdrop of a workload that some mortgage industry advocates have said is disproportionate to the company’s staff even before cuts were handed down. Housing trade and advocacy groups have consistently described Ginnie Mae as underresourced, and successfully lobbied Congress to approve full funding and new hiring for the company ahead of a budget vote last year.
“When something goes wrong at a company that handles Ginnie Mae-backed loans, the agency steps in,” Bloomberg explained. “Sometimes it has to take over a portfolio of loans and find another servicer for them or use its reserves to keep paying investors on time. It also helps servicers who experience operational problems.”
Such an event happened on the reverse mortgage side of the business in 2022, when a reverse mortgage-backed securities issuer declared bankruptcy and was extinguished from the issuer program, leading Ginnie Mae to assume control of its servicing portfolio. It ultimately developed a complementary reverse securities program in the waning months of the Biden administration, but its rollout is now in flux due at least in part to staff reductions, multiple sources have suggested.
A former HUD official also expressed bewilderment of the idea that Ginnie Mae would be a target for cuts on the basis of efficiency.
“They’ve always been underresourced,” this person said. “They’re a much bigger percentage of the market than they once were, and their staff has not grown commensurately. They received a significant bump in budget for salaries last year, and hired a lot of fantastic new people.”
But the cuts, coupled with likely hobbling by a series of recent or impending retirements, mean that “cuts there are much more impactful person for person.” Prior reporting at other outlets said that these cuts leave a staff of about 150 to manage a portfolio of 140 issuers and more than $2 trillion in guarantees.
“Does that seem like a good idea?,” the person asked rhetorically. “The industry is correct to be concerned.”
