Ginnie Mae’s Digital Collateral Program is continuing its growth trajectory and, based on 2022 activity, 2023 is shaping up to be a pivotal year for eNote adoption. According to its 2022 annual report, Ginnie Mae guaranteed approximately $14.7 billion in mortgage-backed securities (MBS) in fiscal year 2022, almost doubling the approximately $8 billion it guaranteed during the program’s initial pilot phase. Currently there are 241 approved participants in the Digital Collateral Program.
The recent uptick in eNote activity is evidence of increasing digital adoption which was spurred by the pandemic and the mortgage industry’s recognition that it needed to answer the call for more e-based mortgage and closing solutions. In January 2021, Ginnie Mae securitized its first eNote as part of the Digital Collateral pilot program which securitized almost 50,000 eMortgages before the pilot ended in June of 2022. At that point, Ginnie Mae launched full production of the permanent Digital Collateral Program, opening it up to new eligible applicants, including issuers, custodians and sub-servicers.
“The lessons learned during the initial pilot of the Digital Collateral Program are now incorporated into the eGuide and resulting enhancements. We are excited to expand access to this program” said Ginnie Mae President Alanna McCargo. “eMortgages bring efficiency and resilience to mortgage lending, and more importantly, improve access to homeownership for borrowers who are not well served by the traditional mortgage lending approach,” she continued.
Since then, eMortgage securitization has gained serious momentum and shows no sign of slowing down. Given Ginnie Mae’s total volume – the organization backs more than one-third of the mortgage market via FHA, VA and USDA loans and in 2022 guaranteed more than $653 billion in MBS – and the early success of its Digital Collateral Program, gains in the share of eNote adoption will be significant in 2023. Currently, eNotes account for nearly 5% of all Fannie Mae and Freddie Mac volumes. Ginnie Mae has already seen its share of eNotes move rapidly from about 1% to 2% of its total volume.
Another factor contributing to the increase in eMortgages and eNote securitization is that the downturn in mortgage origination has given lenders breathing room to pay more attention to, and put more resources in place for, their digital mortgage technology – including eNotes and the accompanying requirement of eVaults. eVaults are a critical component of the digital mortgage process, providing secure transfer and storage of electronic documents. There can be no eNotes without eVaults which is why one of the criteria for participating in Ginnie Mae’s Digital Collateral Program is having an eVault in place and demonstrating experience with creating, registering and transferring eNotes.
Ensuring that loans are created and managed in a secure and compliant way during their entire lifecycle is integral in helping more lenders move toward digitization, a process that’s best viewed as a journey with multiple destinations, rather than a single transformation, given its complexities.
Wolters Kluwer eOriginal has been leading digital technology innovation since its inception. Ginnie Mae selected our technology as the exclusive eVault provider when it first began its digital and modernization efforts in 2019, and our team worked closely with Ginnie Mae to develop common eNote standards for FHA, VA and USDA loans. In 2022, our eVault technology created and registered approximately 82% of all eNotes registered on the MERS eRegistry.
As Ginnie Mae continues to update its support and guidance for eNotes securitization, more and more lenders are embracing the security and benefits of eVault technology. Our eVault allows them to optimize processes and be on the forefront of the expanding digitized marketplace, ensuring that digital loans are created, stored and assigned with full compliance and legal standards for the industry.
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