By the Numbers
Ginnie Mae servicer buyouts are rising
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Delinquency rates have gone up in Ginnie Mae MBS and with it the risk of servicer early buyouts in pools priced above par. Servicers have a large influence on buyout rates and MBS valuations. For example, Village Capital’s buyout rates in higher coupon pools averaged 8.5 CPR over the last year, while Rocket’s averaged only 1.0 CPR. Large servicers are still below Ginnie Mae’s delinquency limits, but growing delinquencies could force servicers to buyout loans to stay under the caps. Servicers would prioritize premium-priced pools for these buyouts.Buyout rates have grown over the past few months in 6.5% and higher coupon Ginnie Mae 30-year MBS (Exhibit 1). There were small gains in 5.5%s and 6.0%s. The increase began in the middle of 2024 as mortgage rates fell. Servicers typically will only choose to buyout loans from pools priced above par since the servicer must pay par for the buyout.
Exhibit 1. Servicer optional buyouts are gaining steam in Ginnie Mae 30-year MBS
Ginnie Mae 30-year fixed-rate MBS. Source: Ginnie Mae, Santander US Capital Markets.
Not all servicers are equally likely to buyout delinquent loans even if it is economical to do so (Exhibit 2). Village Capital, for example, bought out delinquent loans from 6.5% and higher coupon pools at a pace of 8.5 CPR over the last year, while Rocket only bought out loans at a 0.4 CPR average pace. But each of these servicers has at least 5% of the loans in these pools at least 60 days delinquent.
Exhibit 2. Servicer buyout rates in 6.5%s and higher coupon G2SF
The 10 servicers with the largest balance in 6.5% and higher coupon G2SF 30-year MBS as of 4/1/2025. Buyout rates in those coupons from April 2024 through March 2025. Sorter fastest to slowest buyout rate.
Source: Ginnie Mae, Santander US Capital Markets.
FHA delinquency rates have fallen slightly over the last two months (Exhibit 3). However, there is a typical seasonal decline in the spring that can be observed in most years since Ginnie Mae began publishing delinquency data in 2005. It is likely that delinquency rates will rebound even higher starting in the summer months.
Exhibit 3. FHA delinquency rates by vintage
Source: Ginnie Mae, Santander US Capital Markets.
Higher delinquency rates should put more pressure on servicers to buyout delinquent loans to remain under Ginnie Mae’s delinquency thresholds (Exhibit 4). Ginnie Mae requires servicers to adhere to three thresholds across their loans in Ginnie Mae MBS:
- “DQ2+”: The %60+ days delinquent should not exceed 7.5%
- “DQ3+”: The %90+ days delinquent should not exceed 5.0%
- “DQP”: The ratio of the total missed payments to the total monthly payment amount should not exceed 60%
Exhibit 4. The 20 largest servicers are below the delinquency thresholds
DQ2+: The percent of loans at least 2 months delinquent; must not exceed 7.5%. DQ3+: the percent of loans at least 3 months delinquent; must not exceed 5%. DQP: the total missed principal and interest payments as a percent of the total monthly payments due; must not exceed 60%. Red cells indicate servicers that are within 1% of the DQ3+ threshold. These values are estimated using Ginnie Mae loan-level data.
Source: Ginnie Mae, Santander US Capital Markets.
Three servicers—Planet, CrossCountry, and Idaho HFA—are over 4% 90+ days delinquent (DQ3+). These servicers could be forced to increase their buyout rates as delinquencies build later this year. CrossCountry’s buyout rate is over 5 CBR in high coupon pools, so perhaps the servicer is already taking steps to avoid hitting the caps. But Planet and Idaho HFA were very slow to buyout loans last year, and that could increase. These servicers have more room on the other two metrics, but these are also likely to increase this year.
A few smaller servicers are close to the delinquency caps, and a couple are over them (Exhibit 5). Money Source, for example, is at 4.8% 90+ days delinquent, and should not exceed 5%. It is likely to see a pickup in buyouts if delinquency rates grow later this year.
Exhibit 5. A few mid-sized servicers are nearing or have exceeded the DQ thresholds.
Red cells indicate servicers that have apparently breached a Ginnie Mae delinquency limit. DQ2+: The percent of loans at least 2 months delinquent; must not exceed 7.5%. DQ3+: the percent of loans at least 3 months delinquent; must not exceed 5%. DQP: the total missed principal and interest payments as a percent of the total monthly payments due; must not exceed 60%. Red cells indicate servicers that are within 1% of the DQ3+ threshold. These values are estimated using Ginnie Mae loan-level data.
Source: Ginnie Mae, Santander US Capital Markets.
Ginnie Mae has allowed other small servicers to exceed the thresholds (Exhibit 6). Mortgage Solutions of Colorado, for example, is over 15% 60+ days delinquent, over 12.2% 90+ days delinquent, and the total delinquent P&I is nearly 150% of the P&I due each month. Yet it is still putting loans into the multiple issuer pools and even issuing custom pools. So Ginnie Mae retains flexibility to allow servicers to exceed the limits, but may be reluctant to do so for large lenders.
Exhibit 6. Ginnie has also allowed some small servicers to exceed the DQ thresholds.
DQ2+: The percent of loans at least 2 months delinquent; must not exceed 7.5%. DQ3+: the percent of loans at least 3 months delinquent; must not exceed 5%. DQP: the total missed principal and interest payments as a percent of the total monthly payments due; must not exceed 60%. Red cells indicate servicers that are within 1% of the DQ3+ threshold. These values are estimated using Ginnie Mae loan-level data.
Source: Ginnie Mae, Santander US Capital Markets.
These are estimates of the DQ2+, DQ3+, and DQP ratios using the loan-level securities data, not numbers directly published by Ginnie Mae. It is possible there are differences in how Ginine Mae calculates them using internal data. But any differences, especially for the DQ2+ and DQ3+ ratios, are likely to be small.
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