Final_MF MSS Portfolio Seizure Management Narrative_11.07.19.pdf

MF MSS Portfolio Seizure Management

Standard Operating Procedure

Monitoring and Asset Management Division, Office of Issuer and Portfolio Management

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SOP 6000.4.1

DISCLAIMER. Deloitte & Touche LLP assisted Ginnie Mae’s Office of Issuer and Portfolio

Management (OIPM) in documenting this operating procedure. Ginnie Mae is responsible for the development and execution of the extinguishment procedures.

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SOP 6000.4.1

SUBJECT. MF MSS Portfolio Seizure Management Standard Operating Procedure (SOP).

OVERVIEW. This document is intended to provide the Master Subservicer (MSS) an overview of the process for extinguishing a Multifamily (MF) Issuer from Ginnie Mae’s Mortgage-Backed

Securities (MBS) Program. The extinguishment process is divided into four key sections to reflect the following extinguishment phases: Organize, Pre-Site Visit, Site Visit, and Site Visit Closeout.

The Organize phase initiates the extinguishment process by gathering and distributing preliminary extinguishment information to appropriate stakeholders and establishing the Ginnie Mae stakeholder coordination strategy. Next is the Pre-Site Visit phase, where Ginnie Mae communicates the decision to extinguish and identifies the required data/documentation, as well as proactively coordinates stakeholder involvement and extinguishment efforts. OIPM, the Monitoring and Asset Management (M&AM) Division, the Office of Enterprise Risk (OER), the Office of

Securities Operations (OSO), and the MSS(s) Contracting Officer’s Representatives (COR) are key stakeholders in the extinguishment phase of the Issuer Default Lifecycle. The Site Visit phase is when extinguishment teams are deployed to required locations to execute the Default Playbook steps and obtain data and documentation. The final extinguishment phase is Site Visit Closeout, where the extinguished Issuer’s portfolio is transferred to the MSS and efforts relating to the extinguishment, lessons learned, and system updates to reflect the new Default Issuer ID are documented. The extinguishment phases establish a repeatable framework to assist Ginnie Mae through the lifecycle of removing an Issuer from the MBS Program and transitioning the extinguished Issuer’s portfolio to the MSS(s), if applicable.

PURPOSE. This document is intended to provide a detailed overview of the process and expectations for Ginnie Mae’s MSS before, during, and after a Multifamily Issuer Portfolio Seizure.

SCOPE. The scope of this document is isolated to the role of the MSS during the Multifamily

Issuer extinguishment process, which may, but is not required to, occur following the Enhanced

Monitoring & Management (EMM) and/or the Special Situation processes.

POLICY. Ginnie Mae MBS Guide, Guaranty Agreements, and the Office of Management and

Budget (OMB) Circular A-123: Management’s Responsibility for Internal Control in Federal

Agencies.

INTERNAL CONTROLS. There are 10 unique Internal Controls identified within this SOP.

Reference Sections 2.4, 3.4, 4.4, and 5.4 on Key Internal Controls for detail.

EFFECTIVE DATE. The effective date of SOP version 1.00 Month Day, 2019.

FREQUENCY OF REVIEW. The SOP is reviewed on an as-needed basis and, at minimum, annually to ensure consistency and accurate reflection of the current procedures employed in conducting the extinguishment process.

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CERTIFICATION.

Approver Required Approver

Date Date

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DOCUMENT HISTORY

Revision History

Version Date Author Description

Insert Version

Number

Date of Revision

Author of Revision Describe what was modified and/or updated from the previous version.

SOP Extinguishment

SOP Number 6000.4.1

Version Number 1.00

Date Approved Month Day, 2019

Effective Date Month, Day 2019

Author Monitoring and Asset Management Division

Owner Rene Mondonedo, Director

Monitoring and Asset Management Division

Approver Rene Mondonedo, Director

Monitoring and Asset Management Division

Required Approver Leslie Pordzik, Acting Senior Vice President or Designee

Office of Issuer and Portfolio Management

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TABLE OF CONTENTS

1.0 INTRODUCTION

1.1 PURPOSE

1.2 SYSTEMS

1.3 SUMMARY OF PHASES

1.4 ACTIVITY TIMELINE

1.5 ROLES AND RESPONSIBILITIES

2.0 ORGANIZE

2.1 SCOPE

2.2 BUSINESS PROCESS DOCUMENTATION

2.3 ROLES AND RESPONSIBILITIES

2.4 PROCEDURES

2.5 KEY INTERNAL CONTROLS

2.6 EVIDENTIAL MATTER

2.7 APPENDICES

3.0 PRE-SITE VISIT

3.1 SCOPE

3.2 BUSINESS PROCESS DOCUMENTATION

3.3 ROLES AND RESPONSIBILITIES

3.4 PROCEDURES

3.5 KEY INTERNAL CONTROLS

3.6 EVIDENTIAL MATTER

3.7 APPENDICES

4.0 SITE VISIT

4.1 SCOPE

4.2 BUSINESS PROCESS DOCUMENTATION

4.3 ROLES AND RESPONSIBILITIES

4.4 PROCEDURES

4.5 KEY INTERNAL CONTROLS

4.5 EVIDENTIAL MATTER

4.6 APPENDICES

5.0 SITE VISIT CLOSEOUT

5.1 SCOPE

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5.2 BUSINESS PROCESS DOCUMENTATION

5.3 ROLES AND RESPONSIBILITIES

5.4 PROCEDURES

5.5 KEY INTERNAL CONTROLS

5.6 EVIDENTIAL MATTER

5.7 APPENDICES

6.0 REFERENCE MATERIAL

6.1 DEFINITIONS

6.2 ACRONYMS

6.3 EXHIBITS

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1.0 INTRODUCTION

1.1 PURPOSE

The purpose of this document is to provide an understanding of the business processes involved in the event Ginnie Mae extinguishes a Multifamily (MF)

Mortgage-Backed Securities (MBS) Issuer and elects to transfer the Issuer’s portfolio to the Master Subservicer (MSS).

The procedures detailed in this document were developed as part of the internal controls that have been created to achieve the goals of effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations.

1.2 SYSTEMS

Name Description

Ginnie Mae Enterprise Portal (GMEP) or

Successor System

System which acts as the entry point for Issuers, subservicers, and Document Custodians for accessing Ginnie Mae’s systems for monthly reporting, pool transfers, managing master agreements, etc.

Reporting and Feedback System (RFS)

Centralized data collection and processing system for Ginnie Mae Monthly Investor Reporting and related functions, serving as the single point for electronic reporting of monthly pool, loan, and various data related to the MBS Program.

GinnieNET Front end pooling system for pool creation prior to reporting to

RFS.

Master Agreement Management System

(MAMS)

System that provides Issuers with an automated method for creating, searching, viewing, and certifying agreements.

Salesforce Application used for tracking Issuer status from the point of application to the Ginnie Mae MBS program through Extinguishment or another program exit.

MSS Operational Reporting

(MOR)

System of record for the monthly collection of MSS’s operational reporting to Ginnie Mae.

Pool Transfer System (PTS)

PTS provides an automated means for the Issuer to initiate and update pool transfer request information, import and update pool numbers being transferred, view and receive the associated approval documentation, approve or reject pool transfer requests from the Selling Issuer, access and view reports, and confirm associated transfer fees. PTS also provides electronic notifications of transfer requests and reports to Ginnie Mae Account Executives and the Pool Processing Agent (PPA).

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1.3 SUMMARY OF PHASES

PHASE 1 – ORGANIZE

During the Organize phase, the MSS initiates pre-extinguishment activities.

This includes conducting preliminary extinguishment duties such as creating the Estimated MSS Capacity Plan and Draft Issuer Extinguishment Contingency Plan. Ginnie Mae establishes a communication plan, provides a “soft” notification to key external stakeholders, and provides technical direction.

PHASE 2 – PRE-SITE VISIT

Once Ginnie Mae makes the decision to extinguish an Issuer, the MSS is responsible for drafting the MSS Response Plan (MRP), providing data elements for the Integrated Data Collection Plan (IDCP), and participating in pre-extinguishment preparation activities to facilitate efforts during the Site Visit phase.

PHASE 3 – SITE VISIT

During the Site Visit, Ginnie Mae will deploy extinguishment teams to required locations, execute on-site extinguishment steps, obtain data and documentation listed in the Integrated Data Collection Plan (IDCP), and effectively coordinate across multiple stakeholder teams. The MSS is responsible for securing data and documentation associated with the Ginnie Mae portfolio to promote the continuity of servicing operations and to minimize the impact to borrowers once the portfolio is transferred to the MSS.

PHASE 4 – SITE VISIT CLOSEOUT

After the Site Visit, the MSS continues the remaining closeout activities and any items which were not completed during the Site Visit Phase. The MSS prepares MSS Extinguishment Reports and participates in Lessons Learned Conference Calls.

1.4 ACTIVITY TIMELINE

Although the MF MSS Portfolio Seizure Management Process is standardized, the circumstances that result in extinguishment are unique to each Issuer; therefore, the timeline for the process may vary.

1.5 ROLES AND RESPONSIBILITIES

A RACI Matrix is a tool used to identify stakeholder participation and roles in interdepartmental processes. Responsible parties complete the task. Accountable parties delegate work to the Responsible parties and must approve the work that

Responsible parties complete. Consulted parties are those whose input and opinions are sought. Informed parties are kept apprised on progress against key milestones in the process.

Each phase of this process has its own respective RACI Matrix, which is used to provide additional detail as to who will be involved in each of the below steps, and in what capacity.

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2.0 ORGANIZE

2.1 SCOPE

An Issuer may enter the extinguishment process if:

The Issuer did not cure the violation(s) cited in a Notice of Violation (NOV);

The trigger(s) identified in Enhanced Monitoring and Management (EMM) is severe enough to warrant immediate extinguishment;

The Issuer meets the criteria for Immediate Default per Section 10.01(a) of the

Guaranty Agreement and Ginnie Mae determines extinguishment is in the best interest of Ginnie Mae and the MBS program;

An external party (e.g., Federal Deposit Insurance Corporation [FDIC]) places the Issuer in receivership, conservatorship, etc.;

The Issuer voluntarily exits the program without first selling the underlying Ginnie Mae portfolio.

During Organize, the MSS coordinates and prepares for upcoming extinguishment activities. The purpose of these activities is to gather critical information on the Issuer, identify key stakeholders that may be involved in the extinguishment, such as regulatory bodies and insuring agencies, and prepare for the extinguishment process. Outputs from this process include the Soft MSS Notification Letter, Issuer Extinguishment Contingency Plan, Technical Direction, Standard MSS Confirmation Letter, and the Communication Plan.

2.2 BUSINESS PROCESS DOCUMENTATION

Phase 1:

Organize Process Flow

Organize Phase

Process Flow.pdf

PROCESS DURATION

The estimated process duration of the Organize Phase is contingent upon the amount of lead time Ginnie Mae has available. In certain circumstances, Ginnie Mae may have ample lead time (e.g., 7-8 days) to complete Organize activities, whereas other circumstances may dictate an expedited Organize process (e.g., 3-4 days or sooner). Therefore, the duration will vary on a case-by-case basis depending on the Issuer that is being extinguished.

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2.3 ROLES AND RESPONSIBILITIES

Phase 1:

Organize RACI Matrix

Organize Phase

RACI.pdf

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2.4 PROCEDURES

A. Procedures Inputs: Estimated MSS Capacity Plan

Outputs: Soft MSS Notification Letter, Issuer Extinguishment Contingency Plan, Technical Direction, Standard MSS Confirmation Letter, Communication Plan Systems: Salesforce, MAMS, GMEP

Note: The following Procedure steps correspond to MF MSS Portfolio Seizure Management Phase 1: Organize as referenced in the Business Process Documentation in 2.2 and reflect the typical extinguishment process. However, in certain circumstances, the sequencing of procedure steps listed below may vary in duration and become “trailing items” completed during the Pre-Site Visit Phase.

1. Retrieve Estimated MSS Capacity Plan (1.01)

The MSS COR retrieves the Estimated MSS Capacity Plan and will review the draft in conjunction with the Office of Issuer and Portfolio Management

(OIPM) to understand the MSS’s availability to service an additional

Extinguished Issuer Portfolio. The Estimated MSS Capacity Plan may affect

Ginnie Mae’s extinguishment strategy.

2. Submit Soft MSS Notification Letter to MSS (1.02)

The MSS COR submits the approved Soft MSS Notification Letter to the MSS. The Soft MSS Notification Letter is used to notify the MSS of an impending portfolio transfer.

Please see Exhibit E-1 for a template of the Soft MSS Notification Letter.

3. Receive Ginnie Mae Notification (1.03)

Once the MSS receives the approved Soft MSS Notification Letter from the MSS COR, the MSS will mobilize ahead of an impending portfolio transfer.

4. Draft Issuer Extinguishment Contingency Plan (Contingency Plan) (1.04)*

In the event Ginnie Mae identifies a potential Issuer extinguishment, the MSS COR requests the MSS update its Contingency Plan, including an initial Capacity Plan. Upon receipt of the request from the MSS COR to update the Contingency Plan, the MSS drafts the updated Contingency Plan and submits it to the MSS COR for review and feedback.

* The MF MSS is expected to develop the initial Contingency Plan upon Contract Award and update on an annual basis.

Please see Exhibit E-2 for a template of the Issuer Extinguishment Contingency Plan.

a. Identify Updates to Key Departments and Personnel (1.04.1)

Once the MSS COR notifies the MSS of a potential Issuer extinguishment, the MSS will develop the estimated Capacity Plan. The MSS will review and submit the estimated MSS Capacity Plan to the MSS COR, detailing the

S O P # 6 0 0 0 . 4 . 1 P a g e | 13 anticipated time and resources, including system and personnel capacity, required to complete the extinguishment. Information should include:

Time required Personnel required Sample deliverables Capacity to service an additional portfolio, in terms of both personnel and systems

b. Outline Key Tasks and Task Resources (1.04.2)

When the initial Capacity Plan is finalized, the MSS will develop a plan of action by outlining key tasks and task resources to achieve desired extinguishment milestones, which serve as the basis of the MSS Response Plan (MRP) discussed further in Step 2.06. The MSS will document and disseminate these tasks to the appropriate departments and personnel who will be involved with the extinguishment.

5. Review Draft Contingency Plan and Provide Feedback (1.05)

The MSS COR reviews the draft Contingency Plan and provides the MSS with adequate feedback so that the final draft is in line with Ginnie Mae policies, procedures, and regulations. Feedback may include, but is not limited to the following:

Feasibility of Contingency Plan Any possible gaps in the Contingency Plan Any parties that may be affected, but are not currently included in the

Contingency Plan Any other possible relevant consequences of extinguishment that have not been sufficiently addressed

6. Update Contingency Plan Based on Ginnie Mae Feedback (1.06)

Upon receiving Contingency Plan feedback from the MSS COR, the MSS incorporates these changes into the plan and provides the updated Contingency Plan to the MSS COR. This updated plan will be the final draft that will be used going forward. In the event changes are proposed to the Contingency Plan, the changes must be communicated, approved, and agreed to by the MSS COR.

7. Maintain Contingency Plan (1.07)

The MSS will continue to maintain the final draft of the Contingency Pan throughout the Extinguishment process.

8. Inform MSS of Imminent Issuer Extinguishment (1.08)

Ginnie Mae analyzes a variety of information on the status of its Issuers, including information reported by the Issuer, Ginnie Mae, and the Field

Review Contractor (FRC).

If Ginnie Mae finds that an Issuer has been exhibiting behavior that could lead to a potential extinguishment and seizure, the MSS COR will notify the

MSS of the potential Issuer extinguishment. The MSS COR should provide

S O P # 6 0 0 0 . 4 . 1 P a g e | 14 sufficient information for the MSS to adequately prepare for an extinguishment process but will omit distinguishing details that would reveal the identity of the Issuer in question. At this point in the process, the identity of the Issuer should remain confidential, so as not to affect the capital markets.

When the MSS receives the notification of Issuer extinguishment from the

MSS COR, the MSS also receives Technical Direction for Extinguishment from the MSS COR. The MSS will identify the Extinguishment Team

Members.

9. Provide Technical Direction (1.09)

Once an Issuer has been identified by Ginnie Mae for extinguishment and seizure, the MSS COR will provide technical direction for the seizure management process to the MSS. At this point, the MSS is made aware of the identity of the Issuer.

Please see Exhibit E-3 for a template of the Technical Direction.

Ginnie Mae will also send a letter notification, the “Standard MSS

Confirmation Letter,” confirming the MSS’s selection to participate in the seizure management process. At this point, the MSS should also have a plan in place to transfer servicing of the Extinguished Issuer’s portfolio.

Please see Exhibit E-4 for a template of the Standard MSS Confirmation

Letter.

10. Provide Updated Contingency Plan and Submit to MSS COR for Review (1.10)

Once Ginnie Mae provides the name of the Extinguished Issuer to the MSS, the exact size, complexity, and other relevant details of the portfolio will drive revisions to the MSS’s Contingency Plan and Capacity Plan. The MSS will make the appropriate changes based on what they estimate to be the personnel and other resource requirements.

11. Develop and Distribute Communication Plan to External Stakeholders (1.11)

The Senior/Lead Mortgage Banking Analyst (MBA) develops and distributes the Communication Plan to the MSS. The Senior/Lead MBA and MSS COR will work with the MSS and the FRC throughout the entire Portfolio Seizure

Management Process. This process involves significant up-front coordination with all parties before the Issuer Extinguishment occurs.

Please see Exhibit E-5 for a template of the Communication Plan.

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2.5 KEY INTERNAL CONTROLS

# Control Name Control Activity Control

Frequency Control Nature

Control Type

Review and approve

Contingency Plan & Capacity

Plan.

The MSS prepares the Contingency Plan & Capacity Plan. The plans are submitted to Ginnie Mae for review and approved by the

MSS COR.

Upon Request and

Annually Preventative Manual

Review and Approve

Standard MSS Confirmation

Letter.

The M&AM Director reviews and signs the Standard MSS Confirmation Letter before submitting to the MSS.

Ad Hoc Preventative Manual

Review and Approve

Communication Plan.

The Ginnie Mae MBA prepares the Communication Plan. The plan is submitted to the M&AM Director (OIPM) for review and approval.

Ad Hoc Preventative Manual

2.6 EVIDENTIAL MATTER

1. MSS Capacity Plan – Plan which outlines the MSS’s availability to service an additional Extinguished Issuer’s portfolio.

2. Soft MSS Notification Letter – Notification prepared by the MSS COR (OIPM) to notify the MSS of an impending portfolio transfer. Specific Issuer information will be withheld until after the signing of the Justification Memo.

3. Issuer Extinguishment Contingency Plan – Document developed by the MSS which outlines their plan for the Issuer Extinguishment.

4. Technical Direction – Statement of Work prepared by the MSS COR (OIPM) to prepare the MSS and FRC for the Issuer extinguishment which formally outlines the pricing and issuing of work orders for the extinguishment.

5. Standard MSS Confirmation Letter – Letter prepared by the MSS COR (OIPM) to confirm the MSS selection to participate in the seizure management process for the Extinguished Issuer.

6. Communication Plan – Plan created by the Senior/Lead MBA to establish a communication protocol, gather Person(s) of Contact (POC) information, and determine the initial communication schedule for the extinguishment; promote effective communication; serve as a guide throughout the extinguishment process.

2.7 APPENDICES

Refer to the applicable Exhibits at the end of the SOP. These are found on Page 35.

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3.0 PRE-SITE VISIT

3.1 SCOPE

Following aggregating pertinent Issuer information in the Organize phase, the Pre- Site Visit phase includes drafting and approving formal communications to parties affected by the extinguishment, as well as preparing for the Site Visit Phase.

Outputs from this process include the New MSS Security Officer Accounts, MSS Response Plan, Situation Assessment Call Minutes, Integrated Data Collection Plan, and the Master Agreements.

3.2 BUSINESS PROCESS DOCUMENTATION

Phase 2:

Pre-Site Visit Process Flow

Pre-Site Visit Phase

The estimated process duration of the Pre-Site Visit Phase is contingent upon the amount of lead time Ginnie Mae has available. In certain circumstances, Ginnie Mae may have ample lead time (e.g., 30 days) to complete Pre-Site

Visit activities, whereas other circumstances may dictate an expedited Pre-

Site Visit process (e.g., 3-7 days). Therefore, the duration will vary on a case-by-case basis depending on the Issuer that is being extinguished.

3.3 ROLES AND RESPONSIBILITIES

Phase 2:

Pre-Site Visit RACI Matrix

Pre-Site Visit Phase

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3.4 PROCEDURES

A. Procedures Inputs: Technical Direction, Communication Plan

Outputs: New MSS Security Officer Accounts, MSS Response Plan (MRP), Situation Assessment Call Minutes, Integrated Data Collection Plan (IDCP), Master Agreements

Systems: Salesforce, GMEP, PTS, MAMS

Note: The following Procedure steps correspond to MF MSS Seizure Management Phase 2: Pre-Site Visit as referenced in the Business Process Documentation in 3.2 and reflect the typical process. However, in certain circumstances, the sequencing of procedure steps listed below may vary in duration and become “trailing items” completed during the Site Visit Phase.

1. Obtain Communication Plan from Senior/Lead MBA (2.01)

The MSS obtains the Communication Plan from the Senior/Lead MBA.

2. Complete Travel Arrangements (2.02-2.03)

Site visit arrangements, including a travel itinerary, will be coordinated among Ginnie Mae, the MSS, and the FRC Extinguishment Team members. A complete coordination will include flight arrival times, site arrival times, and any hotel accommodations. Additionally, the MSS should document all travel requests, prepare the travel itinerary, and provide a copy to the Ginnie Mae On-Site Lead.

3. Create New Default Issuer ID and Provide to MSS (2.04)

The MSS COR and the Senior/Lead MBA coordinate with the Office of the Chief Financial Officer (OCFO) to determine the appropriate New Defaulted (i.e.

“9000”) Issuer ID.

4. Consult OIPM to Create New MSS Security Officers Accounts for New Default Issuer ID (2.05)

The MSS consults the MSS COR and the Senior/Lead MBA to create new MSS Security Officer accounts following the creation of the new Default Issuer ID.

Note: Direction to the Pool Processing Agent/Central Paying and Transfer Agent (PPA/CPTA) must be made to accept Form HUD-11702 from the MSS with a different Issuer ID Number (physical signature page); AND approval to accept blank Form HUD-11709 and Form HUD-11720, giving the MSS 30 days to finalize and upload signed forms.

a. Complete Ginnie Mae Systems Access Issuer Security Officer Registration (2.05.1)

The MSS completes the latest version of the registration form from Appendix

III-29 of the Ginnie Mae MBS Guide. At least two Security Officers must be designated, one Security Officer for registering users into GMEP, and a second Security Officer to approve those users.

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b. Submit to PPA/CPTA (2.05.2)

Completed forms are sent to the Ginnie Mae Security Administrator, which is currently the PPA/CPTA. Once the PPA/CPTA reviews and approves the MSS Security Officer Access for the New Default Issuer ID, the PPA/CPTA will notify OIPM and the MSS of completion.

5. Draft the MSS Response Plan (MRP) and Submit (2.06)

The MSS creates the MRP by updating the Contingency Plan so that it is specific to the extinguishment at hand. The MRP includes the key elements of the MSS Contingency Plan, which are tailored to the specific Issuer being extinguished.

The MRP will consider factors such as: the size of the extinguished portfolio, utilization of a sub-servicer(s), servicing and ancillary systems utilized, and portfolio composition (e.g. Federal Housing Administration (FHA)). Once updated, the MSS submits the MRP to the MSS COR for review.

Note: Once the Contingency Plan is updated with the Issuer-specific data, it is considered to be the MRP.

6. Approve the MRP? (2.07)

The MSS COR reviews the MRP for completeness. If the MSS COR approves the MRP, proceed to step 2.09. If revisions to the MRP are necessary, proceed to Step 2.08.

7. Revise the MRP (2.08)

The MSS incorporates and/or addresses the MSS COR’s comments and prepares a revised MRP. The MSS resubmits the MRP to the MSS COR for review and approval. Proceed to step 2.07.

8. Receive Approved MRP (2.09)

The MSS receives the approved MRP from the MSS COR.

9. Participate in Situation Assessment Calls (2.10)

The MSS participates in situation assessment calls to discuss the anticipated details and execution of the site visit. The Senior/Lead MBA will conduct the situation assessment calls to address some of the following topics:

Logistics (Extinguished Issuer, extinguishment date, expected response from the Extinguished Issuer, expected impact on the Extinguished Issuer’s ability to continue as a going concern, anticipated duration of the site visit)

Extinguished Issuer information documented on the FRC and OIPM worksheets and impact on the extinguishment execution. Information that should be analyzed includes:

o Portfolio characteristics o Location o Servicing information systems o Tax service o Bank locations o Document Custodian

Party responsible for obtaining remaining information for the FRC and OIPM Worksheets

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Identify and resolve travel coordination problems Prioritizing the Integrated Data Collection Plan (IDCP)

The MSS will provide their readiness status on the situation assessment call.

They will also discuss action items and review results of the call as documented by the FRC.

10. Receive (Read Only) Access to Issuer ID in Ginnie Mae System (2.11)

On a case by case basis, the MSS may request read only access to certain Ginnie Mae systems. If applicable, the Senior/Lead MBA will consult with OSO to grant read only access for the existing Issuer’s ID for the MSS Lead so they may view reported loans to be onboarded. The MSS Lead will obtain (read only) access for the Issuer’s ID in RFS/GinnieNET/GPADS. This will facilitate the MSS’s involvement and understanding of the Issuer and allow the MSS Lead to view reports and submitted documentation.

11. Review Integrated Data Collection Plan (IDCP) Template (2.12)

The Senior/Lead MBA retrieves the most recent IDCP template, which is required to identify data collection requirements. The relevant items in the IDCP will vary based on the Extinguished Issuer’s portfolio characteristics.

The IDCP will describe the logistics for collecting, transporting, and storing required data from the Extinguished Issuer. Either Ginnie Mae or the MSS may provide additional data elements or data requirements that should be included in the IDCP. The FRC develops the IDCP and will incorporate any additional elements into the plan.

Please see Exhibit E-6 for a template of the IDCP.

12. Provide Feedback and Data Elements for Inclusion in the IDCP (2.13)

The FRC provides updates and feedback for the IDCP to the Senior/Lead MBA.

The FRC will mark items that are not relevant to the extinguishment as “N/A”.

13. Review Data Elements for Inclusion in the IDCP and Submit to Senior/Lead MBA (2.14)

The MSS provides updates and feedback for the IDCP to the Senior/Lead MBA.

The MSS will mark items that are not relevant to the extinguishment as “N/A”.

14. Finalize and Redistribute IDCP Requirements to FRC and MSS (2.15)

The Senior/Lead MBA obtains feedback on the initial IDCP, if applicable. The Senior/Lead MBA then incorporates feedback received into the final IDCP. Once completed, the Senior/Lead MBA will redistribute the IDCP to the stakeholders involved in the on-site extinguishment (see Communication Plan for a listing of stakeholders).

15. Create and Coordinate New Default Issuer ID Master Agreements (2.16)

The MSS creates new Master Agreements under the New Default ID.

Specifically, the Form HUD-11707 and Form HUD-11715 are created at this time.

The Form HUD-11709(s) and the Form HUD-11720(s) for each custodial account are finalized when the new accounts are opened, please refer to Step 4.03.

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For the Form HUD-11715, the Designated Document Custodian (DDC) accepts the Master Agreement electronically. Once the Master Agreements are approved by the PPA/CPTA in GMEP (MAMS), the Senior/Lead MBA retrieves and catalogs electronic versions for documentation purposes.

To execute the new Master Agreements under the New Default ID, the Sec Memo must be prepared, approved, and the New Default ID must be created.

Note: Access to MAMS is required to monitor the creation and submission of the new Default ID Master Agreements.

16. Participate in Final Situation Assessment Call (2.17)

Prior to arriving on-site, the Senior/Lead MBA hosts a final Situation Assessment

Call with representatives from the FRC, the MSS, and other relevant parties

(e.g., Regulators) to coordinate the on-site extinguishment activities. The Final

Situation Assessment Call may include, but is not limited to, the following topics:

Extinguishment execution logistics Extinguished Issuer information Prioritizing and assigning IDCP requests Administrative issues Finalizing POCs for Ginnie Mae, the FRC, and the MSS

The Senior/Lead MBA documents the results of this meeting and provides a copy of the meeting minutes to Ginnie Mae and the MSS.

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3.5 KEY INTERNAL CONTROLS

# Control Name Control Activity Control

Frequency Control Nature

Control Type

Review and approve MSS

Response Plan

(MRP).

The MSS prepares the MRP by updating the Contingency Plan & Capacity Plan. The plans are submitted to Ginnie Mae for review and approved by the MSS COR.

Ad Hoc Preventative Manual

Finalize the Integrated Data Collection Plan

(IDCP).

After the FRC and the MSS have updated the IDCP, the Senior/Lead MBA reviews and approves the IDCP.

3.6 EVIDENTIAL MATTER

1. Integrated Data Collection Plan – Lists the data and documentation to be collected by the FRC and the MSS during the Issuer extinguishment.

2. Situation Assessment Call Meeting Minutes – The Senior/Lead MBA coordinates calls to discuss the anticipated details and execution of the site visit.

The meeting minutes are documented and dispersed to relevant stakeholders outlining the results of the meeting.

3.7 APPENDICES

Refer to the applicable Exhibits at the end of the SOP. These are found on Page

355.

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4.0 SITE VISIT

4.1 SCOPE

The purpose of the Site Visit extinguishment phase is to eliminate the Issuer from the Ginnie Mae program by successfully deploying extinguishment teams to required locations, executing extinguishment steps, obtaining data and documentation listed in the Integrated Data Collection Plan (IDCP), and effectively coordinating across multiple stakeholder teams. Outputs from this process include the updated IDCP and the Extinguished Issuer’s portfolio analysis.

4.2 BUSINESS PROCESS DOCUMENTATION

Phase 3:

Site Visit Process Flow

Site Visit Phase

The estimated process duration of the Site Visit phase is contingent upon the amount of lead time Ginnie Mae has available. In certain circumstances, Ginnie Mae may have ample time (e.g., 5 days) to complete Site Visit extinguishment activities, whereas other circumstances may dictate an expedited Site Visit process (e.g., 3 days). Therefore, the duration will vary on a case-by-case basis depending on the Issuer that is being extinguished.

4.3 ROLES AND RESPONSIBILITIES

Phase 3:

Site Visit RACI Matrix

Site Visit Phase

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4.4 PROCEDURES

A. Procedures Inputs: Situation Assessment Call Minutes, IDCP, MRP Outputs: Updated IDCP, Extinguished Issuer Portfolio Analysis Systems: GMEP, Salesforce

The following Procedure steps correspond to MF MSS Portfolio Seizure Management Phase 3: Site Visit as referenced in the Business Process Documentation in 4.2 and reflect the typical process. However, in certain circumstances, the sequencing of procedure steps listed below may vary in duration and become “trailing items” completed during the Site Visit Closeout Phase.

1. Participate in Site Visit Preparation Call and Daily Status Calls (3.01-3.02)

The MSS and the FRC will participate in a Site Visit Preparation Call that the Senior/Lead MBA designated as the Ginnie Mae Headquarters (HQ) Lead and the Senior/Lead MBA(s) designated as the On-Site Lead(s) conduct with all extinguishment stakeholders on the date of the extinguishment before leaving for the extinguishment site(s) and before the NOV is delivered to the Issuer being extinguished.

The following details should be discussed during the Site Visit Preparation Call:

communicating the site visit process, site visit locations (i.e., Issuer and Subservicer sites), open items from the final situation assessment call, confirming all data is accurate and accounted for through the IDCP, site visit preparation items, and that all teams are “at the ready” at alternate sites.

In addition, the MSS and the FRC will participate in daily status calls hosted by the On-Site Lead(s) throughout the on-site phase of the extinguishment.

2. Instruct On-Site Extinguishment Team to Access All Applicable Facilities (3.03)

The Senior/Lead MBA notifies other team leads (including Ginnie Mae staff, FRC, and MSS POCs) and instructs the teams to report to the designated site(s).

3. Receive Notification from Senior/Lead MBA to Initiate Site Visit (3.04)

The MSS, the FRC, and other third-party contractors should remain off-site at an agreed-upon location until requested to go on-site by the On-Site Lead(s).

Once the MSS, the FRC, and other third-party contractors receive notification from the Senior/Lead MBA, the teams report to the designated site(s) to initiate the site visit.

4. Identify POC for Data/Documentation Requests (3.05)

The MSS identifies the on-site POC for data and documentation requests.

5. Obtain Access to Extinguished Issuer’s GinnieNET and GMEP Accounts (3.06)

Upon request by the MSS, the MSS and MSS COR coordinate with OSO to obtain access to the Extinguished Issuer’s account on GMEP and GinnieNET for a single MSS designated person.

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6. Request Data/Documentation Identified in IDCP (3.07-3.08)

The MSS and the FRC will review information gathered during the site visit(s) from the Issuer/Subservicer(s) according to the IDCP. Once reviewed, the MSS and the FRC will request necessary additional information in accordance with the IDCP from the On-Site Lead(s). The On-Site Lead(s) will facilitate these requests directly to the Issuer or Subservicer(s). Any issues that arise should be escalated to the On-Site Lead(s) or HQ Lead.

Note: If requested data/documentation contains personally identifiable information (PII), files must be encrypted and safeguarded. The HQ Lead is responsible for sharing logs with the Ginnie Mae Extinguishment Team to complete a final extinguishment documentation package (artifacts).

7. Prioritize Site Visit IDCP Requests as Needed (3.09)

Ideally, Ginnie Mae, the FRC, and the MSS will prioritize IDCP requirements during the Situation Assessment Call(s) (see Step 2.10 in the Pre-Site Visit phase). In instances where preparation time and on-site time is limited, the FRC and the MSS will consult with the On-Site Lead(s) to prioritize data and documentation requests and site visit activities. The FRC will document the prioritization and justification for the order of tasks performed.

Prior to arriving at the Extinguished Issuer’s location, Ginnie Mae will identify the uninsured loan population when evaluating the Extinguished Issuer’s portfolio composition. However, if an Issuer extinguishment occurs quickly or if the information needed to identify the uninsured loan population is not available, the On-Site Lead(s) will identify the uninsured loan population within the Extinguished Issuer’s portfolio while on-site. The On-Site Lead(s) will perform this by requesting this information from the Issuer in the IDCP, and also leveraging GMEP. The On-Site Lead(s) will communicate the uninsured population to the FRC and the MSS once identified. While on-site at the Extinguished Issuer and/or Subservicer(s) location, the FRC and the MSS will prioritize obtaining data and documentation related to the uninsured loans.

Uninsured loans create additional risk for Ginnie Mae when an Extinguished Issuer’s portfolio is being transferred to Ginnie Mae’s MSS. Considering all uninsured loans that are more than one year past their pooling date are deemed defective, Ginnie Mae is responsible for facilitating a loan buyout for each uninsured loan through the MSS. Additionally, in the event an uninsured loan enters foreclosure, Ginnie Mae is unable to file a claim with the Insuring Agency.

Therefore, identifying the uninsured population and taking the steps necessary to obtain Agency insurance, if possible, is a priority.

The HQ Lead logs final documents, including the completed IDCP, and shares with the Ginnie Mae Extinguishment Team as part of the full extinguishment documentation package (artifacts).

8. Protect Integrity of Requested Data/Documentation (3.10)

Throughout the extinguishment process, the MSS will protect the integrity of the requested data and documentation at all times. A representative from the FRC or the MSS will assist Ginnie Mae in monitoring the extraction of electronic files

(e-files) related to the Ginnie Mae portfolio from the Extinguished Issuer’s servicing system(s). The FRC and the MSS will also assist Ginnie Mae in identifying and securing hardcopy files related to the Ginnie Mae portfolio. In

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Issuer, the On-Site Lead(s) will be notified immediately.

9. Secure Requested Data/Documentation (3.11)

The MSS will immediately begin securing data and documentation related to the Ginnie Mae portfolio once access to the Issuer and/or Subservicer(s) facility is granted. The FRC and the MSS will begin extracting relevant e-files from the Extinguished Issuer’s servicing system(s) and seizing hardcopy files, in accordance with the IDCP.

10. Receive IDCP Data/Documentation from Ginnie Mae and Extinguished Issuer (3.12)

The MSS will work closely with the Extinguished Issuer to seize data and documentation from the extinguished Issuer’s servicing system. During the site visit, MSS staff should not at any time say anything that could be interpreted to compromise Ginnie Mae’s authority, processes, or execution of the extinguishment and seizure process. Any discovery by any MSS staff of any irregularities, evidence of improper activities, or negligent activity by the Extinguished Issuer should be communicated to the Ginnie Mae On-Site Lead immediately via the MSS primary POC.

11. Retrieve IDCP Data/Documentation from (name of shared site) (3.13-3.14)

While the MSS aims to complete as many tasks as possible during the site visit, due to extenuating circumstances, as well as the time and resources available, the MSS may not be able to complete all checklist items in one site visit. If this is the case, the MSS will coordinate with the FRC to identify the remaining checklist tasks to be completed after the site visit is complete. In these instances, the MSS should provide a high-level project plan to Ginnie Mae to detail how and when they expect to complete the remaining tasks.

12. Identify Missing Data/Documentation (3.15-3.16)

Once on-site, the MSS and the FRC will begin collecting data and documentation related to the Extinguished Issuer’s portfolio. Throughout the site visit, both parties will inform the On-Site Lead(s) of missing or incomplete data and documentation. Missing data and documentation will be tracked and monitored in the IDCP.

13. Update Progress Against IDCP (3.17)

As the tasks referenced in Step 3.13 to Step 3.16 are completed, the MSS will update the IDCP accordingly. The On-Site Lead(s) will track the status and, as necessary, follow-up on all information requests with the responsible parties.

14. Provide Daily Status Reports of IDCP Progress and Escalate Issues to On‐Site Extinguishment Lead (3.18)

The MSS will provide daily status reports to the On-Site Lead(s). If tasks are not completed by their respective due dates, the MSS must provide an update and explanation for why these tasks are not completed.

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15. Perform Required Portfolio Analysis (3.19)

While on-site, the MSS will initiate required, optional, and additional analyses of data and information obtained from the Extinguished Issuer. Since these analyses are dependent upon data collection schedules, these analyses will not typically be completed until the Site Visit Closeout Phase of the Extinguishment

Process.

In order for the MSS to assume the responsibility for servicing the Extinguished

Issuer’s securities, the MSS will need to review and assess all documents pertinent to servicing the portfolio. The MSS required analyses can include:

Identify gaps and/or deficiencies in data and documentation seized from the Extinguished Issuer's servicing system

Participate in daily status updates with Ginnie Mae and the FRC If a collateral site-visit was approved by Ginnie Mae: Secure collateral, identify missing collateral files/Form HUD-11708s, analyze collateral, identify uninsured loans, identify missing data/documentation

The primary purposes of required analyses are to: 1) identify potential risks to

Ginnie Mae resulting from the extinguishment, 2) identify any amounts due to

Ginnie Mae, and 3) develop findings to be addressed by Ginnie Mae.

Optional additional analyses may be conducted at Ginnie Mae’s request. The results of the optional and required analyses will be included in the MSS

Assessment Extinguishment Execution Report (the “final report”) to Ginnie Mae.

Interim results may be provided to Ginnie Mae prior to issuance of the final report. In such cases, these results may be incorporated either in full or by reference in the final report or may be provided as additional appendices to the final report.

16. Identify/Request Funds for Construction Draws Due Immediately (3.20)

Construction draw requests that are in-flight and due immediately must be identified. If construction draws are required, proceed to the Construction Draw

Process Flow.

Please see Exhibit E-7 for the Construction Draw Process Flow.

17. Complete Initial Forecasts for Near-Term Cash Outflows (3.21)

The MSS completes initial forecasts for near-term cash outflows. These cash outflows may include, but are not limited to, future pass-throughs to security holders and anticipated construction draw requests from borrowers.

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4.5 KEY INTERNAL CONTROLS

# Control Name Control Activity Control

Frequency Control Nature

Control Type

Remove Issuer access to

GinnieNET AND

GMEP.

The Senior/Lead MBA requests the OSO direct the PPA to remove the Extinguished Issuer’s access to GinnieNET, the system used for front-end pooling, and GMEP.

Ad Hoc Preventative Manual

Review and Approve

Requests for Funding

Construction Draws.

The MSS submits a request for funding for construction draws to the MSS COR/OCFO. The MSS COR/OCFO reviews and approves the request for funding.

4.5 EVIDENTIAL MATTER

1. Data and Documentation Listed in the IDCP – Collection of the data and documentation collected by the FRC and the MSS during the Issuer extinguishment.

2. Daily Status Call Meeting Minutes – The Senior/Lead MBA(s) coordinates daily calls to discuss the action items and progress during the site visit. The meeting minutes are documented and dispersed to relevant stakeholders.

3. Construction Draw Funding Request(s) – The MSS sends a funding request to the MSS COR/OCFO for construction draws required immediately.

4.6 APPENDICES

35.

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5.0 SITE VISIT CLOSEOUT

5.1 SCOPE

The purpose of the Site Visit Closeout process is for Ginnie Mae, the FRC, and the MSS to begin analyzing the condition of the Extinguished Issuer’s portfolio and to perform closeout activities for the extinguishment. Depending on the nature of the extinguishment and cooperation of the Extinguished Issuer, a portion of the activities specified in this section may be completed during the Site Visit phase of the extinguishment. Any activities not completed during the Site Visit phase may be completed in the Site Visit Closeout phase. Outputs from this process include the MSS Extinguishment Reports and Lesson Learned Conference Calls.

5.2 BUSINESS PROCESS DOCUMENTATION

Phase 4:

Site Visit Closeout

Phase Process Flow.pdf

The estimated process duration of the Site Visit Closeout Phase is contingent upon reporting requirements and the amount of lead time Ginnie Mae has available. Due to reporting requirements, the typical duration for Site Visit

Closeout activities will be approximately 60 days. Site Visit Closeout processes are a bridge to asset management and remediation functions that are ongoing tasks performed by the MSS and Ginnie Mae. Therefore, the duration will vary on a case-by-case basis depending on the Issuer that is being extinguished.

5.3 ROLES AND RESPONSIBILITIES

Phase 4:

Phase RACI.pdf

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5.4 PROCEDURES

A. Procedures Inputs: Updated IDCP, Extinguished Issuer Portfolio On-Site Analysis

Outputs: MSS Extinguishment Reports, Lessons Learned Conference Calls

Systems: MAMS, PTS, Salesforce, MOR

Note: The following procedure steps correspond to MF MSS Portfolio Seizure Management Phase 4: Site Visit Closeout as referenced in the Business Process Documentation in Section 5.2 and reflect the typical extinguishment process.

However, in certain circumstances, step sequencing may vary and will be contingent on the Issuer and extinguishment duration.

1. Identify Remaining IDCP Items to be Completed in Site Visit Closeout (4.01)

While the MSS aims to complete as many tasks as possible during the site visit, due to extenuating circumstances, as well as the time and resources available, the MSS may not be able to complete all checklist items in one site visit. If this is the case, the MSS will coordinate with the FRC to identify the remaining checklist tasks to be completed after the site visit is complete. In these instances, the MSS should provide a high-level project plan to Ginnie Mae to detail how and when they expect to complete the remaining tasks.

2. Board All Loan and Pool Records, Escrow and Reserve Account Records, Construction Status, Communication, and Borrower Notes (4.02)

As the data becomes available, the MSS will board all loan and pool records, escrow and reserve account records, construction status, communication, and borrower notes from the Extinguished Issuer’s system to their own system. This process may vary depending on the servicing platform(s) of the Extinguished Issuer and the MSS.

Note: Each MSS will have its own specific process to transfer this loan servicing and payment history data.

3. Setup New Custodial Accounts (4.03)

The MSS coordinates with OIPM to set up new custodial accounts as identified in the contract. For each P&I custodial account created, the MSS must complete the Form HUD-11709 and the Form HUD-11709A. For each escrow custodial account created, the MSS must complete the Form HUD-11720. These forms are submitted electronically via GMEP (MAMS).

Once the Master Agreements are approved by the PPA/CPTA in GMEP (MAMS), the Senior/Lead MBA retrieves and catalogs electronic versions for documentation purposes.

Note: Although the MSS will typically only open one or two P&I custodial accounts, multifamily pools may require several escrow custodial accounts.

These accounts may include, but are not limited to, the following escrow account types: T&I, latent defects, MIP, reserve for replacement, residual receipts, operating deficit, tenant services, debt service, and repairs.

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4. Apply Data Integrity Rules to Confirm Data Consistency, Loan/Pool Counts, Loan Status, and Construction Status (4.04)

The MSS applies the data integrity rules determined by Ginnie Mae to the Extinguished Issuer’s portfolio data. Once the MSS has applied the data integrity rules and has the relevant information on each loan, the MSS will apply a deeper dive into checking the loan data, performing an in-depth cleanse of the information. The loan-level information should be reviewed and organized appropriately so the MSS can properly service the portfolio.

Ginnie Mae’s data integrity rules may include, but are not limited to, the following:

Verifying the loan count per Ginnie Mae’s internal records reconciles to the loan count per the Extinguished Issuer’s servicing system and the loan count on-boarded by the MSS

Verifying loan statuses reported by the Extinguished Issuer are accurate, based on the supporting documentation seized (trial balances, loan histories, collections/loss mitigation notes, etc.)

Verifying that the data seized from the Extinguished Issuer will be within the requirements of MSS Operational Reporting (MOR)

5. Notify MSS COR of any Issues with Integrity of Data (4.05)

The MSS…