Ginnie Mae Eliminates VA Mortgage Loan Limit

Ginnie Mae annnounced that it will be removing the current $417,000 loan limit for VA loans that the agency will accept for securitization effective Sept. 1. Considering the limited availability of credit for jumbo loans currently in the private market, RBS Greenwich Capital analysts believe this will draw a suprisingly large amount of interest from veterans. Analysts from RBSGC also noted that GNMA spreads are now trading down, with market players expecting increased issuance and changing loan characteristics in these securities. They noted that VA loans now make up merely 30% of GNMAs, and this most recent move from the Agency could increase that percentage. One question, however, that analysts are looking at is whether GNMAs with loans over $417,000 would be TBA eligible, or whether they would have to trade as specified pools.