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CHAPTER 25. BUYDOWN MORTGAGE POOLS — SPECIAL REQUIREMENTS
PART 1. OVERVIEW OF CHAPTER Effective Date: 2025-06-16
This chapter describes special requirements that apply for a pool or loan package of buydown mortgages. The requirements described in this chapter may modify, supplement, or in some cases repeat, for the purpose of emphasis, those requirements set forth in previous chapters with respect to mortgage eligibility, pool and loan package requirements, required pool and loan package submission documents, and the actual securities. The buydown pool suffix is “BD”.
Buydown pools may be formed under both Ginnie Mae I and Ginnie Mae II MBS programs, however mortgages with buydown provisions are prohibited from pooling in any Ginnie Mae I SF pool.
Applicable Pool Types At A Glance:
Ginnie Mae I MBS Program Ginnie Mae II MBS Program
X BD: A single family, level payment pool that
C BD: A single family, custom buydown pool that may contain one or more buydown loans
may contain one or more buydown loans.
without limitation. X SF: A single family, level payment pool that
C SF: A single family, level payment custom pool that may contain one or more buydown
may not contain any buydown loans
loans without limitation.
M SF: A single family, multiple Issuer level
payment pool (MIP) consisting of loan packages whose aggregate original principal
balance of buydown loans may not exceed
10.00% of the MIP’s total original principal balance. To ensure compliance with the 10%
threshold for buydown loans, each individual
loan package will also be limited to the 10% threshold for buydown loans. Loan packages
exceeding this threshold will be rejected by Ginnie Mae’s electronic pooling application.
A buydown mortgage is a mortgage for which funds are provided to reduce the borrower's monthly payments during the early years of the mortgage. The buydown funds are usually provided by the builder or other property seller to encourage the buyer to purchase the property. If a loan were originated with a buydown provision and the buydown period expired prior to pooling, that loan will always be considered a buydown loan for pooling purposes.
PART 2. MORTGAGE ELIGIBILITY AND POOL REQUIREMENTS Effective Date: 2025-06-16
The mortgage eligibility and pool requirements that apply, with limited exceptions, to all pool types are found in MBS Guide, Ch. 9. While Buydown mortgage pools may be formed under both Ginnie Mae I and Ginnie Mae II MBS programs, C BD pool types may only be created under the Ginnie Mae II MBS program. With the exception of the prohibition on buydown
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provisions, the eligibility requirements for Ginnie Mae MBS mortgages (Please See MBS Guide Chapter 24) apply to Buydown mortgages, except as modified by the following:
(1) Eligible Pool Types, Ginnie Mae I MBS:
(a) X BD: Single Family, level payment pool that may contain one or more buydown
loans. Note: X SF pools may not contain any buydown loans.
(2) Eligible Pool Types, Ginnie Mae II MBS:
(a) C BD: Single Family level payment custom buydown pool that may contain one or
more buydown loans without limitation.
(b) C SF: Single Family, level payment custom pool that may contain one or more
buydown loans without limitation.
(c) M SF: Single Family, level payment multiple Issuer pool, in which an individual loan
package’s total origination balance of buydown loans may not exceed a 10.00% threshold. If the threshold is exceeded, Ginnie Mae’s electronic pooling application will reject the noncompliant loan package.
(3) Minimum pool balance:
As of the date of issue, each buydown pool, other than a pool formed pursuant to a BFP, must have an original principal amount of at least $500,000;
(4) Pool Composition:
In order for a pool to qualify as a buydown pool, at least one of the underlying mortgages must have buydown provisions.
(5) Interest escrow custodial account:
An interest escrow custodial account must be maintained in connection with buydown mortgages, and used for the deposit of buydown funds administered by the Issuer. This account must meet Ginnie Mae’s escrow custodial account requirements (Please See MBS Guide Chapter 16, Part 5) and it must also meet the insuring or guarantying agency’s requirements for such accounts.
PART 3. REQUIRED DOCUMENTS
The procedures and basic document requirements for submission of all pools are found in MBS Guide, Ch. 10, 11 and 13.
Section A. For Certification by Document Custodian Effective Date: 2021-07-28
The loan documents required for initial and final certification of a BD pool by the document custodian are the same as those discussed in MBS Guide, Ch. 13, Part 7. They are summarized in the following table.
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Documents Form Number Appendix For Initial Certification
Schedule of Pooled Mortgages HUD 11706 III-7 Release of Security Interest, executed original, if applicable
HUD 11711A III-5
Certification and Agreement, executed original
HUD 11711B III-5
Original notes (or, in the case of modified loans, the original notes executed for the modifications) or other evidences of indebtedness, endorsed in blank, without recourse For nonprofit agency section 203(k) loans, FHA affordable housing program letters For Final Certification
Original recorded mortgages (or, in the case of modified loans, the recorded original mortgages, the related original notes, the modification agreements, and any required subordination agreements and/or title endorsements) All recorded interim assignments Evidence of good title (e.g., mortgage title insurance policy) Evidence of mortgage insurance or guaranty provided by FHA, VA, RD, or PIH (not required for manufactured housing). In lieu of an original MIC signed by FHA or LGC signed by VA, electronic confirmation from FHA Connection or VA’s TAS is acceptable.
Section B. For Approval by PPA and Ginnie Mae Effective Date: 2025-06-16
The buydown pool documents required for approval by Ginnie Mae are the same as those discussed in MBS Guide, Ch. 10, Part 3, except as modified below.
(1) All references to "pool number" on all forms must include the suffix "BD";
(2) Schedule of Subscribers and Ginnie Mae Guaranty Agreement, form HUD 11705
(Appendix III-6), that, for Ginnie Mae I pools, must indicate in the block “Type of Issue” that the pool is “X” and in the block “Pool Type” that the securities are to be "BD." For Ginnie Mae II buydown pools or loan packages, the “Type of Issue” block must be populated with a “C” and in the block “Pool Type” the securities are to be “BD”.
(3) Schedule of Pooled Mortgages, form HUD 11706 (Appendix III-7), which must identify
each of the loans as a buydown by including in the column titled "FHAVA-RD-PIH Case Number" the full agency designated number, including the code identifying each loan as
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a BD loan. Also, the "Monthly Constant (P&I)" is the total fixed installment constant, including amounts collected from the mortgagor and from the escrow custodial account;
(4) A BFP certification (Appendix III-12), if required pursuant to MBS Guide, Ch. 25, Part 2
and Ch. 24, Part 2, § B(2).
The following table lists the pool documents required by the PPA for approval of BD pools:
Document Name Form Number Appendix
Schedule of Subscribers and Ginnie Mae Guaranty Agreement
HUD 11705 III-6
Schedule of Pooled Mortgages HUD 11706 III-7 Master Servicing Agreement HUD 11707 III-1 Master Agreement for Servicer's Principal and Interest Custodial Account
HUD 11709 III-2
Master Agreement for Servicer's Escrow Custodial Account HUD 11720 III-3 Master Agreement for Servicer’s Escrow Custodial Account (custodial account for deposit of buydown funds provided by Issuer)
HUD 11720 III-3
Master Custodial Agreement HUD 11715 III-4 Prospectus HUD 11717 IV-4 BFP certification, if required III-12
PART 4. THE SECURITIES Effective Date: 2025-06-16
Preparation and delivery of the securities through the depository are described in MBS Guide, Ch. 12. The text of BD securities held in certificated form is set forth in Appendix IV-11, and a partial statement of the terms of BD and C BD securities held in book entry form is set forth in Appendix IV-17. This section describes additional requirements for securities backed by BD pools.
Buydown securities must be clearly differentiated from other types of Ginnie Mae MBS in all forward market and other transactions. Therefore, and in all communications relating to such transactions, Issuers must clearly disclose that the securities to be delivered are backed by a BD pool. Also, before delivery, Issuers must obtain for their records from each dealer or investor to which the Issuer is selling securities, a confirmation statement clearly disclosing the nature of the pool underlying the securities to be delivered.
An Issuer must retain these confirmation statements as records subject to Ginnie Mae's right of inspection.
The buydown securities are distinguishable from other Ginnie Mae MBS by the suffix "BD" in each certificate number. Otherwise, the security is the same as the single family, level payment, non-buydown security.
PART 5. POOL ADMINISTRATION
Pool administration requirements for all pool types are described in MBS Guide, Ch. 14 through
20. This section describes additional requirements for the administration of BD pools.
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Section A. Computation of Payment Effective Date: 2009-10-01
Scheduled recovery of interest is determined as described in MBS Guide, Ch. 15, Part 4, except that scheduled interest due on the mortgage includes amounts scheduled to be collected from both the mortgagors and the providers of the buydown funds. Issuers are responsible for making advances and for losses that may arise as a result of shortfalls in funds from either of those sources.
Section B. Monthly Reporting Requirements Effective Date: 2009-10-01
Funds due from the providers of buydown funds are accounted for as if they were due from the mortgagor. These receipts must be aggregated with receipts from the mortgagor and reported in the RFS Issuer Monthly Report of Pool and Loan Data (Appendix VI-19).