PART 320—GUARANTY OF MORTGAGE-BACKED SECURITIES Authority: 12 U.S.C. 1721(g) and 1723a(a); and 42 U.S.C. 3535(d). Source: 60 FR 42015, Aug. 14, 1995, unless otherwise noted. Subpart A—Pass-Through Type Securities § 320.1 General. The Association is authorized by section 306(g) of the National Housing Act (12 U.S.C. 1721(g)) upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on securities that are based on and backed by a trust or pool composed of mortgages which are insured or guaranteed by FHA, FmHA or VA. The Association's guaranty of mortgage-backed securities is backed by the full faith and credit of the United States. This subpart is limited to “modified pass-through” securities, and does not purport to set forth all the procedures and requirements that apply to the issuance and guaranty of such securities. All such transactions are governed by the specific terms and provisions of the Association's Mortgage-Backed Securities Guides (MBS Guides) and contracts entered into by the parties. § 320.3 Eligible issuers of securities. (a) Eligibility requirements. (1) Be in good standing as a mortgagee approved by the FHA; (2) Be in good standing as a mortgage seller or servicer approved by the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), or the Association. Loss of either FNMA approval or FHLMC approval may cause the issuer to become ineligible to issue and service the Association's mortgage-backed securities and constitute a default under the applicable guaranty or contractual agreement whether or not the issuer qualified for new issuer approval on the basis of FNMA or FHLMC approval; (3) Have management with adequate experience, and access to adequate facilities to issue or service mortgage-backed securities, as determined by the Association; (4) Maintain the applicable minimum net worth discussed in paragraph (c) of this section; and (5) Meet the requirements, conditions, and limitations prescribed by the Association in this part or the applicable MBS Guides. (b) Time of eligibility. (c) Net worth requirements. (d) Disqualification. (1) The lending policies of the issuer permit any discrimination based on race, religion, color, national origin, age, or sex of a borrower; or (2) The issuer is not in compliance with any rules, regulations, or orders issued under title VI of the Civil Rights Act of 1964; Executive Order 11063, Equal Opportunity in Housing, November 20, 1962; Executive Order 11246, Equal Employment Opportunity, issued on September 24, 1965 and amended on October 13, 1967; title VII of the Civil Rights Act of 1968; title VIII of the Civil Rights Act of 1968 as amended by the Fair Housing Amendments Act of 1988; or by the FHA or VA. (e) Ethics and standards. (f) Change in control. (g) Cross-Default. (h) Failure to comply. (Approved by the Office of Management and Budget under control numbers 2503-0003, 2503-0004, 2503-0006, 2503-0007, and 2503-0026) § 320.5 Securities. (a) Instruments. (b) Issue amount. (c) [Reserved] (d) Transferability. (e) Issue Date. (f) Delivery. (g) Registered Ownership. (h) Payments on Mortgage-Backed Securities. (1) Payment to a Depository. (ii) Payment must be made by the hour specified in the MBS Guide on the calendar day of the month specified in the MBS Guide for payment on such mortgage-backed securities (the “applicable Payment Date”), with adjustments to such time as may be specified in the MBS Guide for Payments Dates that do not fall on business days. (2) Payments to other holders. (i) Guaranty. (j) Definition of Depository. (Approved by the Office of Management and Budget under control number 2503-0009) [60 FR 42015, Aug. 14, 1995, as amended at 63 FR 51251, Sept. 24, 1998; 64 FR 34106, June 24, 1999; 66 FR 44265, Aug. 22, 2001; 70 FR 33652, June 8, 2005; 72 FR 49125, Aug. 27, 2007] § 320.7 Mortgages. Each issue of guaranteed securities must be backed by a separate pool of mortgages which meet the requirements of the applicable MBS Guide. § 320.8 Excess Yield Securities. (a) Definition. (b) GNMA guaranty. [71 FR 32389, June 5, 2006] § 320.9 Pool administration. The Association will only guarantee securities if the issuer executes a guaranty agreement or contractual agreement in the form prescribed by the Association. Pool administration requirements are set forth in such agreements or the applicable MBS Guide. (Approved by the Office of Management and Budget under control numbers 2503-0003, 2503-0004, 2503-0006, 2503-0007, and 2503-0026) § 320.10 Financial reporting. Issuers shall submit to the Association audited annual financial statements within 90 days of their fiscal year end. All financial statements shall include a balance sheet and a statement of operations and cash flows. The audit shall be conducted in accordance with the standards for financial audits of the U.S. Government Accountability Office's Government Auditing Standards, [72 FR 49125, Aug. 27, 2007] § 320.11 Insurance coverage. The issuer shall maintain, for the benefit of the Association, insurance, errors and omissions, fidelity bond and other coverage as required by the Association and set forth in the appropriate MBS Guide. § 320.12 Integrity. (a) Background. (b) Change in status. § 320.13 Guaranty. The Association guarantees the timely payment, whether or not collected, of the interest on the outstanding balance and the specified principal installments on securities that are registered on Ginnie Mae's central registry. The Association's guaranty is backed by the full faith and credit of the United States. [64 FR 34107, June 24, 1999] § 320.15 Default. (a) Issuer default. (b) Action upon default. (1) Institute a claim against the issuer's insurance, bond or other coverage, as specified in § 320.11; (2) Pursuant to section 306(g) of the National Housing Act (12 U.S.C. 1721(g)), extinguish all the right, title, or other interest of the issuer in the pooled mortgages; and (3) Exercise such other rights and remedies as it may have. § 320.17 Fees. The Association may impose application fees, guaranty fees, securities transfer fees and other fees. Subpart B—Bond-Type Securities § 320.21 General. In addition to the “pass-through” securities dealt with in subpart A of this part, the Association is authorized by section 306(g) of the National Housing Act, 12 U.S.C. 1721(g), upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on “bond-type” securities which are based on and backed by a trust or pool composed of mortgages which are insured or guaranteed by FHA, FmHA or the VA. The Association's guaranty of mortgage-backed securities is backed by the full faith and credit of the United States. This subpart deals with such “bond-type” securities and does not purport to set forth all the procedures and requirements that apply to the issuance and guaranty of such securities. All such transactions are governed by the specific terms and provisions of the contracts entered into by the parties and the Bond-Type Securities Guide (the “Bond Guide”). § 320.23 Eligible issuers. Any corporation, trust, partnership, or other entity with a net worth acceptable to the Association as set forth in the Bond Guide, which has the capability to assemble acceptable and eligible mortgages in sufficient quantity to support required minimum issuances of securities and which meets such other requirements as are set forth in the Bond Guide, may be approved to issue and service bond-type securities guaranteed by the Association. Further, the Association reserves the right to limit the number of issuers in the interest of conducting an orderly market of securities of this type. § 320.25 Securities. (a) Instruments. (b) Issue amount. (c) Face amount of securities. (d) Transferability. (e) Treasury approval. § 320.27 Mortgages. Guaranteed securities issued under these provisions must be based on and backed by mortgages pooled under trust arrangements satisfactory to the Association. Such mortgages must meet the requirements of the Bond Guide. § 320.29 Guaranty. With respect to bond-type securities, the Association will guarantee the timely payment of principal of and interest on such securities, subject to the terms and conditions of the securities. The Association's guaranty is backed by the full faith and credit of the United States. § 320.31 Default. Upon default of the issuer, the Association has the right, pursuant to section 306(g) of the National Housing Act (12 U.S.C. 1721(g)), to take title to the mortgages and other assets that are subject to the trust arrangements, and to proceed against other assets of the issuer to the extent necessary to satisfy its own claims and the rights of the holders of securities then outstanding. Such action by the Association shall be taken subject to an accounting to the issuer. § 320.33 Fees. The Association may impose application and guaranty fees, which may vary with relation to the size or risk of the guaranty transaction undertaken.