Several factors will likely limit changes in prepayment activity in Ginnie MBS as the VA implements a new loss-mitigation program.

VA Secretary Denis McDonough pledged to be transparent with lawmakers on the new VA loss-mitigation program. He said congressional oversight will strengthen performance of the program.

The VA earlier this week announced its long-awaited Veterans Affairs Servicing Purchase loss-mitigation program and said it will launch May 31.

Servicers have until Oct. 1 to implement the program.

Facing criticisms that borrowers would intentionally default to qualify for VA’s upcoming loan-modification program, the agency noted that nearly 90% of its home loan portfolio is at a 2.5% to 3% coupon.

VA’s proposed VA Servicing Purchase loss-mitigation program faced intense criticism this week from Rep. Derrick Van Orden, R-WI.

The VA last week issued a circular extending COVID-19-related loss-mitigation assistance through May 31.

The bill seeks to provide VA borrowers a partial claim loss-mitigation option to use after they exit a forbearance.

The bill offered by Democratic leaders would create a partial claims program similar to FHA’s offering.

Industry and consumer groups want the VA’s upcoming Veterans Assistance Servicing Purchase loss-mitigation program to target borrower payment reduction, not a single interest rate target.