GINNIE MAEIssuer and Custodian OutreachDigital Collateral Program

Table of ContentsSlide #Topic3Eligible Loan Types4Participation Criteria for eIssuers &Custodians6eIssuer & eCustodian Application78System Requirementsand c Document Storage10Technical Requirements11eNotarization12Loan Delivery & Initial Certification14Final Certification16Timeline17General Questions and AnswersTimeline2

Eligible Loan TypesSecuritizationProcessEligible Loan TypesFHA Single FamilyVA GuaranteedSingle FamilyRD Single-FamilyIneligible Loan TypesHECMMortgageLoansMultifamilyLoansFixed RateMonthly LevelPaymentsManufacturedHousingLoansDigital Collateral Program3

Participation Criteria for eIssuersMERS MERS SystemMember Integrated withMERS eRegistryDedicatedPersonnel Identified personnelas primary points ofcontact Collaborates andcoordinates withGinnie Mae Delegated authority toimplement pool/loanpackage changeseIssuer ApplicationActive IssuerRequirement eIssuer ‘Application foreClosingParticipation’ Must be a Ginnie Mae Ability to originate Signed by identified employeeand secure Eligibleapproved Issuer foron Form HUD 11702Notesthree (3) preceding System All corresponding certifications calendar monthsRequirements Email Submission to GinnieMaeGood StandingRequirement Six months prior toapplication date: No Notice ofViolation (NOV) No Civil MoneyPenalty (CMP)eServicing Subject MatterExpertise InternalProcesses andsystemseNoteeCustodianRequirementQualified eVaultSystem EstablishedRelationship Ginnie Maeapproved Ability to store andtransfer Storage Requirements Technical requirements TechnicalRequirements Insuring Agency/LocalLaws Mandatory eNoteLanguage4

Participation Criteria for eCustodianseCustodian ApplicationActive Custodian RequirementAll applications and corresponding certificationsshould be sent to Ginnie Mae for approval.Applicant must have provided custodial servicesfor a Ginnie Mae Issuer under executed HUD11715, for at least three (3) months precedingapplication.Good Standing RequirementApplicant must have not received a notice ofviolation (NOV), civil money penalty (CMP) or haveunresolved field compliance review findings in thesix (6) months preceding the application.eNote Safekeeping RequirementsApplicant must have the ability to store and/oraccess to view, copies of eNotes in a QualifiedeVault.eNote Subject Matter ExpertiseApplicant’s staff must have sufficient training andexpertise to carry out custodial responsibilities foreNotes.MERS eRegistry IntegrationApplicant must be an active MERS eRegistryParticipant and meet all correspondingrequirements set forth by MERSCORP Holdings,Inc.Personnel RequirementsApplicant must designate a primary point of contact(POC) for collaborating and coordinating with GinnieMae during the course of the program.5

eIssuer & eCustodian ApplicationNote that R&WAgreements arenot applicable toDigital Pools andLoan Packages.eIssuer ApplicationSubmit eIssuer Application toparticipate in the Digital CollateralProgram including all correspondingcertifications. Hard Paper submissionswill not be accepted. The applicationmust be signed by an employee of theIssuer identified on the most recentForm HUD-11702, and submitted viaemail to [email protected] ApplicationBefore accepting any eNote or anyeDocs from an eIssuer, an institutionmust apply for and receive Ginnie Maeapproval to act as an eCustodian.Applicants can apply by submitting theeCustodian Application to Participate inthe Digital Collateral Program,Appendix B of the eGuide, and sendcorresponding certifications, via emailto [email protected] eIssuer and eCustodian applicants may submit a joint applicationto participate in Ginnie Mae’s Digital Collateral Program by submittingAppendix A and Appendix B of the eGuide as a single application.6

System RequirementsQualifiedeVault eIssuers and eCustodian must have the capability to store copies ofeNotes in a Qualified eVault, which meets the requirements of theeGuide, including the noted encryption requirements.eNoteCapability The system used by an eIssuer to perform eClosings must meet therequirements to be a Qualified Closing SystemDigital Pools &Loan PackagesTamperEvidentSeal The eNote must be a valid, Version 1.02 MISMO Category 1SmartDoc, which is generated, displayed, and signed electronicallyusing a Qualified eClosing System, and secured by a Tamper Seal.QualifiedClosingSystemEncryption7

Digital EquivalentsThe below identified documents may be transmittedelectronically to a custodian in lieu of a hard copy.HUD FormsElectronicallyRecorded SecurityInstrumentsTitle PolicieseDocs Accepted asDigital Equivalents ofHard Copy DocumentsChain of Assignment100908070PDF files acceptedElectronic image ofSecurity instrumentacceptedPDF files acceptedLoans will be MERS loanswith MOM (MERS as OriginalMortgagee) SecurityInstruments8

Electronic Document StorageFirewallSupports one or moreauthentication methodsNetwork PerimeterSecurity Controls For the storage of eDocs, eCustodians must use a systemthat is set up with measures that ensure system integrity. eCustodians may use a Qualified eVault for storage so longas the eVault supports the storage, grouping, retrievabilityand file naming requirements expressed in the eGuide.Safeguards againstmalwareEmploys backupand recoverysystemeDocs must be stored inan electronic folder orother linking/groupingmethodSingle Loan(s) mustbe easily identifiable,grouped, andretrievable9

Technical RequirementsQualified eVault1. Interfaces and is integrated with MERS eRegistryand MERS eDelivery2. Verifies document integrity including, but notlimited to, compliance with eNote DTD eNoteTamper Evident Seals before accepting documents.3. Logs validations of eNotes and any other SMARTDoc Tamper-Evident Seals and DTDs.4. Allows Ginnie Mae, eIssuers and eCustodians tovalidate compliance with eNote DTDs and eNoteTamper-Evident Seal requirements.5. Supports the registration of the eNote with theMERS eRegistry within one (1) business day ofdate of closing.6. Supports the use of the Secured Party field on theMERS eRegistry.7. Has the capability to transfer eNotes and othereDocs to another Qualified eVault using MERS eDelivery.Qualified eClosing System1. Supports the verification of the Borrower’s identity.2. Clearly identifies symbol or process used as Electronic signature by theBorrower and the purpose of the Electronic Signature.3. Presents Electronic Records in compliance with all applicable state andfederal requirements concerning the content, display, and format ofinformation and retention.4. Clearly identifies the Electronic Record being signed.5. Captures clear evidence of Borrower’s intent to adopt ElectronicSignature and to electronically sign eNote and other Electronic Records.6. Attaches the Electronic Signature to, or associates the ElectronicSignature with, the eNote and any other Electronic Records executed bythe Borrower.7. Attributes Electronic Signature to Applicable Borrower.8. Includes Borrower’s printed name in visible and legible manner onElectronic Record.9. Includes date and time stamp of the Borrower’s execution of eNote andany other Electronic Records.8. Distinguishes Authoritative Copies of eNotes fromretained or Non-Authoritative Copies of eNotes.10. Applies a Tamper-Evident Seal to the eNote and any other SMART Doc after each Borrower signs, and immediately after last Borrower signs.9. Provides a user interface for viewing Authoritativeand Non-Authoritative Copies of eNotes.11. Provides reasonable evidence that electronic records created andmaintained by system have not been subject to alteration or unauthorizedaccess.10. Supports the MISMO industry standard documentversion in which the eNote was originally createdfor the life of the loan plus seven (7) years.12. Tracks and logs actions related to the creation, signing, and transferringof the eNote and other Electronic Records.10

eNotarizationIn-Person Electronic Notarization (IPEN) and Remote Online Notarization(RON) is permitted, if the following criteria is met: The Notary public is properly licensed and authorized to perform the notarial act. The use of IPEN/RON by the notary is permissible in the state in which themortgaged property is located. The use of IPEN/RON does not inhibit the recordability of the security instrumentor any other loan documents which must be recorded in the applicable landrecords. The use of IPEN/RON does not create any exceptions or exclusions in the titlepolicy. The platform utilized to facilitate the RON complies with the Mortgage IndustryStandards Maintenance Organization’s RON Standards.11

Loan Delivery & Certification For Paper NotesIssuer ClosesLoan with papernoteIssuer submits FormHUD 11706, HUD11711, HUD 11715 &Original note(GinnieNET)Custodian prints copyof Form HUD 11706and places in masterfile, reflecting wetsignature ofCustodianCustodian retrievesForm HUD 11706 fromGinnieNET and printsitCustodian executes andtransmits Initial Certificationvia GinnieNET, and storesloan documentsCustodian reviews loandocuments and ascertains ifinformation is consistent withloans on Form HUD 11706YESInitialCert?NOInitial CertConfirmationCustodian notifiesIssuers of documentswhich requirecompleteness/correction12

Loan Delivery & Certification For eNotesIssuer Closes Loanwith eNoteIssuer RegisterseNote on MERS eRegistryIssuer Sends FormHUD 11711 toCustodianCustodian Performs Initial Cert Process: RHs on MERS eRegistry MIN on MERS System & MERS eRegistryMatch Active on MERS System & MERS eRegistry eNote matches info on Form HUD 11706 Form HUD 11711 receivedIssuer TransfersLocation to Custodian& Names GNMA asSecured PartyIssuer Submits FormHUD 11705 & 11706 toLoan Delivery SystemIssuer Sends Copy ofeNote to Custodian &GNMA via MERS eDeliveryCustodian Logs intoLoan Delivery Systemand providesvalidationInitial CertConfirmation13

Final Certification For Paper NotesPool ProcessingAgent notifies Issuer& Custodian of FinalCert. DeadlineIssuer providesCustodian with originalrecorded mortgages onForm HUD 11706Custodian ensures copy ofForm HUD 11706 is placed inpool/loan package masterfile and that a copy ismaintained in its files.Custodian executesFinal Certification &transmits it overGinnieNET systemCustodian reviews andmakes decision on validatingdocumentsYESApproved?NOGinnie Mae validatesFederal InsuranceNo Final Certification(Issuer submits afterremediation)NOIf no match byFinalCertification,BUYOUT14

Final Certification For eNotesPool ProcessingAgent notifies Issuer& Custodian of FinalCert. DeadlineGinnie Mae validatesFederal InsuranceCustodian accepts TrailingDocumentsIssuer compiles andsubmits Trailing Documents(e.g., Security Instrument,Title Policy) to CustodianCustodian logs intodelivery system toconfirm Certification Verifies Rightsholders oneRegistry Verifies Security Instrumentagainst Form HUD 11706 Active on MERS System &MERS eRegistry Evidence of Reconciliation Title Policy ReceivedYESHas Custodianverified Issuer’ssubmission &MERS status?NONOIf no match byFinalCertification,BUYOUTFinal Certificationposted/confirmationcaptured by PPANo Final Certification(Issuer resubmitsafter remediation)15

TimelineRFIAPM and eGuideParticipantApplicationTestingProgram LauncheGuide PublicationPracticeTransactionRFI ClosePooling StartApplicationProvides platform forDefines interfaceGinnie Mae’s RFI was exchanging Orderspecification,definesichreleaseGinnie Mae,whwilleGuideandAPMpublished and open for infoThermation in supporttransmissionof GT&C,OrderParticipantApplicationswill be published lJune athefeedback on October 25th. of IntragovernmentandPerformancedatafromas an addendum to the2020. ionsThere was an ensuing 30- Buy/Sell TransactG-InvoicingApplicationtoeGuideday review and feedbackFederal Program Agencyperiod.systemsAdditional enhancements will addressPrior rulesto inittialloan deliveryo initiatesettlement,Participantprocessingand certification,eIssuersof advances, and supportfor mustAgreementsand eCustodiansmustto settlement.adjustmentsbe signed prior tosuccessfully completepooling.practice transactions in theMERS eRegistry16

General Questions &Answers17

General Questions on Program and Outreach SessionWhen will the Digital Collateral Program begin, i.e.,when can Issuers begin closing eligible eNotes?Ginnie Mae plans to begin accepting applications forparticipation in June.Will Ginnie Mae provide a link to the list of registeredparticipants for this presentation?No.Will there be a recording of this webinar available?No, a recording of this presentation will not beavailable, but the visual presentation will be postedon Ginnie Mae's website.18

Questions on Program IntegrationOnce applications are being accepted, can anyonewho gets approved start utilizing eNotes, or will therebe a pilot?Yes, once an Issuer is accepted into the Digital CollateralProgram, they can securitize eNotes.Will existing collateral be turned into an eNote, or willthis only apply going forward?Ginnie Mae does not permit the conversion of existing papernotes into eNotes. eNotes that are eligible must meet therequirements specified in the MBS eGuide, section 2500: Technical Requirements Insuring Agency and State and Local Law Requirements Mandatory eNote Language eNote Heading Required eNote Clauses Approved Electronic Signature Format19

Questions on Program Integration Cont’d.Are there restrictions on electronic modifications?Ginnie Mae's requirements for modifications will apply toall mortgages in the Digital Collateral Program and remainunchanged at this time.If Ginnie Mae is registered as the Secured Party, thenwill the Controller remain in the Issuer's name?Yes.What is the final certification deadline for eNote pools?The initial participants in the Digital Collateral Program willbe asked to adhere to a shorter (6 month) timeframe. Thiswill help Ginnie Mae test and solidify its internal processes.Once this test period is finished, the final certificationrequirements will be aligned to final certificationrequirements for paper notes.20

Questions on Participation in the ProgramIs there an eCustodian approved provider list?There is no list at this time, but interested parties shouldrefer to the approved Document Custodian Directoryregarding their plans on becoming an eCustodian.Will Ginnie Mae accept alternative title products inelectronic form for a title policy?Ginnie Mae's existing title policy coverage requirementsremain unchanged for paper notes and eNotes exceptthat upon launch of the Digital Collateral Program,Ginnie Mae will allow Issuer's to provide evidence ofcoverage through digital equivalents.21

Questions on Integrating Paper Notes and eNotesAfter a copy of the recorded electronic securityinstrument is delivered and it is accepted, can thepaper original then be destroyed?No, paper copies of the original security instrument mustbe maintained by the Issuer's document custodian at thistime.Will eNotes need to be pooled separately from papernotes?Yes, but this is not expected to be a permanent restriction.Are we able to co-mingle paper notes with eNotes inpools?No, a pool must be either wholly paper notes or whollyeNotes.22

Questions on MERS eRegistryWhat position does Ginnie Mae take for an eNote inthe eRegistry?Ginnie Mae should be identified as the Secured Party foran eNote in the eRegistry.Will all eligible eNotes need to be registered inMERS?Yes.Will the security instrument need to be registered inthe MERS system for the corresponding eNote to beeligible for the Digital Collateral program?Yes.23

eVault. Applicant's staff must have sufficient training and expertise to carry out custodial responsibilities for eNotes. Applicant must be an active MERS eRegistry Participant and meet all corresponding requirements set forth by MERSCORP Holdings, Inc. Personnel Requirements Applicant must designate a primary point of contact