Since 2016, Ginnie Mae has tried to combat the churning of VA mortgages, which results in unusually fast prepayment speeds and makes all government mortgages slightly more expensive, particularly loans made to veterans. The additional cost fast prepayments impose upon all government mortgage borrowers in the form of higher mortgage rates is 7 basis points, or 0.07 percent, an unnecessary cost with no benefit to the borrower. And the cost to all borrowers could be larger if investors lose confidence in Ginnie Mae securities because of this churning. Ginnie Mae should take further action to reduce this churning but must also ensure that its solutions does not impose significant costs on the mortgage system or pick winners and losers.
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