What Happened?

On March 4, 2024, Ginnie Mae issued All Participant Memorandum (APM) 24-02 to impose a new cybersecurity incident notification requirement. Ginnie Mae has also amended its Mortgage-Backed Securities Guide to reflect this new requirement.

Effective immediately, all Issuers, including subservicers, of Ginnie Mae Mortgage-Backed Securities (Issuers) are required to notify Ginnie Mae within 48 hours of detection that a “Significant Cybersecurity Incident” may have occurred.

Issuers must provide email notification to Ginnie Mae with the following information:

• the date/time of the incident,
• a summary of in the incident based on what is known at the time of notification, and
• designated point(s) of contact who will be responsible for coordinating any follow-up activities on behalf of the notifying party.

For purposes of this reporting obligation, a “Significant Cybersecurity Incident” is “an event that actually or potentially jeopardizes, without lawful authority, the confidentiality, integrity of information or an information system; or constitutes a violation of imminent threat of violation of security policies, security procedures, or acceptable use policies or has the potential to directly or indirectly impact the issuer’s ability to meet its obligations under the terms of the Guaranty Agreement.”

Once Ginnie Mae receives notification, it may contact the designated point of contact to obtain further information and establish the appropriate level of engagement needed, depending on the scope and nature of the incident.

Ginnie Mae also previewed that it is reviewing its information security requirements with the intent of further refining its information security, business continuity and reporting requirements.

Why Is It Important?

Under the Ginnie Mae Guarantee Agreement, Issuers are required to furnish reports or information as requested by Ginnie Mae.  Any failure of the Issuer to comply with the terms of the Guaranty Agreement constitutes an event of default if it has not been corrected to Ginnie Mae’s satisfaction within 30 days.  Moreover, Ginnie Mae reserves the right to declare immediate default if an Issuer receives three or more notices for failure to comply with the Guarantee Agreement.  It is worth noting that an immediate default also occurs if certain acts or conditions occur, including the “submission of false reports, statements or data or any act of dishonestly or breach of fiduciary duty to Ginnie Mae related to the MBS program.”

Ginnie Mae’s notification requirement adds to the list of data breach notification obligations with which mortgage servicers must comply. For example, according to the Federal Trade Commission, all states, the District of Columbia, Puerto Rico, and the Virgin Islands have enacted legislation requiring notification of security breaches involving personal information. In addition, depending on the types of information involved in the breach, there may be other laws or regulations that apply. For example, with respect to mortgage servicing, both Fannie Mae and Freddie Mac impose notification obligations similar to that of Ginnie Mae.

What Do I Need to Do?

If you are an Issuer and facing a cybersecurity incident, please take note of this reporting obligation. For Issuers who have not yet faced a cybersecurity incident, now is the time to ensure you are prepared as your company could become the next victim of a cybersecurity incident given the rise in cybersecurity attacks against financial services companies.

As regulated entities, mortgage companies must ensure compliance with all the applicable reporting obligations, and the list is growing. 

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