Q: How do you determine if there is Original Issue Discount (OID)?
A: The OID in question is the OID associated with the original mortgage issuance rather than the initial sale price of the mortgage-backed securities because the mortgage-backed securities are not taxable entities and the security holders are recognized as the owners of the securities' underlying assets. This is supported by Treasury Regulations §§ 301.7701-2 through 301.7701-4, and Revenue Rulings 70-544, 70-545, 74-169, and 84-10. The Treasury rules indicate that the mortgages underlying the mortgage-backed securities issued before August 13, 1998, can be treated as having been issued with no OID (26 CFR §1.671-5(c)(2)(ii)(A)). For mortgage-backed securities issued from August 13, 1998, through January 24, 2006, if the Issuer has attempted in good faith, but without success, to obtain the required data to provide OID information, the Issuer may assume that the underlying mortgages were issued without OID. The regulations require that OID be reported for all mortgage-backed securities issued after January 24, 2006. In general, there is no reportable OID on a 30-year mortgage issued with fewer than 5 points, and no reportable OID on a 15-year mortgage issued with fewer than 2½ points. These guidelines are supported by Treasury Regulations at § 1.1273-1(d)(2).
Q: How do you calculate the Market Discount Fraction (MDF)?
A:The IRS regulations specifically describe two Market Discount Fraction calculations, one used when there is OID, and one when there is no OID. The following information is from the regulations codified at 26 CFR §1.671-5 (g)(1)(v).
- For either type of security, with or without OID, the MDF must be expressed as a decimal carried to at least eight places.
- For mortgage-backed securities backed by mortgages issued with OID, the MDF equals the OID accrued during the month, divided by the total remaining OID as of the beginning of the month.
- For securities backed by mortgages issued without OID, the MDF equals the amount of stated interest paid to the mortgage-backed security during the month, divided by the total amount of stated interest remaining to be paid to the mortgage-backed security as of the beginning of the month.
The Treasury regulations require that, in order to compute the total amount of stated interest remaining to be paid and the total remaining OID as of the beginning of the month, the trustee must use the prepayment assumption used in pricing the original issue of trust interests. For mortgage-backed securities issued before January 24, 2006, if the Issuer, after a good faith effort to ascertain that information, does not know the prepayment assumption used in pricing the original issue of trust interests, the Issuer may use any reasonable prepayment assumption to calculate these amounts provided it continues to use the same prepayment assumption consistently thereafter.
Q: With respect to Ginnie Mae book-entry securities, will Issuers continue to be responsible for reporting tax information on these securities electronically to the IRS?
A: No. Issuers are not required to file 1099s with the IRS for book-entry securities. Instead, the middleman that distributes payments of principal and interest on the securities to the beneficial owners is required to file a 1099 with the IRS for each beneficial owner of a book-entry security. For Ginnie Mae securities the appropriate middleman is usually a broker-dealer.
Issuers are required to file 1099s with the IRS only with respect to certificated securities.
Q: The Reporting and Feedback System (RFS) Technical Reference Guide file dated June 6, 2007, states that all Ginnie Mae II pools issued after 1998 will require reporting. APM 07-16 does not delineate between Ginnie Mae I and/or Ginnie Mae II pools. Which is correct?
A: Issuers are to report on all Ginnie Mae pools, including Ginnie Mae I and II. The RFS Technical Reference Guide will be updated to reflect the following:
- For pools issued before August 13, 1998, no OID reporting is needed.
- For pools issued from August 13, 1998, through January 24, 2006, OID reporting is required, but there are no penalties if the Issuer has attempted in good faith to obtain historical OID data, but without success.
- For pools issued after January 24, 2006, OID must be reported.
These exceptions do not apply to the Market Discount Fraction. The MDF must be reported for all pools in existence as of January 1, 2007. For purposes of calculating the MDF for pools issued before
August 13, 1998, the trustee may assume the mortgages were issued without OID.
Q: Where and when do I submit my pool Tax Identification Numbers (TIN)?
A: The request for pool Tax Identification Numbers for all active pools is a one-time request that may be submitted via CSV file or flat file. The submission of pool TINs is due not later than January 10, 2008. The submission method is via Ginnie Mae's e-Access.
Reminder: All pools submitted for a January 1, 2008 issuance and thereafter, must include a pool TIN at issuance. Effective January 2008, pools transmitted via GinnieNET must have a pool TIN or it will be rejected. Pool TINs for loan packages that are part of a multiple Issuer pool are assigned by the Pool Processing Agent.
Q: Can I report OID and MDF as part of the 11710A process?
A: The file layout attached in APM 07-16, which includes OID and MDF, is a supplement to the monthly reporting process, and is to be submitted via eAccess. The 11710A process is a separate submission; however, both are due on the 10th calendar day.
Q: Can I submit OID and MDF in a text file or CSV file?
A: No. Issuers must use the flat file layout that is outlined in the attachment in APM 07-16. The CSV file option is only available for the one-time submission of pool TINs.
Q: If I submit a pool via GinnieNET in January 2008, can I fax the TIN for that pool in February 2008?
A: No. All pools submitted for a January 1, 2008 issuance and thereafter, must include a pool TIN at issuance. Effective January 2008, pools transmitted via GinnieNET must have a pool TIN or it will be rejected. Submitting pool TINs at a later date will not be acceptable in 2008. Pool TINs for loan packages that are part of a multiple issuer pool are assigned by the Pool Processing Agent.
Q: Where in e-Access can I submit the pool TINs, OID and MDF?
A: Effective December 31, 2007, Issuers logging onto e-Access will have a new menu option on the main menu. More information will be provided in the coming weeks.
Q: Can the CSV reporting file layout be used for both the initial reporting and also for each monthly report submitted until RFS is implemented?
A: No. The CSV file is only for the pool TIN one-time submission. OID and MDF must be submitted using the flat file. Issuers should begin reporting OID and MDF as part of their monthly reporting process, beginning with the February 2008 reporting month. Issuers that need more time must report OID and MDF no later than July 2008. If an Issuer cannot submit until July, the July 2008 reporting month submission must include OID and MDF for the months of January-June of 2008. Effective with the August 2008 reporting month and thereafter, Issuers are to report OID and MDF on a monthly basis.
Once the Reporting and Feedback System (RFS) is implemented supplemental file layout submission in APM 07-16 will not be required, the RFS layout includes OID and MDF.
Q: How do Issuers obtain pool TINs?
A: The pool TIN is also known as the Employer Identification Number (EIN). Issuers may obtain EINs from the Internal Revenue Service. For additional information on obtaining EINs visit How to Apply for an EIN.
Q: Do issuers need to sign up somewhere to obtain access to the new menu option in eAccess to submit the pool TINs, OID and MDF values?
A: Issuers who have access to Web IIS will have access to this module. Issuers that do not have access to Web IIS will need to sign up using the e-Access registration form located on the Ginnie Mae Website.
Q: What is the difference between a CSV file and a flat file?
A: A CSV (Comma Separated Value) file is a text file format that contains comma-delimited values. A CSV file does not require a header and footer record. For the TIN submission, only 3 fields are required for each record. Fields are not restricted to a predefined length. These files are easily created using a spreadsheet application. A flat file is a structured text file that is predefined by record lengths. In a flat file, the first character indicates the type of data for each record (row). The flat file contains a header record at the beginning of the file, the data records, and a trailer record at the end of the file.
Q: If I am submitting 2007 tax data and have included TINs, do I have to submit pool TINs in a separate submission?
A: No. If the issuer submits 2007 tax data, a separate TIN file is no longer needed. The 2007 tax data file will contain the required TIN information.
Q: Will I be able to make corrections to OID and MDF once submitted?
A: Yes. Issuers will be given until the end of the calendar month to submit corrections.
Q: Will I be able to overwrite OID and MDF that was reported in previous months?
A: No. The supplemental tax file will be rejected if tax information has already been submitted for a reporting month. Issuers will not be able to change and resubmit tax information for already reported month(s).
Q: If I am submitting TIN data in a flat file, which fields are required?
A: The file layout can be found in the attachment of APM 07-16. As indicated all flat file submissions must include a header record, trailer record and WHFIT tax records. The header tax record must include a start and end date. If the issuer is submitting only TIN data in a flat file, the start and end date for TIN submission should be the year and month, 200712. The reporting month which is part of the WHFIT record may be left blank or can be filled with 999999. In addition, OID and MDF must remain blank if the issuer is only submitting TINs.
Q: What should I put as the start and end date if I am submitting 2007 tax data?
A: The file layout can be found in the attachment of APM 07-16. As indicated, all flat file submissions must include a header record, trailer record and WHFIT tax records. The header tax record must include a start and end date. If the issuer is submitting 2007 tax data, the start date should be year and month 200612 and end date should be 200712.
Q: What should I put as the start and end date if I am submitting January - June 2008 tax data?
A: The file layout can be found in the attachment of APM 07-16. As indicated, all flat file submissions must include a header record, trailer record and WHFIT tax records. The header tax record must include a start and end date. If the issuer is submitting six months of 2008 tax data, the start date should be year and month 200801 and end date should be 200806. Reporting month is required if OID and MDF are provided. Please note, beginning with the August reporting month, issuers are to report OID and MDF on a monthly basis.
Q: What are the standards and naming conventions for the file uploads?
A: A CSV TIN submission will have the following format: EIIIIMMYYNN.csv where 'E' is the file qualifier; 'IIII' is the 4-digit issuer number; 'MMYY' is the reporting month and year; and 'NN' is the file sequence number.
A TIN flat file submission will have the following format: EIIIIMMYYNN.dat where 'E' is the file qualifier; 'IIII' is the 4-digit issuer number; 'MMYY' is the reporting month and year; and 'NN' is the file sequence number.
A 2007 data file submission will have the following format: DIIIIMMYYNN.dat where 'D' is the file qualifier; 'IIII' is the 4-digit issuer number; 'MMYY' is the reporting month and year; and 'NN' is the file sequence number.
A 2008 and thereafter data file submission will have the following format: TIIIIMMYYNN.dat where 'T' is the file qualifier; 'IIII' is the 4-digit issuer number; 'MMYY' is the reporting month and year; and 'NN' is the file sequence number.
Q: Currently the RFS Technical Specification Guide states that the Original Issuer Discount (OID) can be reported as blanks. The Widely Held Fixed Investment Trust (WHFIT) Tax Reporting file layout states that the OID can be reported as "zero dollars". Can both the WHFIT Tax Reporting record and RFS Pool Record accept either spaces or zeros?
A: Yes. Both layouts accept spaces or zeroes.
WHFIT allows blanks and treats the blank as a zero.
RFS allows spaces or zeroes for unreported numeric fields. OID is numeric so both blanks or zeroes are allowed.
Q: APM 07-16, page 2 has instructions for field level reporting for the WFHIT Tax Reporting Record. For numeric fields (designated as 9s), report numeric values as right justified. Does this mean leading spaces should be inserted?
A: Yes. Numeric fields can have leading zeroes or leading spaces.
Q: APM 07-16 page 3 the TAX_ID reflects 999999999 under Remarks, will this accept spaces for multiple issuer pools?
A: Yes. It can accept spaces for any pool. Please note, it is not necessary to include the Tax ID in WHFIT monthly submissions. GNMA will NOT be looking for Tax ID for any pool on the WHFIT Tax Reporting Record since this information was previously sent by Issuers, it was included to meet the one time collection in January 2008.
Q: Should we send data on inactive pools or do you want only active pools as of June 2008 on the WHFIT Tax Reporting Record? (i.e. Pool inactive in March, do you want Jan & Feb records on the file)
A: Yes. You should submit OID and MDF values for the months in which the pools are active.
Q: APM 07-16 Page 1 states all submissions are to be made via e-Access. If an Issuer has a servicer, can the servicer submit the files on behalf of the Issuer?
A: No. At this time the system is set up to receive the WHFIT file via e-Access. Therefore the servicer will have to provide the file to Issuer and the Issuer is to upload the file via e-Access.
Q: APM 07-16 Page 2 states the WHFIT Tax Reporting Record should be sent no later than the 10th of each month. If the 10th of the month falls on a weekend or holiday, when would the file need to be received?
A: The rules that apply to monthly reporting requirements also apply to the WHFIT data. If the 10th falls on a weekend/holiday then it is to be submitted on the next business day. The file can be received any time of day and submissions can be received on weekends, as this is a 24/7 system.
