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Ginnie Volume, Share Surging

2008 issuances jump 159% from prior year

December 18, 2008

WASHINGTON correspondent for MortgageDaily.com

photo of Lisa Burden
WASHINGTON, D.C. -- Driven by hungry foreign investors, the Government National Mortgage Association said it has become one of the principal players in the securitization market as virtually all securitization of private lending has stopped. But even with surging volume, the company's president said it has no plans to increase headcount.

The previously obscure government organization made that declaration at a press briefing yesterday at its Washington, D.C. headquarters.

Ginnie Mae officials said its mortgage-backed securities market share has achieved dramatic growth -- rising to 18.8 percent at the end of fiscal 2008 from 4.4 percent at the end of fiscal 2007.

Issuance during the latest fiscal year, $220 billion, was 159 percent higher than in 2007, when Ginnie securitized $85 billion.

And, for the first time in 20 years, Ginnie MBS issuances exceeded securitizations at both Fannie Mae and Freddie Mac.

Ginnie saw $26.9 billion in November single-family MBS issuances, while October volume was $29.2 billion.

Fannie's issuances were $23.5 billion in November and $28.5 billion the prior month, while Freddie's volume was $14.8 billion last month and $13.8 billion in October.

Major issuers have told the government-owned corporation that it could represent more than 30 percent of their business by year's end.

Activity in loans insured by the Federal Housing Administration are driving the increasing volume.

The number of FHA endorsements during fiscal 2008 -- including purchases, refinances and reverse mortgages -- more than doubled to 1.2 million from 0.5 million the prior year.

But, while volume is booming, there are no plans to increase staffing.

Ginnie President Joseph J. Murin told MortgageDaily.com that the workload is sustainable with current staffing levels because the 60-employee company outsources labor-intensive activities to the private sector.

Foreign investors -- an important source of liquidity for Ginnie's securities -- have shown an increased appetite for the securities, presently purchasing 48 percent of its securities. Traditionally, foreign investors had only purchased about 30 percent of the company's securities.

Officials at the press briefing said Ginnie securities have always exceeded comparable Treasury yields and have no credit or liquidity risk.

Ginnie officials say its guaranty fee of six basis points allows lenders to obtain a better price for their mortgage loans in the secondary markets.

Ginnie was chartered under the same act that re-chartered Fannie. But unlike Fannie and Freddie, the HUD-subsidiary does not have any private investors. It does not buy or sell loans nor does it maintain a portfolio. But it does create a secondary market for government-insured or guaranteed mortgages and is essentially an insurance company.

Ginnie's mission is to expand affordable housing in America by linking global capital markets to the nation's housing markets.

Ginnie photo of
Joseph J. Murin

Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently the publisher of Maryland Employment Law Reporter and a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record.

e-mail Lisa at: [email protected]

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