Ginnie In Brief
|Multifamily MBS Volume Sets Record|
|by Ginnie Mae | 8/24/2020|
The Ginnie Mae multifamily mortgage-backed securities (MBS) program is breaking records. Although most of the attention in the mortgage market is on single-family loan volume as mortgage rates achieve historic lows, owners of properties financed through Ginnie Mae multifamily MBS also are taking advantage of record-low rates to refinance their loans and strengthen their portfolios.
Production figures in the first 9 months of FY 2020 have already surpassed FY 2019 totals, with issuance of Ginnie Mae multifamily MBS hitting $23.1 billion between October 2019 and June 2020 compared to $18.4 billion for all of FY 2019.
While low mortgage rates are essential to this trend, owners can take advantage of low rates because of products in the market that meet their needs. For example, in times of economic uncertainty, the FHA product of long term, fixed rate financing becomes more attractive to borrowers, lenders, and investors.
In addition, multifamily Issuers continue to find value across Ginnie Mae’s products that help them reduce the rate on mortgages within Ginnie Mae MBS. Ginnie Mae Issuers utilizing the Interest Rate Reduction product have seen an average interest rate decrease of approximately 69 bps.
The Ginnie Mae Multifamily MBS Program currently relies on 54 Issuers to service 14,692 pools with $126.3 billion in UPB. Most of these Issuers have enjoyed a longstanding relationship with Ginnie Mae and have helped grow UPB from $39.4 billion in December 2008 to $126.3 billion in June 2020, a 223% increase.
Growth in the program over the last 12 years has been critical to facilitating the construction and renovation of Multifamily housing such as apartment buildings, hospitals, nursing homes, and assisted-living facilities. Today, 28 of 54 Issuers service more than $1 billion in UPB, including 6 Issuers that service more than $5 billion in UPB.
|Securities Issuance Stays Strong and Innovations in Multiclass Products Attract New Participants|
|by Ginnie Mae | 5/26/2020|
Ginnie Mae’s investment in operational and program improvement is helping Issuers do business with Ginnie Mae and provide a wider group of investors with the products they demand, strengthening Ginnie Mae’s ability to maintain the flow of affordable mortgage capital to households in the U.S. Ginnie Mae saw record volume in MBS issuance in April, and a new investor type began using a new feature in one of the agency’s multi-class product.
Specifically, more than $63 billion of Ginnie Mae MBS were issued in April, the ninth consecutive month MBS issuance exceeded $50 billion and the second time volume was above $60 billion in a month.
Single-family mortgage rates consistently near-record-low levels since last summer and the scalability of the Ginnie Mae platform to meet market demand have helped fuel Issuance strength in the MBS business. Program innovation in the multi-class segment, particularly in the Platinum product -- which increases administrative flexibility and liquidity for investors holding small dollar sized Ginnie Mae MBS -- has driven issuance in that product.
Platinum securities volume reached $6.6 billion in April via 30 transactions, up from $4.4 billion and 40 transactions in March. Ginnie Mae’s Office of Capital Markets continues to innovate within its program and work to bring in new types of investors to the Platinum program.
April saw strong issuance of $1.6 billion in the Ginnie Mae Jumbo Only Fixed Platinum option. This option allows Platinum users to bundle Jumbo Fixed pools together and get a pool type assigned reflecting the Jumbo nature of collateral. Having the proper Jumbo pool-type assigned to the security facilitates applying the most accurate prepayment model to the security, enabling better pricing.
April also saw the first HMBS Platinum transactions with adjustable-rate mortgage collateral. Typically, HMBS ARMs are securitized through REMIC transactions, but the new Platinum program innovation now offers another option for investors.
Ginnie Mae REMICS, another multi-class product, also reported strong April volume. Seventeen REMIC transactions were settled in the month for $7.1 billion, compared to 18 deals for $9.8 billion in March.
Overall, the trend in Ginnie Mae securities is positive, illustrating the agency’s strong commitment to meeting the needs of Issuers, investors, and to the ultimate benefit of the homeowners and renters who rely on a steady supply of mortgage capital.
|Ginnie Mae’s Role in Facilitating Rural Homeownership|
|by Ginnie Mae | 3/23/2020|
As Ginnie Mae’s role in the housing finance system has grown since the 2008 housing crisis, it has generated a significant amount of attention for its support of affordable housing through the Federal Housing Administration (FHA) and Veterans Affairs (VA) mortgage programs. Less known, though, is Ginnie Mae’s role in facilitating affordable mortgage lending in rural parts of the U.S.
Ginnie Mae is an essential and consistent source of mortgage capital in communities all across the country, including approximately 2.1 million outstanding mortgage loans in rural areas at the end of 2019.
While most observers readily connect Ginnie Mae to the FHA and VA mortgage programs, which are very active in rural areas, few are aware of another aspect of Ginnie Mae’s mortgage-backed securities (MBS) program that facilitates homeownership in rural parts of the United States.
Ginnie Mae’s charter enables it to guarantee MBS that are backed by loans guaranteed by the Rural Housing Service, a unit with the U.S. Department of Agriculture (USDA). Mortgages financed through the USDA’s Rural Housing Service support a variety of programs. In the last 10 years, more than 1.3 million of these loans and mortgages on residential homes have been packaged into Ginnie Mae MBS.
|VA Mortgage Program Fuels Ginnie Mae MBS Issuance |
|by Ginnie Mae | 12/6/2019|
Ginnie Mae’s current position in fixed-income markets is vastly different than it was a decade ago. Our outstanding mortgage-backed securities (MBS) have grown steadily over the past ten years as the agency has fulfilled its mission to support the government-guaranteed mortgage market by attracting broad investor support for the government-guaranteed MBS product. Consider the numbers: Over the past decade, the value of Ginnie Mae’s outstanding MBS more than doubled from $888 billion at the end of fiscal year 2009 to $2.1 trillion at the end of fiscal year 2019.
The volume increase in outstanding MBS reflects an expansion of the portion guaranteed by the Department of Veterans Affairs (VA). The share of VA mortgages in new Ginnie Mae MBS has increased sharply since the housing crisis, from more than 16% in 2009 to 42% in 2019.
Ginnie Mae is committed to maintaining a strong MBS program built on a foundation of flexibility and reliability in order to meet the secondary market needs of the Issuers responsible for loans to veterans under the VA program. Recent policy changes regarding eligibility for VA mortgages pooled into our securities underscore our commitment to providing a liquid and efficient MBS product for lenders and investors that protects veterans’ home equity while also minimizing risks to taxpayers.
|Deploying Robotic Process Automation at Ginnie Mae|
|by Ginnie Mae | 10/16/2019|
Ginnie Mae’s data processing operations manage millions of data records each month, including the information that enables the flow of billions of dollars in principal and interest payments to investors around the world. To keep this enormous task running as smoothly and efficiently as possible, Ginnie Mae is investing in the development of artificial intelligence (AI) capabilities led by teams within the agency’s Office of Securities Operations and Office of Enterprise Data and Technology Solutions.
These efforts align with the Presidential order on AI from earlier this year, which serves as the basis for a whole-of-government strategy to tap private sector innovation in support of government program excellence.
AI encompasses a range of applications, processes and technologies. At Ginnie Mae, robotic process automation (RPA) is the first type of AI that we have deployed. Despite “robotic” as part of its name, RPA does not actually involve robots or other physical manipulative assets; RPA uses software to replicate repetitive human tasks such as the collection and analysis of data. (see Figure 1)
In the second half of 2019, Ginnie Mae completed two RPA projects, or bots. The first is designed to collect and organize data related to the London Inter-bank Offered Rate (LIBOR), the principal index for the majority of adjustable rate mortgage-backed securities. The second bot assists staff within the agency’s Chief Financial Officer division to manage and report key information into the Ginnie Mae general ledger. Both bots free our staff to work on more value-added tasks, increasing the overall efficiency of the agency.
Although RPA is an excellent tool for increasing the efficiency of repeatable processes, it has also been important to recognize that not every repeatable process is the same. For example, research shows that RPA is best applied to processes that use structured and accessible data sources, such as the publicly available data on LIBOR or in-house financial statement data. RPA can also be used with unstructured data with a clear rules-based protocol for data manipulation. However, any break from the rules could cause an exception, or breakdown, that would require staff intervention, ultimately rendering the process ineffective.
As Ginnie Mae moves forward with its strategic and technology modernization plans, the agency intends to expand the number of RPA processes deployed and implement more sophisticated AI functions, such as machine learning, where appropriate.
Each phase of our modernization strategy will be governed by what is fiscally sound and secure. Our plan is to leverage capabilities of the private sector, as defined in the aforementioned Presidential order, as well as adopt or develop capabilities in partnership with leading-edge firms that advance our technological infrastructure. This strategy will effectively meet the changing needs of a sophisticated and nimble mortgage finance market, while keeping true to our mission to protect taxpayers and provide a robust secondary mortgage market for government home loans.