March 25, 2003
GINNIE MAE LAUNCHES HYBRID ARM MBS, ENHANCED DISCLOSURES
HUD Secretary Martinez Rings Opening Bell of New York Stock Exchange and
Announces Expanded Targeted Lending Initiative at Ginnie Mae Investor Symposium
NEW YORK - U.S. Department of Housing and Urban Development Secretary Mel Martinez today rang the opening bell of the New York Stock exchange and spoke to institutional investors and other financial professionals on Wall Street. Martinez announced the details of several new initiatives at Ginnie Mae designed to benefit investors and enhance the agency's portion of the U.S. secondary mortgage market.
Martinez said that Ginnie Mae will create a new securitization program to pool hybrid adjustable-rate mortgages, disclose new data on the loans underlying its mortgage-backed securities, and expand its Targeted Lending Initiative to new portions of U.S. states along the Mexican border.
"Today's announcements further demonstrate the Bush Administration's commitment
to deliver results that expand homeownership and affordable housing opportunities,"
Martinez said. "We estimate that the Hybrid ARM program and the expanded
Targeted Lending Initiative (TLI) benefit more than 45,000 families, which will
help meet the President's goal of increasing minority homeownership by 5.5 million
by the end of the decade."
Hybrid ARM Program. Starting Oct. 1, Ginnie Mae will have a mortgage-backed security guarantee program for both recently announced Federal Housing Administration and U.S. Department of Veterans Affairs hybrid ARM mortgages. The program will securitize FHA's 3-, 5-, 7- and 10-year hybrid ARMs and the VA's new 3-year hybrid ARM. The new FHA and VA products will offer borrowers a fixed interest rate for an initial period, followed by a capped, adjustable rate. The program is expected to address investor demand for a securitized hybrid ARM investment while benefiting as many as 40,000 families, especially first time homebuyers and the families of active veterans.
New Data Disclosures. Effective Jan. 1, 2004, Ginnie Mae will offer additional detail on the loan pools underlying both its single-family and multifamily securities, providing investors with new information to better forecast prepayment speeds. New single-family pool information will include a weighted average payment-to-income ratio, weighted average loan-to-value ratio, distribution of remaining terms to maturity, distribution of original loan terms, distribution of original loan sizes and, where possible, a distribution of borrower credit scores. Multifamily securities will include loan level delinquency information.
Expanded Targeted Lending Initiative. Ginnie Mae is expanding the geographic reach of its TLI to include the colonias along the U.S.-Mexico border. The TLI has already created 100,000 American homeowners by providing market incentives to lenders to write mortgages in underserved areas. Ginnie Mae reduced its guarantee fee by up to 50 percent in the targeted areas.
Martinez and Ginnie Mae President Ronald A. Rosenfeld discussed the new developments during the Ginnie Mae Investors Symposium and Fixed Income Investment Outlook at the New York Stock Exchange.
"Investment capital is critical to fulfilling Ginnie Mae's mission of expanding affordable housing and homeownership in America," Rosenfeld said. "By helping domestic and international institutions to better understand mortgage-backed securities in general, and Ginnie Mae mortgage-backed securities in particular, it will be easier to attract the capital necessary to finance affordable housing and homeownership."
The symposium brought together experts in finance and economics to discuss critical topics and trends influencing institutions' investing decisions. In addition remarks by Martinez and a keynote speech from Wayne Abernathy, assistant treasury secretary for financial institutions, presenters included:
- New York Stock Exchange President, Co-Chief Operating Officer and Executive Vice Chairman Robert G. Britz
- Goldman Sachs Chief Economist William Dudley
- Merrill Lynch Chief U.S. Fixed Income Strategist Kenneth L. Hackel
- Federal Reserve Bank of New York Executive Vice President, Markets Group, Dino Kos
- Mortgage Bankers Association of America Chief Economist Douglas G. Duncan
- UBS Warburg LLC Managing Director Laurie Goodman
- Deutsche Bank Securities Director Alexander Crawford
- Ginnie Mae Executive Vice President George S. Anderson
- Ginnie Mae Vice President, Capital Markets Michael J. Frenz
- Ginnie Mae Chief Economist Steven A. Bernstein
Since being charted by Congress in 1968 as a government-owned corporation, Ginnie Mae pioneered the mortgage backed security. It has guaranteed more than $2 trillion in residential mortgages and provided homeownership opportunities for more than 28 million households. Ginnie Mae's are the only mortgage securities backed by the full faith and credit guarantee of the U.S. government, and have directly contributed to the nation's record homeownership levels, which reached 67 percent in 2002. More information about Ginnie Mae is available at www.ginniemae.gov.
Ginnie Mae is part of HUD. HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available.
Style Usage: While chartered in 1968 as the Government National Mortgage Association, the corporation does business as "Ginnie Mae," its preferred name for more than 25 years. News organizations are asked to use "Ginnie Mae" in all references to ensure consistency with accepted usage by Ginnie Mae and its employees, investors and lenders.
Photos of Secretary Martinez ringing the NYSE opening bell are available via Associated Press/New York (212-621-1902), Reuters America (646-223-6285) and Bloomberg Photo (212-893-3420).