GINNIE MAE INTRODUCES GOVERNMENT-GUARANTEED STRIPPED MBS
$2.2 Billion Transaction Led by Goldman Sachs

WASHINGTON - Ginnie Mae launched the first government-guaranteed stripped mortgage-backed securities (SMBS) today with a $2.2 billion transaction underwritten by a syndicate of 14 Wall Street securities dealers lead managed by Goldman Sachs Group, Inc. SMBS are pass-through securities that are created by separating -- or stripping apart -- the principal and interest payments from the underlying mortgages that back standard Mortgage-Backed Securities, REMIC Certificates, SMBS Certificates issued from other trusts, and other mortgage-related assets. Often called SMBS or Strips, one or more classes of securities are then created:

• one may receive the interest cash flow, called IO -- or interest only;
  
• the other may receive the principal cash flow, called PO -- or principal only; and
  
• additional classes may receive different portions of principal and interest.

Depending on the type of class held investors in these securities are entitled to interest or principal payments or some combination of principal and interest payments due on the pool of assets underlying the related SMBS trust. Holders of certain SMBS classes may exchange those classes for equivalent combinations of SMBS classes, or in some instances, for the underlying assets. Currently, Platinum securities - Ginnie Mae's mortgage-backed securities aggregation product - are the only type of asset allowed as collateral for these SMBS transactions. (See the offering documents for further details.)

"We view the SMBS program an important opportunity to deepen Ginnie Mae's participation in housing finance and is the next step in our strategy to broaden the investor base for our securities. The SMBS program provides us greater access to the important institutional investor segment," said Ronald A. Rosenfeld, President of Ginnie Mae. "These new securities help satisfy investor demand for additional risk management and yield enhancement securities, and should increase the demand for Ginnie Mae mortgage-backed securities. This should ultimately lead to lower borrowing rates for FHA and VA homebuyers."

Ginnie Mae guarantees the timely payment of interest and principal on these securities. Ginnie Mae's guarantee is backed by the full faith and credit of the United States.

Chartered by Congress in 1968 as a government corporation, Ginnie Mae has guaranteed more than $2 trillion in residential mortgages, providing homeownership opportunities for more than 27 million households.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and 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 on the Internet and espanol.hud.gov.

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