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Speeches

Remarks by Ted Tozer from the 2012 MBA Annual Convention & Expo
Published Date: 12/7/2012

Remarks of Ted Tozer, President, Ginnie Mae

“Special Session: The Government Platform”

Sunday, Oct. 21, 2012
Mortgage Bankers Association Annual Convention & Expo
Chicago, Illinois

Thanks, E.J. [Burke]. Thanks for this opportunity, and thanks for the nice introduction.

I would like to start off by talking about our securitization platform and provide a background on what Ginnie Mae does. Our platform supports single-family – both forward mortgages and reverse mortgages – multifamily and multiclass securities – including REMIC and our Platinum program.
 
And, since we just finished our fiscal year, I want to give you some information about how we supported housing last year. We provided the financing for roughly half of all the home purchase transactions in America and about 15 percent of the refinances. We provided the financing for 100 percent of all FHA single-family loans and about 99 ½ percent of the FHA multifamily. And as far as VA, we provided the funding for 98 percent of the VA loans this past fiscal year.

Since the housing crisis started in 2008, we have provided $1.7 trillion in financing to the housing market, which reflects 1.7 million homes that we’ve provided funding for.

Also in fiscal year 2012, we supported the creation of $388 billion worth of new securities.

Our portfolio has grown to $1.3 trillion – or 355,000 pools that are supported by 8 million mortgages. We supported the creation of between 2,500 and 3,000 pools per month.
 
We made tremendous strides in our disclosures. We now release our monthly factors at the same time as Fannie Mae and Freddie Mac. That’s important to us because two years ago we were basically a month behind the GSEs, and now we release our data at or slightly earlier them.
 
We have three basic objectives we’re trying to accomplish. One is to create a more stakeholder-centric organization. And to do that, we know we have to improve our IT and data infrastructure as well as enhance our risk management practices.
 
Again, talking about the stakeholder-centric process, we have increased our staff by approximately 70 percent since I joined Ginnie Mae two and a half years ago. By doing that, we have been able to emphasize training for new Issuers – we have had a substantial amount of people wanting to join our program over the last couple of years – as well as increase our training available to our current Issuers as refresher courses.
 
We have also been working to help increase liquidity in the value of MSRs on Ginnie Mae securities because – as lenders – one of your largest assets is your MSRs on your balance sheet.
We’ve also put a tremendous emphasis on our account executives. We’ve expanded that staff dramatically, again to partner with our lenders, to have Ginnie Mae be key to their success, and understand the business model and where they want to get to as an organization.

We’ve also been reaching out to our lenders and to groups of investors, again trying to make sure that we are doing what you need as stakeholders, not what we think you need. We’re trying to work off your priorities; not our priorities.

As far as improving IT and data infrastructure, we’re in the process of upgrading all of our
infrastructure and software. We are trying to get off the old legacy software that was in place when the first Ginnie Mae security was created back in 1970.

Part of that involves everything from our pooling process to the information servicers give us on a monthly basis, to our disclosures. We’re trying to upgrade all that so we can position Ginnie Mae with a foundation that can support the industry into the future and support any kind of technology that evolves.
 
One of the things that we’re also working on right now is our data strategy and governance. As part of our process to rewrite our system, we’re fully embracing the xml and data standards to have our systems become cutting-edge, as far as data definitions, and to fit into the strategy of the overall industry.
 
We’ve also been working heavily to develop an Issuer advisory group. We have 40 to 45 Issuers that want to help us make sure our system works well. We’re encouraging them to help us understand our changes so we can meet their needs of the future as well as not build a system that could possibly make their lives more difficult. At the end of the day, we want to be able to ensure that all of our stakeholders, whether it’s investors with more transparency and securities or Issuers, are able to work with us in a very efficient manner.

And the last thing we’re working on right now is developing our systems over the next 9 to 12 months so we can give loan-level disclosures on a monthly basis. That’s information on all 8 million loans, not just 335,000 pools! We think this is going a long way to help the industry have the transparency that’s needed to evaluate securities and develop a standard that people can use, be it Fannie Mae, Freddie Mac, or the private labels.
 
When it comes to risk management, we’ve turned our attention to increasing our staff so we can be proactive in dealing with our Issuers. We’re trying to understand where they are as far as their delinquencies, their liquidity, and their capital, so when we start seeing trends developing that possibly can cause problems for them down the road; we deal with them immediately and try to remediate the problem.
 
We have also developed a scoring process to rank our Issuers based on problems we’ve seen in previous defaults of Issuers. That way, we can actually determine who’s got a potential issue and give them the resources, the time, and the energy to be able to work through those issues so they can stay successful in our program.
 
We’re also looking to see the makeup of our securities, the type of collateral that’s in there, Issuers, and what kind of pools we’re issuing. Again, this is to support our investors to make sure they know what they’re getting through our disclosures. And, we can counsel our Issuers if they potentially are creating pools that can tend to perform differently than we would expect.
 
And, we’re also developing an internal score card that we plan to share with our lenders to show them how they stack up against their peers and how they look themselves – again with the concept of having people understand the average Ginnie Mae Issuer has these kind of delinquencies, product mixes – and that way they can understand where they’re at versus their peers.

We are trying to be your partner and we’re trying to be here to make you successful.
 
And that’s our goal through state-of-the art technology and through outreach.
 
Thank you.​