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Stakeholder Letters

Ginnie Mae Leadership Q&A: Senior Vice President and Chief Financial Officer, Office of Finance – Michael Najjum
Published Date: 12/1/2011 1:00 AM

A Message from Terry Carr, Senior Advisor, Communications & Congressional Relations

We are excited to present the next chapter in our Q&A series featuring Ginnie Mae’s leadership. In the sixth interview of the series, Ginnie Mae’s Senior Vice President of the Office of Finance and Chief Financial Officer, Michael Najjum, answers questions about Ginnie Mae’s Fiscal Year 2011 financial performance.

Mike, tell us about your role at Ginnie Mae. How long have you been with the corporation?

I am Ginnie Mae’s Chief Financial Officer. I am responsible for the overall management of the company’s financial condition including accurate and reliable financial reporting, directing our investment portfolio, and ensuring financial compliance with Congressional budget limits. I manage the actual and forecasted financial data needed for strategic planning and management decision making. I lead financial planning and analysis, plan resource allocation and direct our budget modeling. I have more than 30 years of experience in financial services, beginning my Ginnie Mae career in 1988 as an accountant.

Ginnie Mae recently announced its fiscal year 2011 financial performance. Tell our readers all about it. How do these numbers compare year over year?

In terms of financial performance, we had our best year ever. Our profit this fiscal year reached $1.184 billion, which is a significant milestone for the corporation. In fiscal year 2010, we reported $541.5 million, while the previous record in 2008 was $906 million. So, we’re very proud that in the middle of what remains a rocky housing market, we’ve produced positive results for the American taxpayer. Other highlights this year include increased revenues and retained earnings. Revenues of $1.064 billion were up from $1.011 billion in fiscal year 2010.  Our FY 2011 net profit was higher than revenue largely because of two reasons. First, in fiscal year 2010, we increased our MBS program provision for loan loss reserves by $730 million. Because we shored up our reserve cushion last year, we didn’t need to set aside so much this year. Second, this fiscal year we were able to recapture about $394 million from claims and sales on foreclosures that occurred this fiscal year.  Not having to provision for loan losses and recapturing additional monies led to an increase income of nearly 80 percent over last year. Lastly, retained earnings rose to $15.7 billion from $14.6 billion. Our substantial retained earnings provide assurance that, should the market take another downward turn, we’ve got a significant cushion of protection.

Ginnie Mae’s net income is $1.184 billion. As a wholly-owned government corporation, where does that profit go since Ginnie Mae has no equity shareholders?

As a government corporation, our shareholders are the U.S. taxpayers. The profits we earn are added to our reserves, which are invested in U.S. Treasury securities. In fact, we’ve been a solidly run, profitable corporation nearly every year since its inception. Even during the current credit crisis, Ginnie Mae produced strong profits: $906 million in 2008, $509.6 million in 2009, and $541.5 million in 2010.

Given the ongoing market volatility, these are remarkable numbers. What impact does this have on consumers?

Our strength and stability has continued to provide liquidity to the U.S. housing market when it needs it most. Our guaranty matters. In fact, the Ginnie Mae MBS is highly liquid and attractive to domestic and foreign investors. This funding liquidity is passed on to lenders who then use the proceeds to make new mortgage loans for more and more families. This ongoing cycle helps to lower mortgage rates and ultimately supports accessible and affordable homes in both the single and multifamily housing markets. That is essentially how our solidly performing business model and financial results impact consumers.

How has the Ginnie Mae program performed for families?

Since the credit crisis began in September 2008, Ginnie Mae has supplied approximately $1.2 trillion in liquidity to the U.S. housing finance market. This has provided capital to finance more than 5.1 million American households.

Within this past fiscal year, the Multifamily program reached a milestone of $50 billion in outstanding MBS, marking 17 years of consecutive growth. This achievement helped to finance 1,397 apartment building loans, 21 hospital loans and 476 nursing home loans. This business also guaranteed a $756 million MBS – backed by the largest-ever multifamily construction loan – to finance a new medical services facility in Trenton, NJ. This important project created about 4,800 jobs during the construction phase and, when the project is completed, about 2,200 permanent jobs. So we’re really proud to have been a part of that project and hope to do similar securitizations going forward.

Is there anything of which you are especially proud of accomplishing this year?

It’s no secret that as the private market retreated; lenders looked to government-insured mortgage programs. Our business volume increased dramatically over the course of the last three or so years and that placed tremendous stress on staff here at Ginnie Mae. Nevertheless, our incredible staff has been able to pull together and get the job done. I’m very proud of the talent we have here at Ginnie Mae. Our staff is always monitoring the business processes to minimize risk to the America taxpayer and has done a tremendous job during a very challenging time.​