Last month Ginnie Mae reached an incredible milestone that, for me, cements our place as a leader in the mortgage-backed securities (MBS) market: Our total outstanding principal balance crossed the $2 trillion line.
That number matters because millions of low- and moderate-income rural, urban and veteran homeowners rely on loans made possible by Ginnie Mae’s MBS. The Ginnie Mae guaranty allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market, thus driving down the cost of homeownership. The lenders can then use the proceeds to make new mortgage loans available, thus increasing liquidity.
The fact that Ginnie Mae has reached $2 trillion in outstanding principal underscores the corporation’s increasingly important role as a pillar of the secondary mortgage market. The corporation has grown a lot in the past decade or so. In 2010, Ginnie Mae’s outstanding principal balance was just $1 trillion. In other words, in just eight years we’ve grown as much as we did in our first 42 years. We meaningfully expanded our service at a moment when consumers needed it most.
Ginnie Mae’s market share of MBS has also skyrocketed, from a low of 4 percent in 2005 to a peak of 31 percent in recent years.
Ginnie Mae has been able to grow and increase our impact because our business model works. We facilitate the securitization of mortgages insured or guaranteed by the Federal Housing Administration, the Department of Housing and Urban Development’s Office of Public and Indian Housing, the Department of Veterans Affairs, and the Department of Agriculture’s Rural Development Programs. With an explicit, transparent and paid-for government guaranty, Ginnie Mae’s bond and Ginnie Mae’s brand are recognized as the most secure mortgage security in the world.
Ginnie Mae’s business model significantly limits risks to taxpayers by providing a safe, effective and government-backed channel for the flow of capital for U.S. mortgages. How reliable is our robust process for ensuring the timely payment of principal and interest to security holders? Ginnie Mae has never missed a payment since its founding in 1968, even during the financial crisis of 2007-2008 and ensuing recession. We return money to the U.S. Treasury every year.
A strong secondary mortgage market strengthens homeownership. We’re proud to say we’ve supported American homeownership for 50 years, and we’re not slowing down.