Every time Ginnie Mae takes a step to strengthen the value, performance and desirability of our security, we have one goal in mind: expanding homeownership in America. It’s at the heart of our mission and what we were created to do.
Protecting the Ginnie Mae security ensures liquidity in the market, accessibility for borrowers and stability for investors.
Expanding global market awareness and overseas demand for Ginnie Mae mortgage-backed securities is one way we are increasing liquidity. That helps lower costs and expand opportunity for low- and moderate-income borrowers. Ensuring investors have confidence in the Ginnie Mae security is paramount to the functioning of the U.S. system of housing finance in which we play such an important role. In doing so, we’re able to increase global capital flows in support of the U.S. housing market. At the end of February, foreign investors held almost 24 percent of Ginnie Mae MBS.
To understand why protecting our security is so critically important to Ginnie Mae and our mission, we point to the reasons the U.S. Congress established our agency in 1968. Congress chartered Ginnie Mae to perform five primary functions:
- Provide stability in the secondary market for residential mortgages;
- Respond appropriately to the private capital market;
- Provide ongoing assistance to the secondary market for residential mortgages by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing;
- Promote access to mortgage credit throughout the nation; and
- Manage and liquidate federally owned mortgage portfolios while minimizing adverse effects on the residential mortgage market and loss to the government.
In other words, responding to concerns about security protection is not just a top priority for us. It’s our statutory obligation as we continue to innovate new solutions to minimize risk for participants in the secondary market.
Ginnie Mae is committed to eliminating the problem of prepayment speeds that evidence material deviations from market norms and without reasonable connection to economic fundamentals. We are working with issuers to highlight responsible lending practices that will not only have a positive impact on the borrowers they serve, but also protect our security — which helps the entire housing-finance ecosystem.
The Ginnie Mae program has enjoyed 50 years of success despite significant changes in the market for mortgage finance. This success has been achieved with the support of market participants cognizant of the need for Ginnie Mae to evolve its approach to changed circumstances. The advent of continuous monitoring of prepayment performance and the adoption of policy changes necessary to protect our security is another significant step in the development of the program. Our work is not done. We are fully committed to eradicating concerns about market instability that excessive prepayment speeds create so that investors can confidently rely on a more market-predictable security, in order to serve borrowers with safe, affordable and sustainable mortgage financing.