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Global Investors Seeking More Ginnie Mae MBS in Portfolio
by Alven Lam | 6/22/2020

At Ginnie Mae we are committed to our mission of bringing global capital into the American housing finance system. The mobilization of investment into Ginnie Mae mortgage-backed securities (MBS), from capital markets throughout the world, ensures borrowers from different walks of life—including first-time home buyers, lower-income home buyers, veterans or those living in rural  areas—can access affordable housing finance, even in the worst of times. The insurance and guarantees placed on the loans in Ginnie Mae securities attract investors concerned about credit risk with other fixed income products.

The full faith and credit guaranty of the United States government on Ginnie Mae MBS and multiclass securities is another reason that our products are attractive to investors. The Ginnie Mae guaranty gives confidence to our security holders, this explicit pledge makes Ginnie Mae MBS products unique and valuable investment vehicles. The guaranty means investors receive scheduled principal and interest (P&I) payments regardless of the circumstance.

During the worst economic conditions and disasters, investors in Ginnie Mae MBS have received their P&I payments on time without disruption to their scheduled delivery. The ongoing COVID-19 pandemic is no exception. The coronavirus emergency is one of many examples in our 50 plus years where Ginnie Mae provides liquidity and stability into the U.S. housing finance sector amidst crisis. Despite the hardship experienced here at home and abroad, global investors continue to invest in Ginnie Mae MBS with confidence that all scheduled payments will be made on time and in full.

Declining Treasury rates in the broader fixed income space have led to increased demand for Ginnie Mae MBS with comparatively higher yields versus other sovereign debt. Moreover, international demand for Ginnie Mae MBS has been particularly strong for those global investors seeking to place their capital outside of bonds with lower rates in local and regional bond markets. Accordingly, those investors who successfully manage interest rate and prepayment risks can obtain a yield premium over similar duration U.S. Treasury notes.

Investment demand for Ginnie Mae MBS hasn’t slowed since the 2008-2009 financial crisis, when production of new securities and associated investor demand for Ginnie Mae MBS grew from $400 billion outstanding to more than $2 trillion in ten years. Most recently, in May 2020, Ginnie Mae MBS production reached $63.44 billion in issuance and $2.149 trillion in total outstanding principal balance. This continued level of investment helped an additional 235,000 borrowers obtain affordable housing credit. Such accomplishments come from the close work of Ginnie Mae stakeholders involved throughout the MBS and multiclass securities programs.

Ginnie Mae collaborates with partners and stakeholders working with market participants to address liquidity concerns and advance payments. The Pass-Through Assistance Program (PTAP), implemented in response to the COVID-19 National Emergency, has minimized disruptions for mortgage servicers during the coronavirus emergency. The PTAP has also mitigated risks for the U.S. taxpayer, another key component of Ginnie Mae’s role as the guarantor of last resort, by helping to prevent disruption to the mortgage servicing market while implementing various policies aimed at helping borrowers experiencing financial distress.

Another key component of Ginnie Mae operations is to engage with global investors. We conduct robust engagements with institutional investors to raise awareness, answer questions and obtain feedback on Ginnie Mae’s securities programs. In these engagements with investors spanning relevant capital markets actors, we share global market analysis insights and trends on U.S. housing finance markets in a variety of media, including: teleconferences, monthly reports and policy updates. These engagements also solicit input and feedback from investors about Ginnie Mae’s programs. As a result, our investor engagements facilitate valuable input on market perspectives that contribute to decision-making as Ginnie Mae consistently strives for the best in the evaluation of the securities programs and their operations.

Our $2.1 trillion portfolio of MBS principal balance outstanding demonstrates the worldwide trust investors and policymakers place in Ginnie Mae and its products. Our staff of about 150 people is highly skilled with deep knowledge and strong ties to the industry. As such, we are committed to the best in both business and government administration. Our longstanding experience and expertise will ensure we continue to channel investment into the U.S. housing finance system and minimize risks for the U.S. taxpayer—no matter the challenge.

Ginnie in Brief Contributors
Michael R. Bright
Ginnie Mae
Michael Drayne
Gregory A. Keith
Maren Kasper
Tamara Togans
Roy Hormuth
John F. Getchis
John T. Daugherty
Omar Bouaichi
Seth D. Appleton
Eric Blankenstein
Alven Lam
Angel Hernandez
Laticia Jefferson
Regina Chase
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Last Modified: 6/26/2020 5:00 PM