Ginnie Mae Setting Historic Pace in August

A recent story on HW covering the growth of Lenders One, a nationwide cooperative comprised of independent mortgage bankers, had us thinking about the origination mix reported by the company, which said it originated more than $3 billion during a 30-day period. That mix: 43.5 percent to the FHA, only 5.3 percent jumbo, Alt-A or second mortgage products, and the rest in conforming product. You’d have to have been in the origination business (or known some people who have) to appreciate that statistic — nearly half of originations went to FHA, and by extension to oft-forgotten Ginnie Mae. But a review of month-to-date issuance volume by HousingWire, using data provided courtesy of eMBS, Inc., suggests that Ginnie Mae won’t be playing third fiddle to its two better-known siblings for very long. In fact, the explicitly government-backed mortgage operation soundly trumped Freddie Mac (FRE) in fixed issuance during July, a milestone that few market participants seem to have noticed: $24.9 billion was issued via Ginnie during the month, compared to $20.3 billion at Freddie. It was the first time Ginnie’s fixed issuance had been above either Freddie or Fannie Mae (FNM) in recent memory, and certainly the first time in the fours years’ worth of data reviewed. But August, at least so far, is shaping up to be a historic month that could mark a clear turning point in our nation’s debate over mortgage financing’s future: that’s because, to-date in August, Ginnie Mae’s fixed issuance is ahead of both better-known GSEs. According to eMBS’ data, Ginnie Mae has issued $25.3 billion to date, while Fannie and Freddie have issued $24.0 billion and $16.5 billion, respectively. Imagine a world where the leading GSE isn’t named Fannie Mae or Freddie Mac; and if you’ve been in the mortgage business for any meaningful period of time, it’s an amazing thing to consider. We’re talking about an agency whose monthly issuances as recently as late last year were just 25 percent of Freddie’s volume — and that was in a good month. The speed of the market shift has been just as stunning, as well: in February, for example, Ginnie’s issuance total was just 17 percent of that recorded by Fannie Mae.

<em>While Fannie and Freddie have seen issuance fall, Ginnie has not.</em>
While Fannie and Freddie have seen issuance fall, Ginnie has not.
My, how the tables have turned, especially as both Fannie and Freddie have run into problems of their own as of late; and expansion of the FHA’s role by lawmakers hasn’t hurt either. The Economic Stimulus Act of 2008 allowed FHA to raise its loan limits from $362,790 to $729,750 in some areas of the country. The increase is one of a few key areas of legislation that has had major impact favoring a revitalization of Ginnie — in the four months since Ginnie Mae rolled out its new jumbo loan product, issuers have securitized $17 million in April, $331 million in May, $1.089 billion in June, and $1.470 billion in July of FHA’s jumbo loans. To date in August, eMBS reports that issuers have securitized another $1.952 billion thus far — Fannie and Freddie combined have managed a just $161.7 million thus far, in comparison. Ginnie Mae President Joseph J. Murin told the Wall Street Journal in an interview Friday that the agency’s rapid growth has been “taxing,” and that HUD officials are asking Congress to increase staff at the agency. Disclosure: The author was long FRE when story was published; indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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