1. Ginnie Mae’s Era of Transformation
Ted Tozer
Consumer Federation of America
December 5, 2014

2. U.S. Mortgage Market
U.S. mortgage market is comprised of two segments:
Primary market is made up of the borrower and lender
Secondary market is made up of the lender, and investor
The secondary market enables lenders to sell the loans they originate to a third party
Transfer credit risk from their balance sheet, or
Remove loans from their balance sheet by selling to investors
Proceeds provide capital for new mortgage loans  

3. Scope of Mortgage Market & Government Involvement
Total U.S. outstanding mortgage debt is currently at almost $10 trillion
Outstanding mortgage debt is roughly equivalent to 70% of total net loan value on banks’ balance sheets
In 2014, only about 20% of mortgages were kept on banks’ balance sheets
If all banks did was invest in mortgage loans, they would not be able to fund all mortgages in market, i.e., banks would not fund auto loans, credit card loans, etc.
Government-backed securitization is necessary to maintain current volume available & preserve the 30-year fixed rate mortgage

4. Government Support of Mortgages goes back at least 30 years
Single-family Mortgage Market Share

5. TBA Market Important to Consumers
Created in 1970s to support Ginnie Mae financing
Allows consumers to lock in interest rates (because lenders can lock in rate for loan origination)
Gives buyers negotiating power by allowing them to lock in their loan terms when the mortgage application is taken
TBA securities have U.S. government guarantee
Allows for wide availability of 30-year and 20-year fixed rate mortgages
Government guaranty qualifies mortgages for the TBA market & attracts capital from throughout the world to invest in U.S. mortgages
Guaranty makes investment in U.S.-backed mortgages exceptionally safe & provides liquidity to them
Guaranty homogenizes mortgages & lender/servicers so they are indistinguishable to investors
Homogenization of mortgages & lender/servicers enables investment in enormous blocks of mortgages
$176 billion in daily TBA MBS trading in 2014
TBA market would not exist without government guaranteed MBS

6. TBA Market Volume
$505
To-Be-Announced (TBA) market was created in 1970s to support Ginnie Mae securitization & financing of government insured loans
Virtually all government insured mortgages are sold into the TBA market – sold as part of MBS guaranteed by Ginnie Mae, Fannie Mae & Freddie Mac
Without the TBA Market the 30-year mortgage could not exist.
TBA enables an interest rate lock for consumers.
Without TBA, consumers would not be able to shop for a credit rate until the day they closed; They would have no negotiating power.
Facilitates forward trading of mortgages (delivery can take over three months, on average takes two months)
Enables lenders to lock in rate for loan originations prior to actually originating loans
Most liquid & important secondary mortgage market
System provides broad & stable capital availability for potential homebuyers throughout the U.S.
TBA securities have U.S. Government guaranty, which facilitates scale of market & fungibility of securities
$176
$20 $4

7. Ginnie Mae’s securitization platform is evolving
Ginnie Mae’s increased relevance is evidenced in its steady growth and its growing share of the secondary mortgage market.
Ginnie’s average issuance in last five years is $382 billion;
2014 YTD August volume now has Ginnie Mae as 32% of total new MBS issue market.
$1.5 Trillion
Current Outstanding Ginnie Mae Securities
$25
Billion
Average MBS Issued Per Month in FY2014
9.1
Million
Loans Currently Processed
$22
Billion
P & I Paid to Investors Monthly
Our outstanding MBS is probably around $1.6 billion at this point.
Our growth is unlimited…
Average issuance is about $382 billion a year in last five years.
We return an average of about $700 billion to the US Treasury, each year
We have 344 approved issuers – allowing us to spread risk and access to capital markets.
344
Active Issuers 4
Guarantors

8. Ginnie Mae Model Distributes Risk
Fannie/Freddie Loan with High LTV
First Dollar Loss
Last Dollar Loss
LOSSES
Government Agency Credit Enhancement*
Corporate Resources of Issuer/ Servicer
Ginnie Mae
Relative Loss Position $
Last Dollar Loss
Fannie/
Freddie
LOSSES
Private Credit Enhancement $
Private Mortgage Insurance
Ginnie Mae provides guaranty solely on MBS
Mortgages insured by US Government (FHA, VA, RHDS)
Covers catastrophic risk of Issuer/Servicer not making P&I payment to MBS investor
Ensures liquidity
Provides incentive for Lender/Issuer/Servicer to make & securitize sound loans
Issuer/Servicer obligated to make monthly P&I payment regardless of whether borrower made his/her payment
Explicit government guarantee on MBS P&I payment
GSE provide guaranty on mortgage & MBS
GSE buy mortgages from private lenders and issue MBS themselves
Ensure liquidity
Implicit government guarantee on MBS P&I payment
Platform is able to handle volume – next slide shows that we are already overtaking Freddie in monthly issuance
Homeowner Equity
Homeowner Equity
First Dollar Loss
Relative Loss Position
*VA covers the first 25% of the credit loss per loan, USDA RHS covers the first 90%, and FHA covers 100%; coverage of foreclosure expenses varies by agency - expenses not covered can be substantial

9. Ginnie Mae MBS Outstanding Relative to GSEs
MBS outstanding in billions
September 2014: $1,526B
Sources: Fannie Mae and Freddie Mac Monthly Reports; Ginnie Mae data includes HECMs

10. Composition of Ginnie Mae MBS Issuance Volume
*Ginnie Mae Issuers are responsible for servicing the securities & the loans backing them; in the case an original
Issuer sells servicing to another entity, the new entity takes on all obligations of the original Issuer
** FY2014 year-to-date (YTD) includes October 2013 through July 2014 issuance

11. Top 10 Issuer Comparison by Issuance, 2011 & 2014
Top 10 Issuers by MBS Issuance in Sept. 2011
Issuer Rank
Issuer Name
Issuance Volume
% of Month’s
Total Issuance 1
WELLS FARGO BANK, NA*
$9,581,191,630
38.0% 2
BANK OF AMERICA, NA*
$3,916,997,131
15.6% 3
JP MORGAN CHASE BANK, NA*
$2,316,465,826
9.2% 4
PHH MORTGAGE CORPORATION
$917,299,334
3.6% 5
U. S. BANK, NA*
$873,997,967
3.5% 6
FLAGSTAR BANK, FSB*
$815,042,447
3.2% 7
GMAC MORTGAGE, LLC
$792,359,433
3.1% 8
QUICKEN LOANS, INC
$615,331,645
2.4% 9
MORTGAGE INVESTORS CORPORATION
$487,994,501
1.9% 10
METLIFE BANK, N.A.
$430,077,779
1.7%
Total Top 10 Issuers
$20,746,757,692
82.4%
Total Ginnie Mae Single-family Issuance:
$25,188,529,663
Top 10 Issuers by MBS Issuance in June 2014
Issuer Rank
Issuer Name
Issuance Volume
% of Month’s
Total Issuance 1
WELLS FARGO BANK, NA*
$5,942,565,380
24.3% 2
PENNYMAC LOAN SERVICES, LLC
$1,337,393,959
5.5% 3
FREEDOM MORTGAGE CORPORATION
$1,102,401,513
4.5% 4
QUICKEN LOANS, INC
$1,043,790,372
4.3% 5
JP MORGAN CHASE BANK, NA*
$846,509,397
3.5% 6
U. S. BANK, NA*
$793,512,230
3.2% 7
PINGORA LOAN SERVICING, LLC
$679,571,946
2.8% 8
FLAGSTAR BANK, FSB*
$574,846,337
2.4% 9
USAA FEDERAL SAVINGS BANK*
$541,092,729
2.2% 10
BANK OF AMERICA, NA*
$505,332,852
2.1%
Total Top 10 Issuers
$13,367,016,714
54.7%
Total Ginnie Mae Single-family Issuance:
$24,444,302,581
*Depositories
BLUE = Issuers that have fallen out of the top 10 since 2011
RED = Issuers that have risen in to the top 10 since 2011

12. Summary: The Future is Now
Ginnie Mae model works because:
Spreads risk across many issuers, rather than just two
Single security model and platform facilitates competition and equal access to capital markets via a single security and platform.
Ensures a competitive primary market
Consumers should be concerned about competitive primary market
If only one or two issuers exist, guaranty fees will not be competitive
Ensure that Independent Mortgage Bankers remain viable.
Market changes – Rise of NDI’s; withdrawal of banks have ramifications:
Decreased credit
More of an FDIC-like role for Ginnie Mae