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Ginnie Mae Attracting Investors

While the broader economy is on rocky terrain as a result of the global COVID-19 pandemic, Ginnie Mae is assuring the market and its investors that it remains on solid footing. Investors across the globe are continuing to invest in Ginnie Mae [1] mortgage-backed securities, even in the current economic climate.

As of May, Ginnie Mae’s MBS production climbed to $63.44 billion in issuance and totaled $2.149 trillion in outstanding principal balance.

According to Ginnie Mae, this investment has helped “an additional 235,000 borrowers obtain affordable housing credit.”

In a post this week, Ginnie Mae explained that it has traditionally helped maintain a stable market even during economic downturns by ensuring that its MBS have continued receiving principal and interest payments even during the worst economies.

“The ongoing COVID-19 pandemic is no exception,” Ginnie Mae stated. “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 the crisis.”

In response to the pandemic, Ginnie Mae created the Pass-Through Assistance Program [2] (PTAP) in April to help servicers as well as taxpayers.

The PTAP has helped servicers by allowing them to offer flexibility to home loan borrowers during the financial crisis created by the pandemic. In May, Ginnie Mae also expanded PTAP to multifamily MBS.

Under PTAP, disruptions in payment do not qualify as a default.

Ginnie Mae also noted that its MBS is actually increasing in demand as Treasury rates decline, explaining that “international demand for Ginnie Mae MBS has been particularly strong for those global investors seeking to place their capital outside bonds with lower rates in local and regional bond markets.”

International investors can continue to invest knowing that their principal and interest payments will remain on schedule and they have their investment has the guaranty of the U.S. government.

In fact, Ginnie Mae has continued to have strong demand since the Great Recession, growing from $400 billion to more than $2 trillion over the past decade.