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Ginnie Mae Makes Key Changes to Ginnie II Multiple-Issuer Pools

In an announcement Tuesday, the ""Government National Mortgage Association"":http://www.ginniemae.gov/ (Ginnie Mae) described specific[IMAGE]

details surrounding two important operational changes to Ginnie II multiple-issuer pools. The program changes, initially announced by HUD Secretary Shawn Donovan in April, include program enhancements aimed at minimizing financial risk for warehouse lenders and making the program more efficient for all lenders, the association said in a statement.

""These program changes reflect one more step in Ginnie Mae's continuing efforts to bring greater stability to the housing market by minimizing financial risk on warehouse lending lines,"" said Theodore Tozer, president of Ginnie Mae. ""As we've become a larger piece of the housing recovery puzzle, the housing industry has looked to Ginnie Mae to lead, and this is one example of how we've responded quickly to the challenging business needs of our issuers.""

As part of these changes, beginning in the fall of 2010, issuance for Ginnie II multiple-issuer pools can occur on a daily basis, rather than once a month. Tozer said this will allow lenders to better utilize warehouse lending lines and reduce interest costs associated with carrying loans until they can be securitized and settled.

Ginnie Mae said the second program change, which is intended to improve lender efficiency, will enable lenders to securitize a single loan in Ginnie Mae multiple issuer pools, eliminating the current three-loan minimum requirement. With this change, small lenders will be able to more easily participate in multiple-issuer pools because it will only require one loan to participate in the pools of a security, the association explained.

In addition, Ginnie Mae said the program enhancements will help to accommodate ""orphan loans"" or individual loans that cannot be securitized because the interest rate differs significantly--at least 50 basis points--from other, more similarly characterized loans in the pool. The association said it expects to begin accepting single loans into multiple-issuer securities in July of 2010.

""Ginnie Mae's important role in the mortgage market is unmistakable,"" said John Courson, president and CEO of the Mortgage Bankers Association. ""Efforts to bring stability to the mortgage market by quickly and prudently creating business solutions for [mortgage-backed securities] issuers, such as those announced today, exemplify the leadership role they've taken.""

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