In his new role, Getchis is looking at ways to continue efforts to improve Ginnie’s securitization efforts in line with its mission.
“It’s a unique business model, to securitize mortgages for homeowners on an affordable basis, even in the worst housing crisis,” he said of Ginnie, also noting that the agency is striving to do to this on a self-sustaining basis with no deficit.
An industry veteran who has worked for mortgage market participants such as Ally Financial and Freddie Mac, Getchis is now working with what he describes as a small team of capable professionals on this influential government agency’s securitization efforts. Among these is Ginnie’s multiclass securities program, through which it provides diverse cashflows by placing collateralized mortgage obligations and REMICs collateralized by Ginnie Mae MBS into the market. Getchis said among other things he is working on investor outreach in the markets for Ginnie’s securities products.
Getchis said the government agency will “continue to interact with global investment community as more nations…understand the benefits of Ginnie Mae holdings.” These include Ginnie Mae’s “full faith and credit” government guarantee, which he said, in effect, makes it a sovereign debt instrument equal to Treasury bonds. These carry a 0% risk-based capital weighting. Ginnie’s securities also offer a favorable yield spread to Treasuries, he noted. Depending on global market conditions or market conditions in a particular country, about 30% of Ginnie’s securities are held by foreign investors, he said.
Another securitization effort Getchis is involved in is interaction with Ginnie Mae’s dealer group.
Getchis said he and his team are systematically working with the dealer community and evaluating revisions and possible implementation plans for some potential changes to the multiclass securities program’s criteria.
Among other things, they are reviewing the rules for Platinum securities, which are formed by combining mortgage-backed securities with uniform coupons and terms. These, for example, currently prohibit inclusion of adjustable-rate mortgage in pools. Responding to market demand for that capability, Getchis said Ginnie Mae is looking into how processes and production lines would have to be set up to handle ARM features.
He said Ginnie Mae also is considering improvements to investor disclosures for Platinums and making sure the process used to create real estate investment conduit securities is efficient for the dealer group. In addition, it is evaluating with the dealer group a revision of the permissible boundaries of Ginnie’s callable note program relative to a par pricing restriction that has been a concern given higher prices in the market.
“The dealer group reflects market conditions and provides good information about what changes are helpful, make securitization efficient and create value in today’s super-premium marketplace,” Getchis said.
He said such efforts “should keep us busy in the next several months.”
Overall, Getchis said he believes Ginnie Mae is “well-positioned to continue to have a positive influence on housing policy, to continue to provide liquidity” and “continue to respond to the marketplace to restore affordable housing.”