Ginnie Mae's decision last year to reduce servicing fees on Ginnie II mortgage-backed securities has really paid off.Lenders are securitizing more 30-year fixed rate mortgages in GNMAs IIs and the average servicing fee has declined to 48 basis points from 78 bp, according to Ginnie Mae vice president for MBS Theodore Foster. In March, 47.2% of all 30-year fixed rate mortgages went into Ginnie II securities, as opposed to Ginnie I securities. Before Ginnie Mae lowered its minimum servicing fee requirement from 44 basis points to 19 bp last July, only 25% to 33% of fixed-rate product went into Ginnie IIs. Execution has improved and spreads between GNMA Is and GNMA IIs have narrowed, Mr. Foster stated at the Mortgage Bankers Association's secondary market conference. Meanwhile, Federal Housing Administration has given lenders the green light to originate hybrids adjustable rate mortgages, and Ginnie Mae is ready to handle the new product, Mr. Foster said. So far, Ginnie has guaranteed $3.2 billion in three-year hybrid adjustable-rate mortgages backed by the Department of Veterans Affairs. VA lenders started to originate hybrids in October. "We really look forward to next months' pooling, which will include the FHA product," Ginnie Mae vice president Michael Frenz said.

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