Ginnie I Issuance Falls to New Low in October

Ginnie Mae MBS issuance fell in October for the fourth straight month as Ginnie I MBS issuance fell to historic lows.

The secondary market agency reported late Friday that Ginnie issuers securitized $26.5 billion in government-backed loans in October, down 9% from the prior month. It represents the lowest issuance level since February 2012.

Meanwhile, issuers sold $2.3 billion in Ginnie I MBS to investors including $1.7 billion in multifamily loans and only $575 million in single-family loans. Ginnie II single-family MBS issuance totaled $26 billion in October.

Ginnie Mae officials would like to merge the Ginnie I MBS program into the Ginnie II program. However, investors have “voiced concerns about the logistics of how we get there, and in particular, what will become of the legacy Ginnie Mae I security,” the agency says in a letter to stakeholders.

In continuing the process of modernizing the Ginnie Mae I and II MBS programs, the agency says it will have to answer key questions in terms of managing existing Ginnie Mae I’s. “Will there be a sunset period for legacy Ginnie Mae I’s? Will there be a conversion option?”

There are currently $402 billion in outstanding Ginnie I’s, down from $500 billion three years ago. “Since 2010, Ginnie Mae II issuance has been increasingly outpacing the issuance of Ginnie Mae I’s,” the Nov. 20 stakeholder letter says. There are $816 billion in outstanding in Ginnie II’s.