Technology is rapidly asserting itself in the residential real estate market. The ubiquity of television commercials touting rapid loan approvals and the ability to check for-sale listings anywhere in the country are but two examples of how technology that faces consumers has increased the pace of business.
To help ensure that lenders and consumers who seek financing in the government mortgage market are able to do so quickly and securely, Ginnie Mae is modernizing its operations. We have a critical role to play as an essential source of mortgage capital that is available all of the time and at the best price that an efficient global capital market can provide.
While a government agency, Ginnie Mae is less constrained than many others and can move more quickly and decisively in order to keep up with the pace of change occurring in the primary market. While some agencies do struggle with dated technology, Ginnie Mae has been an outlier in our focus on continued improvement. We believe that our work will help ensure a stable secondary market for government mortgage loans.
To start, Ginnie Mae runs its operations on a hybrid set of technologies, the overwhelming majority of which are on a cloud-based Oracle platform. The company relies on state-of-the-art technologies to meet the needs of its more than 400 Issuers and global investors.
As we’ve noted in the recently published “Ginnie Mae 2020” white paper, Ginnie Mae is also engaged in a comprehensive customer-facing technology upgrade designed to make our partner lenders and our investor interfaces more efficient and more secure.
To make this happen, Ginnie Mae is creating a single gateway to all of its systems, applications and resources — called the MyGinnieMae Portal — that will boost efficiency for our business partners and provide a consistent user experience by eliminating multiple entry points.
MyGinnieMae will be the primary vehicle for conducting business, building user communities and sharing information. It enhances collaboration by enabling user discussion, messaging and other interactions, as well as offering shared workspace for all users while also allowing for customized landing pages. Once complete, we are confident that the MyGinnieMae Portal will offer issuers a more efficient user interface with our platform, making the operation costs of being a Ginnie Mae issuer lower and ultimately helping our business partners to better serve American homeowners. In short, issuers will save time and money that can be reinvested into their business and help them better compete for customers.
Improving security will also help enable Ginnie Mae to adopt electronic mortgages and other digital collateral in the government loan market, which, in our view, will further reduce the cost of mortgage origination and improve consumer affordability.
At the same time, Ginnie Mae is making additional changes to its systems, including improving its data standards to seamlessly align with the Mortgage Industry Standards Maintenance Organization and other industry protocols.
Now is a critical time for the work outlined in our recent report, given the rapidly changing nature of the mortgage lending and mortgage investing landscape. Not only is Ginnie Mae much larger than it has ever been in the past, but today we rely on a diverse set of lenders, servicers and global investors to ensure our program’s success. Keeping up with the rapid changes taking place in this market is a top priority for us. We recognize that to meet our mission to provide liquidity to the market for government mortgage loans, we must do more than keep up with the pace of change — we must lead when we can, align with the overall market and constantly anticipate technology’s impact.
We are at a point in the economic cycle where the investment choices of investors will increase. Although the full faith and credit guarantee that comes with a Ginnie Mae mortgage-backed securities is extremely attractive to foreign investors, if we’re not able to provide a stable security with predictable prepayment behaviors, investors may look elsewhere to invest their capital. We’ve already seen that happen earlier in 2018 when rapid prepayments of loans insured by the Department of Veterans Affairs affected the predictability of our securities and the prices fell. Providing issuers with better prepayment monitoring tools and setting clear standards with respect to prepayments has reinvigorated our MBS prices.
The bottom line for the participants in the primary and secondary markets for government mortgage loans is that, as technology changes, government agencies like Ginnie Mae must do the same. This is crucial for ensuring that our customers can do business more efficiently as well as for preserving the health of the mortgage market.