NEWS RELEASE

WASHINGTON - Ginnie Mae, created by Congress in 1968 as part of the Department of Housing and Urban Development, commemorated its 35th anniversary today by announcing it issued $215.8 billion in mortgage-backed securities for the fiscal year ending September 30, a 24.3 percent increase over fiscal year 2002.

As the only issuer of mortgage-backed securities guaranteed by the U. S. government, Ginnie Mae helped 2.4 million Americans become homeowners in 2003, and some 30 million Americans since its creation, resulting in more than $2 trillion in residential mortgages.

"For 35 years Ginnie Mae has revolutionized housing finance while making homeownership a reality for millions of low- and moderate-income Americans," said Acting HUD Secretary Alphonso Jackson at an event commemorating the anniversary. "Ginnie Mae is a key player in President Bush's push to increase the number of American homeowners by expanding the stock of affordable housing, and its legacy of innovation will continue far into the future."

"Three decades ago, Ginnie Mae revolutionized the secondary mortgage market," noted President Ronald Rosenfeld. "Today, we celebrate our accomplishments and our most significant achievement — providing more than 30 million American families with affordable housing."

Ginnie Mae was created to help low- and moderate-income Americans when Congress split Fannie Mae into two separate corporate organizations.

Within two years of the split, Ginnie Mae created what has become today's secondary mortgage market by issuing the first mortgage-backed security. Within six years, Ginnie Mae had issued more than $30 billion in MBS and topped $100 billion by 1980. In 1983, as a result of the extraordinary growth of the MBS program and advances in technology, the agency introduced its Ginnie Mae II security.

Under the direction of Rosenfeld, the agency has made a number of significant changes to the way it does business. Recent initiatives include:

• Supporting U.S. Armed Forces - The Soldiers' and Sailors' Civil Relief Act requires all mortgage lenders to limit the interest rate on mortgage debt to 6 percent for military personnel called to active duty. Traditionally, Ginnie Mae had reimbursed issuers for the interest shortfall only when the borrower was called to active duty areas within Operation Enduring Freedom. Last year, Ginnie Mae began reimbursing lenders for mortgage interest in excess of 6 percent regardless of where the guardsperson or reservist was called to serve, saving the issuer $6 million each year.
• Cutting Red Tape - Ginnie Mae has initiated an aggressive campaign to streamline documentation requirements and internal procedures. Last year, for example, Ginnie Mae began accepting representations and warranties in lieu of collateral documents from qualified issuers, saving the industry $8 million annually, bringing the total savings from its sreamlining to some $27 million annually.
• Enhancing the Ginnie Mae II Program - Ginnie Mae recently revamped its Ginnie Mae II program to increase servicing flexibility for issuers, thus lowering lenders' costs. Program changes reduced the minimum number of basis points that issuers of federally guaranteed mortgages must set aside for servicing from 44 to 19 — a move housing officials believe will cut the cost of federally insured mortgages and increase homeownership rates.
• Creating a Hybrid ARM Program - In response to the record levels of fixed-rate mortgage originations and the expectation that borrowers will choose adjustable rate mortgages, Ginnie Mae has created a new Hybrid ARM program. This year, the agency began securitizing Hybrid ARMS guaranteed by the Veterans Administration and plans to do the same for FHA in the coming year.