Washington DC - Today, Ginnie Mae announced that during the course of a quality control review, it identified approximately 2,360 mortgages in 1,693 of its securities that may be buydown mortgages, and thus ineligible for those Ginnie Mae securities. Buydown loans are mortgages with funds contributed from third parties to reduce borrowers' monthly payments during the early years of the mortgages. Ginnie Mae program requirements prohibit including buydown mortgages in certain securities.

During the next phase of the review, Ginnie Mae will work with its issuers to determine whether these loans are in fact buydowns, or have been misreported by issuers. If the loans are buydowns, Ginnie Mae will require issuers to substitute eligible mortgages or buy them out of the pools.

The buydown loan review led Ginnie Mae to expand its quality control efforts by establishing a formal quality control function in the Office of Program Operations. Among other things, the expanded quality control procedures include a periodic post-issuance review of outstanding Ginnie Mae securities. Ginnie Mae already performs pre-issuance quality control reviews. The post-issuance review provides additional assurance that outstanding securities comply with Ginnie Mae program requirements.

Director of Securities Policy Research, Steve Ledbetter, is leading the initiative to eliminate buydown loans from Ginnie Mae securities and the effort to improve and expedite Ginnie Mae's disclosure information. According to Ledbetter, "This review is driven by our desire to make sure the information we disclose about the loans backing our securities is 100 percent accurate, now and in the future."

A list of the specific securities and the number and unpaid principal balance of the possible buydown loans can be found on Ginnie Mae's website at www.ginniemae.gov. This list will be updated as 1) buydown loans are purchased, 2) new loans are substituted, or 3) Ginnie Mae receives verification that loans have been improperly coded and are not buydown loans.

Ginnie Mae is a wholly-owned government corporation within the U.S. Department of Housing and Urban Development. Ginnie Mae pioneered the mortgage-backed security (MBS), issuing the very first security in 1970. An MBS enables a mortgage lender to aggregate and sell mortgage loans as a security to investors. Ginnie Mae securities are the only MBSs to carry the full faith and credit guaranty of the United States Government, which means that, even in difficult times, an investment in Ginnie Mae is one of the safest an investor can make.