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Ginnie Mae Multiclass Programs

The Ginnie Mae Multiclass Securities Program consists of Ginnie Mae REMIC Securities and Ginnie Mae Platinum Securities. The Multiclass Securities Program provides an important adjunct to Ginnie Mae's secondary market activities, allowing the private sector to combine and restructure cash flows from Ginnie Mae MBS into securities that meet unique investor requirements in connection with yield, maturity, and call-option protection. The intent of the Multiclass Securities Program is to increase liquidity in the secondary mortgage market and to attract new sources of capital for federally insured or guaranteed residential loans. Ginnie Mae guarantees the timely payment of principal and interest on Ginnie Mae REMIC and Ginnie Mae Platinum Securities.

Ginnie Mae began its multiclass securities program in 1994 with a REMIC offering collateralized by MBS from the Ginnie Mae I program. In 1995, Ginnie Mae II single-family MBS were structured into a REMIC offering, expanding Ginnie Mae's position in the REMIC market. In 1995, Ginnie Mae began to allow sponsors to use Ginnie Mae II adjustable rate MBS to collateralize a REMIC.

Ginnie Mae introduced a REMIC collateralized by Ginnie Mae Multifamily MBS (MBS backed by FHA insured multifamily or project loans) in 1996. Ginnie Mae Multifamily MBS typically securitize one FHA-insured multifamily loan. The Ginnie Mae Multifamily REMIC securities also enjoy some prepayment protection because the multifamily loans typically have five-year lock-out periods during which the loan may not be prepaid. (See discussion of Ginnie Mae I and Ginnie Mae II Programs.)

Ginnie Mae's presence in the market benefits investors by offering them government-guaranteed mortgage products structured to specific investment needs. It has increased efficiency in the market by attracting a broader range of investors, funneling capital into the nation's housing markets – which in turn creates more lower-interest mortgage loans.

 

Ginnie Mae REMIC Securities

REMIC Volume Graph

Ginnie Mae administers a Real Estate Mortgage Investment Conduits (REMIC) program.

REMICs direct principal and interest payments from underlying mortgage-backed securities to classes with different principal balances, interest rates, average lives, prepayment characteristics and final maturities. REMICs allow investors with different investment horizons, risk-reward preferences and asset-liability management requirements to purchase MBS tailored to their needs.

Unlike traditional pass-throughs, the principal and interest payments in REMICs are not passed through to investors pro rata; instead they are divided into varying payment streams to create classes with different expected maturities, differing levels of seniority or subordination or other characteristics. The assets underlying REMIC securities can be either other MBS or whole mortgage loans.

Ultimately, REMICs allow issuers to create securities with short, intermediate and long-term maturities, flexibility that in turn allows issuers to expand the MBS market to fit the needs of a variety of investors.

 
Platinum Volume

Ginnie Mae Platinum Securities

Ginnie Mae Platinum Securities allow investors to combine Ginnie Mae MBS pools with uniform coupons and original terms to maturity into a single security, backed by the full faith and credit of the United States government. Investors then receive a single payment of principal and interest every month, rather than separate payments from each individual pool. Because it lowers administrative costs and improves liquidity, particularly for small pools, this feature serves to make the Platinum security more attractive.

Ginnie Mae Platinum Securities can be used in structured finance transactions, repurchase transactions as well as general trading.

 
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