IV. Selected Programs and Recent Initiatives Selected Programs MBS Program Ginnie Mae’s principal product is the MBS, the vehicle through which it helps to increase low- and moderate-income homeownership in America.  Ginnie Mae MBS are created when mortgage loans are pooled by eligible issuers.  Commonly referred to as “pass- through” certificates, these MBS entitle an investor to an undivided interest in the under- lying mortgage loan pool.  Thus, an investor receives a pro rata share of the interest (net of servicing and guaranty fees) and principal on the underlying mortgage loans.  Through its MBS program, Ginnie Mae increases the liq- uidity and efficiency of mortgage loan fund- ing, making more capital available to low- and moderate-income homeowners at competitive interest rates.  The following chart represents the average rates on Ginnie Mae MBS origi- nated during the past five years: Average Rates on Ginnie Mae MBS Fiscal Year Average Rate 1997 7.05% 1998 6.68% 1999 6.99% 2000 7.77% 2001 6.72% Ginnie Mae I MBS Ginnie Mae I MBS are securities based on sin- gle-issuer pools and are Ginnie Mae’s most heavily traded product.  The underlying mort- gages generally have the same or similar matu- rities and the same interest on the mortgages. Single family Ginnie Mae I pools have a 50 basis point (0.5 percent) guaranty and servic- ing fee.  Ginnie Mae I payments are made to holders on the 15th day of each month. The securitization provisions are established in the Ginnie Mae MBS guide (Ginnie Mae Handbook 5500.3).  The Handbook can be found on Ginnie Mae’s website, at www.gin- niemae.gov. Ginnie Mae II MBS Ginnie Mae II MBS securities have been a use- ful tool for “pipeline management” for our issuers, and provide them with additional flex- ibility and liquidity.  For example, these secu- rities permit greater flexibility with respect to loan characteristics.  Coupon rates on the underlying mortgages can vary between 50 and 150 basis points above the interest rate on the pool. Both multiple-issuer and single-issuer pools are permitted in these securities.  The Ginnie Mae II MBS also allow smaller issuers who do not meet the minimum dollar pool require- ments of the Ginnie Mae I MBS to participate in the secondary mortgage market.  The Ginnie Mae II MBS have a central paying and transfer agent which collects payments from all issuers and makes one consolidated pay- ment each month to each security holder. Ginnie Mae II MBS pay on the 20th day of each month. An issuer may participate in the Ginnie Mae II MBS either by issuing custom, single-issuer pools or multiple-issuer pools.  A custom pool 11 G i n n i e   M a e   A n n u a l   R e p o r t   2 0 0 1