•   By all mortgage-backed securities settling and trading on the same depository, economies of scale should be realized in the form of lower transaction costs. •   Investors of Ginnie Mae serial note securities will have greater flexibility in that they will have the option to either hold the serial note security at the pool level or break out the pool into individual serial note units of $25,000 for repo transactions or trading purposes. Targeted Lending Initiative Ginnie Mae’s Targeted Lending Initiative (TLI) was implemented in 1996 to help raise homeownership levels in central city areas, including Rural Empowerment Zones and Rural Enterprise Communities.  Since that time, the Initiative has been expanded to include Indian lands, new Urban Empower- ment Zones, and new Urban Enterprise Communities.  Through the TLI, Ginnie Mae has helped 278,784 families buy homes in underserved areas.  A listing of the targeted areas and the census tracts may be accessed on Ginnie Mae’s web site, at www.ginniemae.gov. This program provides financial incentives for lenders to increase loan volumes in tradition- ally underserved areas.  By increasing lender activity in these targeted areas, Ginnie Mae provides underserved families and households with increased opportunities to achieve home- ownership. In five years of operation (October 1, 1996 - September 30, 2001), the Targeted Lending Initiative has issued $22.3 billion in securities, representing 228,512 loans in 10,835 pools. Under the Initiative, Ginnie Mae reduces its guaranty fee by up to 50 percent when approved issuers originate (or purchase) eligible home mortgage loans in designated communities and place them in Ginnie Mae pools.  The Ginnie Mae guaranty fee may be reduced by 1 to 3 basis points on a pool, depending on the percentage of unpaid prin- cipal balance of eligible FHA-insured and VA-guaranteed loans in the pool.  Issuers may combine these newly eligible loans with other targeted lending single family loans, other than manufactured housing loans, to meet the previously established targeted lend- ing thresholds. All Ginnie Mae single family issuers may par- ticipate in the Initiative.  Once a Ginnie Mae issuer has originated or purchased eligible loans, the issuer merely submits the pool package through Ginnie Mae’s GinnieNET delivery system.  Issuers will receive a confir- mation from Ginnie Mae of their reduced guarantee fee, as applicable. Leveraging Cross-cutting Initiatives Ginnie Mae’s mission of helping low- and moderate-income Americans gain access to home mortgages is just part of HUD’s - and the federal government’s - effort to improve housing and economic development in the United States.  Ginnie Mae is committed to working with HUD, with other federal enti- ties, and with other public and private sector organizations to leverage cross-cutting pro- grams and objectives in support of better housing and economic development. Native American Home Loan Guarantee Program HUD’s Native American Home Loan Guarantee program (Section 184), adminis- tered by the Office of Public and Indian Housing, provides Native Americans with an effective vehicle for obtaining mortgage financing.  This program offers a 100 percent federal loan guarantee to lenders, which Ginnie Mae supports by providing for the eli- gibility of Section 184 loans for pooling into single family Ginnie Mae I and Ginnie Mae II pools.  Section 184 loans must be processed through GinnieNET and guaranteed by the Office of Public and Indian Housing. Section 184 loans offer the mortgage commu- nity (lenders and issuers) a secure means to establish solid relationships with underserved 15 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