Results of Operations
Ginnie Mae believes that the following discus-
sion will provide the reader with information
that is relevant to an assessment and under-
standing of Ginnie Maes financial condition
and of the results of operations. The discus-
sion should be read in conjunction with the
financial statements and notes thereto. Ginnie
Maes operating results are subject to fluctua-
tion each year depending on the frequency
and severity of losses resulting from general
economic conditions, mortgage market
conditions, and terminating issuers.
MBS Program Income
MBS program income includes Guaranty
Fees, New Issuer Fees, Commitment Fees,
Handling Fees, and Transfer of Servicing Fees.
Guaranty Fees and Commitment Fees com-
prise approximately 95 percent of total MBS
program revenues. Guaranty Fees represent
income streams earned by providing Ginnie
Maes guaranty of the full faith and credit of
the United States Government to MBS issuers.
These income streams are recognized over the
life of the outstanding mortgage-backed secu-
rities. Commitment Fees represent income
that Ginnie Mae earns for providing approved
issuers with authority to pool mortgages into
Ginnie Mae mortgage-backed securities.
Commitment Fees increased 94.7 percent
from $16.9 million in Fiscal Year 2000 to
$32.9 million in Fiscal Year 2001. This in-
crease resulted from a surge in MBS issuance
activity. New commitments issued by Ginnie
Mae amounted to $161.7 billion during Fiscal
Year 2001, an 84.8 percent increase from Fiscal
Year 2000.
Steady growth in the MBS portfolio was
responsible for the increase in MBS program
income. MBS Guaranty Fees increased 3.4
percent to $382.9 million in Fiscal Year 2001
from $370.3 million in Fiscal Year 2000. The
Guaranty Fees are collected on the aggregate
principal balance of the guaranteed securities
outstanding of the non-defaulted issuer
portfolio.
The following chart represents the remaining
principal balance outstanding of the MBS
portfolio as of September 30, 2001:
Remaining Principal Balance
Outstanding of the MBS Portfolio
Fiscal Year
Dollars in Millions
1997
$530,553
1998
$542,207
1999
$569,650
2000
$603,471
2001
$604,309
Interest Income
Ginnie Mae funds its investment portfolio
through its excess revenues over expenses.
As a result, the corresponding interest income
has steadily increased over the past five years.
For Fiscal Year 2001, interest income increased
3.5 percent to $430.3 million from $415.8
million in Fiscal Year 2000. This increase is
directly related to Ginnie Maes investment
strategy and the success of its increasing
investment portfolio. Ginnie Mae invests the
excess of its accumulated revenues over
expenses only in U.S. Government securities,
as mandated by the U.S. Treasury. However,
the interest rate of return has continually
decreased and, therefore, the revenue generat-
ed as a percentage of income continues to
decline.
Multiclass Revenues and Miscellaneous
Income
Multiclass revenue is part of the MBS pro-
gram revenues and is composed of REMIC
and Platinum program fees. Miscellaneous
income, also a component of the MBS pro-
gram revenues, is earned from the Ginnie
Mae II portfolio. The Multiclass revenue bal-
ance fluctuates based on market conditions
and issuance activity. Ginnie Mae issued
19
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