Things are going well for Ginnie Mae [1]. On Wednesday, the Urban Institute [2] (UI) issued a report [3] finding that, based on the latest numbers, Ginnie's book of business is now at $1.5 trillion—a rate of growth that has tripled over the last seven years.
What this means is that at its current rate of growth, Ginnie Mae will soon surpass Freddie Mac as the silver medalist in the single-family mortgage securitization platform game, behind Fannie Mae [4].
Not being a GSE (Ginnie deals only in government-backed loans) has, according to UI, been a key factor in stabilizing the post-recession market. In the recession's wake, the share of loans insured by the government increased rapidly. Accordingly, Ginnie's single-family securitization sector (its largest) grew at a much faster pace than the GSEs.
If Ginnie keeps growing at its current pace, it will overtake Freddie Mac within a year as the second largest single-family securitization platform, the report stated.
UI's cheerleading of Ginnie's growth goes beyond the raw numbers. Today's private label securitization market, after all, is a shadow of its former self. Bank portfolio holdings are a smaller share of total originations than even before the recession, UI reported. Into the void stepped the federal government to pick up most of the difference through explicit government insurance and guarantees through FHA [5], VA [6], and the Rural Housing Service [7]. FHA has been the main source of mortgage loans for borrowers with shaky credit, and the number of those with credit issues soared as the recession lingered.
Without Ginnie and its full-faith and credit guarantee, UI reported, "the government insurance programs could not have played such a critical counter-cyclical role and the downturn in home prices would have been much more severe." UI credits Ginnie with luring investors, foreign and domestic, to take the chance of buying properties when times were at their worst.
"Ginnie Mae may be the GSEs' less famous cousin," the report concluded, "but its tremendous value cannot be disputed."
The sentiments are not mere PR and not at all new. Back in 2009, when the recession was burrowing deeper, the Wall Street Journal predicted [8] that FHA and Ginnie would overtake the GSEs. The Journal's growth predictions, it turned out, were incredibly accurate as well. As for when Ginnie will surpass Fannie, no one is yet sure. But it no longer seems out of the question to think it will happen before too long.