Not-so-old remic's new look; Ginnie Mae plans ARM, strip products to spur interest.

The Department of Housing and Urban Developments Ginnie Mae Remic program is off to a rocky start even as the agency tries to put the best light on its efforts.

In comments at the Savings & Community Bankers of Americas annual convention in Orlando, Fla., Dwight P. Robinson, president of Ginnie Mae, said the agency completed eight to 10 deals valued at $8 billion in the fiscal year that ended Sept. 30, far short of expectations and projections. He also said Ginnie had twice reduced its fees in an apparent reflection of chilly market reception for the new product.

Robinson said Congress and HUD had projected $70 million to $140 million in fees would be generated during last fiscal year through the new Ginnie Mae program. He said revenue from the project didnt hit $70 million but would not give the actual figure. He projects that the program will generate $130 million in fees in the current fiscal year, which started Oct. 1.

Ginnie Mae has hired only four people to deal with the new product, and the offerings so far have been plain vanilla products. Robinson said that the agency will soon introduce a Ginnie Mae II program to complete the Ginnie Mae I program. The terminology deals with the type of loan involved in the security. Ginnie Mae Is are 30-year, fixed MBS, and the II program involves adjustable-rate mortgages.

Robinson said Ginnie Mae next plans to introduce exotic tranches in its products, for example, MBS with interest-only and principal-only strips. It also plans to introduce a mega or giant product. That is market terminology for taking the MBS instruments of small originators and packaging them into one Remic.

Congress has high hopes for the Ginnie Mae program, whose revenues are reflected in the federal budget. There had been a high demand for several years for Ginnie Mae to launch the program, but only a mandate from Congress in 1993under pressure to find revenues without bruising a constituencyforced HUD to act. The theory was that the market would clamor for a product that carried the full faith and credit of the government behind it and not the implied guarantee of Fannie Mae and Freddie Mac products.

But the dismal market for mortgage-backed securities as interest rates rose hurt, Robinson said, as did the difficulty in getting an instrument quickly as the program was launched. He said pass-through time had been reduced to 16 days, but didnt say what it had been reduced from.

Robinson has also assumed another hat as acting deputy secretary of HUD, the No. 2 man to Secretary Henry Cis-neros, who is under great pressure be-cause of personal problems. Robinson came to HUD from Freddie Mac, where he served as director of the single-fam-ily, affordable housing initiatives de-partment.

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