High-level Government National Mortgage Association officials say their long-awaited Real Estate Mortgage Investment Conduits will be available to investors by Jan. 1.
Remics have been enormously successful with secondary market investors -- Fannie Mae and Freddie Mac reported in excess of $300 billion and $475 billion, respectively, in 1992 outstanding volume. And Ginnie Mae, with its explicit federal government backing, figures it will have a competitive edge.
"It's a program that will have tremendous attractiveness to investors," Ginnie Mae acting President Robert Kalish told The Mortgage Marketplace in an interview last week. "Particularly conservative investors who lay great weight on the full faith and credit of the government. This will be the only Remic on the street backed by an explicit guaranty by the United States -- Fannie and Freddie have implicit guaranties."
The Clinton administration's budget proposals called for Ginnie Mae to issue $50 billion worth of Remics in the fiscal year starting Oct. 1, earning $146 million for the agency the first year and $730 Million over five fiscal years. Some experts doubt Ginnie Mae could generate enough business to raise so much money, noting that the agency issued only $49.1 billion in plain vanilla mortgage-backeds in the first half of this year. But Kalish said Ginnie Mae would reach its target.
"I certainly would hope we could commence ... sometime during the first quarter of the fiscal year, which would be by Jan. 1 -- it could be earlier," he said.
Other specifics of the program, such as tranche ranges and fees, weren't available. However, sources close to the agency said Remic fees are likely to be higher than its regular mortgage-backed securities fees.
To bolster the program, increased staffing has been written into the Clinton administration's 1994 budget, and Kalish said the Ginnie Mae provision is supported by both Houses. He also noted that after the administration announced its support for the instrument, Department of Housing and Urban Development Secretary Henry Cisneros called for immediate program development.
"The 1994 budget authorizes an additional four positions -- three directly related to Remics," Kalish said. "The fourth is a contracting position. And, in my view, the person who fills that position will spend 90% of his or her time on the Remic program."
While staffing the Remics program is a priority, other areas within Ginnie Mae will have to wait. The organization was assailed in a recent Government Accounting Office report for staffing shortages, but Kalish contends that, as part of HUD, Ginnie Mae staffing must increase proportionally with the rest of the department.
Another staffing problem facing Ginnie Mae is the lack of a president. The organization has been running without a chief executive since former President Raoul L. Carroll stepped down Dec. 1. Industry sources claim a high-level Freddie Mac official is headed for the post and, although Kalish confirmed he had heard the rumor, he declined to comment.