Pressure is mounting on the Clinton administration and the Department of Housing and Urban Development to revitalize the Government National Mortgage Association so it can reduce its exposure to losses and develop new products.

The latest pressure comes from the General Accounting Office, which says Ginnie Mae must increase its staff so it can better monitor its issuers and expand its product offerings. The report also warned that Ginnie Mae's role in the marketplace could be affected by the staffing problems.

The GAO report is expected to spur the Clinton administration and HUD to finally name a new Ginnie Mae president; the agency has been without a chief executive for several months. But the report is not entirely negative. It praises Ginnie Mae for improving oversight of its MBS programs and disposing of assets acquired from issuers who default.

It should also have added clout because the GAO asks Congress to prod HUD to comply with the requests for adding staffing. including, if necessary, directing HUD to "provide Ginnie Mae with the necessary staff without regard to HUD's personnel budget."

The GAO request will have added power because the budget reconcillation package now being considered by Congress calls for Ginnie Mae to gain more than $700 million in new revenue over the next five years by issuing Real Estate Mortgage Investment Conduits.

The administration's budget proposal, issued in February, called for a more modest $240 minion revenue gain over five years through issuance of Remics, a product Ginnie Mae has been hesitant about getting involved with because of its small staff and because it will require some statutory changes.

The budget plan called for adding three staff members to Ginnie Mae and the statutory changes required to facilitate issuance of Remics were submitted to Congress in early June by the Office of Management and Budget after being prepared by HUD's legal staff. But the GAO proposal clearly implies that subtantive staffing of qualified analysis and other professionals far beyond that level are required.

Remics are expected to win broad acceptance in the growing secondary mortgage marketplace and bring new players into the market because they are insured products with appeal to a more conservative segment of the marketplace comfortable with their explicit government guarantee.

Remics issued by Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. have increased interest and volume in the mortgage secondary market, but these products carry only an implicit government guarantee.

In a report released last week, the congressional watchdog agency said Ginnie Mae management has been trying to respond to calls in 1989 for better oversight of its issuers by hiring contractors to undertake this task.

But now, the report said, Ginnie Mae managers "have not been able to adequately monitor their contractors' activities and have been unable to respond to changing market conditions by creating new products that could provide lower financing costs for Federal Housing Administration [Department of Veterans Affairs] home buyers."

The report noted that HUD had requested three additional staff members for Ginnie Mae in its budget request for the coming fiscal year, but said that Ginnie Mae had not asked for "additional staff to address management problems related to insufficient staff."

GAO said that Ginnie Mae "must have the core capability - a sufficient number of trained and experienced staff - to properly manage and be accountable for its work."

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