Ginnie Mae extended the announcement date for the selection of a financial adviser for the Ginnie Mae Remic program to nearly three weeks later than originally planned, but despite the delay mortgage industry sources don't believe it means a slower than expected start for the much-awaited program.
The more than 300 in attendance at the Public Securities Association's operations conference in New York Nov. 5 were informed that the selection due date had been extended to Nov. 23 and, although HUD would not disclose who or how many parties had applied for the positions, the delay may indicate Ginnie is sorting through a larger-than-expected applicant turnout, said one mortgage industry source.
However, a large turnout may not have come as a surprise. When Ginnie Mae conducted a pre-proposal conference Sept. 30, it was well-attended, the source said. That gathering allowed Ginnie to field questions from a number of interested parties regarding the request for proposal.
In the RFP, Ginnie told the prospective financial advisers that in the program's initial stage, two or more teams of sponsors, trustees, trust counsel and accounting firms would be selected to do the first several Remics. It also said it may complete the first deal as early as 45 to 60 days after the contract is awarded.
Although no adviser has been hired. Ginnie Mae has been working on the program. One marketplace source said that coupled with the work Ginnie has already accomplished - as well as the submitted RFPs that may have completed a substantial amount of the work involved - a January takeoff may not be unrealistic.
The Ginnie Remic program was spotlighted during a general session at the PSA's New York conference Nov. 4, and a number of specific points regarding the development of the program that will be greatly influenced by the financial adviser were brought up.
During his presentation, Frederick Khedori, senior managing director of Bear Stearns & Co., speculated about some specifics of the program and how Ginnie might deal with them.
"Fannie and Freddie ... actively discourage some instruments like Jump Zs [an accrual class of CMO or Remic that changes priority with other classes if a triggering event occurs, such as a specified prepayment or interest rate] because they're concerned about quality," he said. "Ginnie may have to do the same."
Khedori also said that how guaranty fees will be established wouldn't be easy to answer and that a uniform set of guidelines with a predetermined fee schedule may need to be established to help avoid pricing conflicts. "If dealer A is charged three-thirty-seconds and dealer B is charged two-thirty-seconds, someone is going to ask why," he said.
"But the nice thing about it is not having to be the first," Khedori said. "Fannie and Freddie have already established the market."
Other questions brought up included how the financial adviser would determine the eligibility of pools of seasoned loans of which there are now 260,000 pools with $435 billion in amortized value, according to Larry Galloway, senior vice president of the Participants Trust Corp. He said the financial adviser would also need to determine Remic payment dates and the use of electronic data transfer systems to help speed the process to Wall Street.
The program has evolved without soon-to-be-approved leader Dwight Robinson, a driving force behind many of Freddie Mac's affordable housing programs. Robinson addressed the House Banking Committee during nomination hearings Nov. 9 and committee Chairman Sen. Don Reigle Jr., D-Mich., left little doubt that he would assume the post when the House votes on the nomination between Nov. 15 and 19.
Robinson said he expected the Remic program to begin in the second fiscal quarter and reaffirmed Ginnie's intention to meet the goals set by the Clinton administration.