Ginnie Mae enhances its risk management strategyMortgagePress.comGinnie Mae, risk management strategy
The Government National Mortgage Association (Ginnie Mae) has
announced recent enhancements to its risk management strategy. The
organization announced a multi-faceted approach in establishing a
risk committee, appointing a chief risk officer and reconstituting
its issuer review board to ensure its securities continue to remain
safe and stable. "Enhancing our risk management process is an
enterprise-wide endeavor," said Joseph J. Murin, president of
Ginnie Mae. "This is a very turbulent time for the mortgage
industry. While our business model significantly limits risk, the
current environment and our rapid growth has presented a different
set of challenges than we have ever faced before. We have to take a
long, hard look at our strategy to ensure we continue on the right
path."
Given the challenging state of the mortgage industry, Ginnie
Mae's explicit full faith and credit backing of the U.S. government
has increased the number of lenders turning to the organization for
safe harbor. In fact, the volume of Ginnie Mae's monthly
mortgage-backed securities (MBS) issuance hit $27 billion in June
and $26 billion in July, more than triple what it had been for the
same two months in 2007.
The enhancements announced today will help Ginnie Mae keep
abreast of the financial condition and program compliance of its
issuers, thus minimizing risk to the corporation. The risk
committee will promote an enterprise-wide approach to risk
management. Working with the risk committee, the chief risk officer
is responsible for establishing a risk governance structure and
providing independent evaluation and oversight of risk management
activities. The issuer review board is responsible for evaluating
and overseeing issuer activities and compliance.
A key element to Ginnie Mae's enhanced risk management strategy
is the appointment of Stephen L. Ledbetter as chief risk officer.
Ledbetter, who brings 20 years of financial management experience,
will continue serving as acting vice president of the Office of
Mortgage-Backed Securities in addition to this appointment.
Ginnie Mae MBS are backed by government-insured or -guaranteed
loans and the corporation does not buy or sell loans, or maintain a
portfolio. This business model helps to limit risk. If an issuer
defaults on its principal and interest payment obligation to
investors and Ginnie Mae takes the issuer's portfolio, Ginnie Mae
is largely reimbursed as the new issuer of record - by the Federal
Housing Administration (FHA) or the U.S. Department of Veterans
Affairs (VA), for example - for losses resulting from borrowers who
default.
For more information, visit www.ginniemae.gov.
