Anywhere. Cspan is your unfiltered view of governmt, funded by these telogen companies and more, including comcast. You think this is just a Community Center . No, it is more. Comcast is partnering with 1000 committees centers so students from low income families can get the tools they need to be ready for anything. Comcast supports cspan as a Public Service along with these other television providers, giving you a front row seat to democracy. And now jenny made president Alanna Mccargo talks about Housing Finance and expanding ownership opportunities. This is about 50 minutes. [captions Copyright National cable satellite corp. 2023] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] good morning everyone and welcome to the bipartisan policy center. We are privileged to have a guest with us today. Ginnie mae provides a Critical Role in the u. S. Housing finance system by providing a guarantee for 2. 4 trillion, that is trained with an t securities and mortgages ensured by the federal Housing Administration and the veterans administration, usdas Rural Housing service and huds indian homeland guarantee program. Ginnie mae helps connect investors from across the globe to the u. S. Housing market. Thisy of mortgage credits to millions of households served by federal housing programs. Our guest today is certainly no stranger to those in the housing field, where she has enjoyed a long and distinguished career. Alanna mccargo was sworn in as ginnie maes 18th president in 2021. Prior to joining the biden harris administration, she was Vice President of the Housing Finance policy center at the urban institute, where she helped advance the National Policy conversation around reducing racial homeownership and wealth gaps, and removing barriers to credit and capital. She also has held Important Roles in the private sector, with core logic and jpmorgan chase. From 20022012, she worked at fannie mae, focusing on Mortgage Market programs and policy. While there, she played a Critical Role executing on the housing and economic recovery act of 2008, including implementation of new programs and Mortgage Servicing reforms, foreclosing prevention and loss mitigation solutions. So again, thank you for joining us. Before we start our conversation, let me remind our virtual audience that if you have questions for our guest, you can post them to our twitter x account epc bipartisan. You can use the hashtag. We are welcome to submit questions in the youtube chat. He will save some time at the end to take questions from both our in person audience and our virtual audience. So, uh, before let me begin. Ginnie mae is one of the most important financial agencies in washington, but i think it is one of the least understood, so for those in the Virtual World and here in the room who might not be as familiar with the Critical Role of ginnie mae, can you start off by going through the Organizations Mission . Alanna sure. Well, first of all, thank you for having me. It is great to be at the bipartisan policy center. It has been a long time since i have been here. So i appreciate the invitation and the opportunity to talk about ginnie mae. It is true, very pres. Biden important to the Housing Finance system, not only in the u. S. About globally if our Investor Base given our Investor Base and not well known. I learned this when i was going through my confirmation process, i would tell people, President Biden has nominated need to be the president of the Government National mortgage association. And nobody knew what that was, except for those in the room and those close to housing, so it was really interesting and i have been spending my time explaining what we do and all the great work in Public Servants working in their careers at ginnie mae. We are a governmentowned corporation. That is unique. We are housed within that apartment of housing and urban development. We provide an explicit, full faith Credit Guarantee of the u. S. Government on our Mortgage Backed securities program. We basically guarantee timely payments to investors. Every single month, principal and interest on mortgage and securities collateralized by the government, so the federal Housing Administration, fha, da, usda v. A. , usda Rural Housing, and pih, are all government mortgage Lending Programs that provide access to credit to communities and people really underserved. A lot of low to moderate income, specialized populations. And so, we do singlefamily and multifamily collateralization. We back the Health Care Program at fha for the loans that are made. And to the loans that are made for hospitals and senior care facilities, something that is less known. And we back 100 of the multi Affordable Housing program out of fha, so there are a lot of good things to talk about as it relates to the role we play in making housing affordable and creating liquidity and access. Uh, through the process. We are also we have two critical stakeholders in the secondary market, issuers being one of them, banks, Financial Institutions that are doing mortgage lending, and also investors around the globe who are investing in ginnie mae mortgagebacked securities which enables us to put more money back in the system and allows lenders to make more loans to people and communities that need them. So really a Critical Role, that is the place where we play. Our issuers are a volunteer army. That is what we call them often because doing issuance is a different model than fannie mae and freddie mac, and we have a heavy reliance on those issuers. They are primarily, majority nonbanks today. That is different where we were 10 years ago where it was primarily banks, so the dynamics, the risk profile, everything in our business has changed fundamentally since the great financial crisis. So im looking forward to getting into that with you and talking about it. Dennis so, the lenders are insured by federal Government Agencies, are the lenders also the issuers of the securities . Alanna yes. The lenders are the issuers of securities for ginnie mae. Dennis ok. Alanna so, it is a very very different model than the gses. Dennis could you just sort of explain that a little bit . People are more familiar with fannie mae and freddie mac. Alanna yeah. Chris as opposed to ginnie mae. Alanna yeah. One of the biggest differences, fannie and freddie, they are involved in underwriting, creating of the policies underlying loans made in the margin market. They also have to issue and have a completely different business model. Ginnie mae, and they are also in a different credit most position than ginnie mae. Ginnie mae is, because of our issuer, and model, we are essentially in a fourth loss position, so that means we stand behind a number of counterparties before we take any losses. In the government, and we essentially do not create underwriting guidelines. We we securitize loans that are , made under the guidelines of the federal agencies that make mortgages. And so, we do not influence process. We work with those agencies closely to make sure we understand the guidelines and what is in the securities underlying those, and we obviously manage the risk of the counterparties, and those counterparties are the issuers. So again very different model , a that puts us in a better loss position than you might think which is why and i should have mentioned this at the top on august 1, ginnie mae celebrated its 55th birthday. Dennis umhmm. Alanna 55 years of grace work great work without interruption from the federal government. So, going from a 500 million enterprise to a 2. 5 trillion organization, the growth has been incredible. And the story of the 55 years has been transformative to see a federal Government Agency be able to sort of keep pace with all of the changes that have happened whether technologically or otherwise in our Housing Finance system in america, so it has played a really really crucial role in making sure access to credit and Affordable Housing has been made available to again, low to moderate income famines, veterans, seniors. Income families, veterans and seniors. Dennis you mentioned that. I worked on the epc Housing Mission report. A key part of our report was envisioning a new house and finance system for the u. S. In the wake of the 2008 financial crisis. And we were attracted by the fourth loss model of ginnie mae. So, so you have been president for almost two years, approaching two years. Give us your top priorities. Alanna sure. I mean, it has been an interesting time, as you can all imagine and as you are all experiencing yourselves in the Housing Market these last two years. Coming out of the pandemic, we started there. We did a lot of work focused on how we in the secondary market could support the programs that the agencies were putting in place around loss mitigation. Um, so we did some things, some Creative Things in the secondary market, for example, creating a 40year security program. We did a repooling program. That enabled billions of dollars of modified loans to be able to be resecuritized. We have done a lot of development, that is where we started. When we got here, the pandemic was very much real a real driver of what was happening. And we were seeing in the government sector the largest number of defaults on mortgages underlying, so there was a lot of support and liquidity our issuers needed through that period, so we did focus there. We have been really our Risk Management program has been the number one thing that we think about every sickle day, as who our issuers are, are they financially in good health . As i mentioned at the top, we have really seen a transformation of the underlying issuer base. Dennis yeah. Alanna that supports us. So the independent mortgage bankers, nonbanks has really stepped up since the crisis and has done the majority of government lending and disproportionately serving those that we are here to serve. So that has been, in our minds, that is a huge shift from pre2008 and postpandemic, we have a whole new landscape we are supporting that is supporting this part of the Housing Market. We are just doing everything we can to stay on top of, collect data, watching the factors that we watch every single day, payments, defaults, in the sector rework income so that has been a top priority, including the announcements about the eligibility requirement changes we did with fha and director thompson. We partnered to make sure we could be consistent and aligned on that because it is such an important part of the underpinning of the Housing Finance system. So those are some of the things. We have work going on to try to expand access to the platform. Um, this is not a way we would have talked about ginnie mae, but ginnie mae has the power to really create and enable scale. And there are a lot of small Financial Institutions, credit unions, even the Housing Finance agencies at the state level that do not have access to us because our eligibility requirements require huge volumes to be able to participate and be an issuer. So we are doing some work with federal home loan banks and others to figure out ways to aggregate, to get communitybased lenders and others through our task force access to the platform. As you know, dennis, and as everybody here knows, one of the first things President Biden did when he came into office was put out an executive order about equity. Um, it focused on equity in housing. It challenged every single agency. Secretary fudge look across all of hud and all agency heads slipped across their businesses. We were charged to look at how ginnie mae can be a bigger player in making access to financing more equitable. Um, and we think there is an Important Role that we could play there. In order to do that, not only do we need to be helping and serving who we serve today through the system, but we need to make our platform more accessible to smaller players and others doing that mending in the community that we care so deeply about. So, so that has been a huge focus for us. Dennis well, let me you mentioned nonbanks becoming much larger segment of lenders in the fha program. Alanna yep. Dennis that you backstop. What in particular nonbanks as i understand it do not have access to the feds discount window. When there is a problem, they do not have a Customer Base to tap into if there is a problem. What are the unique concerns that . Alanna yeah, what youre talking about is real. It was a dynamic at the beginning of the pandemic that everybody was fearful about, which was what is the liquidity that will help there was a real concern that like, things would stop at the beginning. You remember this, the beginning of march 2020, whoa, were going to have a serious issue here. We were saved thankfully, the nonbank issuers and others were able to maintain and grow because of the refinancing and low we were in a low Interest Rate environment. There was a ton of business still happening. That kept folks going. They did not need it. But at the time we did put the Assistance Program in place, a liquidity support. But it is not perfect. It doesnt help in all ways. It had a lot of limitations. There are a lot of people asking for the government to figure out ways for the nonbanks to tap into the liquidity that are available to the quiddity sector. That did not get where it needed to get. I would just say this nonbank , liquidity is sort of the biggest challenge of our time, especially now, because we are not in a 2 , 3 Interest Rate environment. The cost for them to borrow, the cost of credit, the lack of you know, just being in a purchase market with refinances is a huge huge stress on the system. So we are thinking about this every day, working with our partners at treasury and elsewhere to figure out how we could support, um, how what ways the government could support in the future a more robust facility for the nonbanking sector. We have not figured it all out yet. But a huge i believe, speaking for myself, one of the biggest needs, we do not need to enter another crisis of any kind and not have, not know how we are going to support these institutions. They are incredibly important to the system and to the constituents we all serve. So, you know, their failure is is a major, major problem for all of us. So i think we just have to figure out what that is going to look like, and that is been some of the work we have been very focused on with our colleagues. Dennis right. Thank you for that. You alluded to President Bidens executive order on equity. Alanna umhmm. Dennis i know that the National Housing conference, with numerous organizations are trying to increase the number of black homeowners by 2030. What world do you see ginnie mae playing and closing the racial homeownership gap . It is important because we build wealth in this country primarily through homeownership, so closing the racial homeownership gap is important, soak could you elaborate more on how ginnie mae so could you elaborate more on how ginnie mae is playing into that . Alanna this work on closing ritual homeownership gap has been my careers work. I thank President Biden for being thoughtful. It was a day one thing, that is not typical. Support for underserved communities throughout the federal government. I feel like, it empowered all of us to think deeply about how the mechanisms, the agencies that we support and that we are accountable for, can be a part of that. And it made us think outside the box quite a bit. And in the conversations we would have with partners, lending institutions, banks, nonbanks, it is they are now as a thing for us to continue to think about. And i think that is really important. It should always be, because we do not have the Playing Field has not been leveled, we have a lot of work to do to try to close the major gaps that persist in our country. I think there is, you know, the racial homeownership gap has grown, the pandemic was there was a boost, a lot of homeownership created throughout the pandemic, which is a great thing. Uh, and now, we are in a position or situation where home prices are very very high, Interest Rates are very high, and to the ability to afford anything in terms of Monthly Payment is very hard. Especially for firsttime homebuyers, which ginnie mae supports the majority of firsttime homebuyers through the federal housing programs. So, it is, it is important to me that we continue, and the work we are doing to try to expand access to the ginnie mae platform. I am a believer, and i say this, and many in this room have heard me say before, in or