Guarantees the timely payment of principal and interest as provided by the terms of the multiclass security.
Nature of Program
: The Ginnie Mae Multiclass Securities program increases the liquidity of Ginnie Mae MBS and attracts new sources of capital for federally-insured or guaranteed loans.
: Real Estate Mortgage Investment Conduits (REMICs) direct principal and interest payments from underlying mortgage-backed securities to classes with different principal balances, interest rates, average lives, prepayment characteristics and final maturities. They allow investors with different investment horizons, risk-reward preferences and asset-liability management requirements to purchase MBS tailored to their needs.
Unlike traditional pass-throughs, the principal and interest payments in REMICs are not passed through to investors pro rata; instead, they are divided into varying payment streams to create classes with different expected maturities, different prices and interest rate sensitivities. The assets underlying REMIC securities can be either other MBS or whole mortgage loans.
: A Ginnie Mae Platinum security is formed by combining Ginnie Mae MBS pools that have uniform coupons and original terms to maturity into a single certificate. Investors owning smaller pools of Ginnie Mae MBS can combine new or existing MBS into larger Ginnie Mae Platinum pools. A Ginnie Mae Platinum security may be used in structured financings, repurchase transactions, and general trading.
Ginnie Mae Platinum pool processing costs for investors, for monthly principal and interest payments, are lower due to the fact that multiple MBS pools are combined into one larger pool. Ginnie Mae requires that the pool of Ginnie Mae MBS underlying a Ginnie Mae Platinum pool consists entirely of Ginnie Mae I MBS or entirely of fixed-rate Ginnie Mae II MBS. In both cases, the securities must have the same pool type, coupon rate and delivery eligibility. Both 30- year and 15-year Ginnie Mae MBS Certificates are eligible for Ginnie Mae Platinum pools. Ginnie Mae Platinum pools can be created from seasoned or current MBS production; depositors can contribute entire or partial pools of Ginnie Mae MBS certificates.
Ginnie Mae guarantees the timely payment of principal and interest on each Ginnie Mae Platinum pool. This guaranty is backed by the full faith and credit of the United States government. In exchange for Ginnie Mae's guaranty of the Ginnie Mae Platinum pool, a guaranty fee is charged.
: "Stripped" Mortgage-Backed Securities (SMBS) are created by stripping apart the principal and interest payments from the underlying mortgage-related collateral into two or more classes of securities. SMBS allow sophisticated investors to reduce or increase prepayment
risks by isolating and combining various interest only and principal only cash flow components.
Each Trust will be comprised primarily of:
- Fully modified pass-through mortgage-backed certificates as to which Ginnie Mae has guaranteed the timely payment of principal and interest pursuant to the Ginnie Mae I Program or the Ginnie Mae II Program,
- Certificates backed by Ginnie Mae MBS certificates as to which Ginnie Mae has guaranteed the timely payment of principal and interest pursuant to the Ginnie Mae Platinum Program,
- REMIC or comparable mortgage certificates, or
- Previously issued Ginnie Mae guaranteed SMBS, in each case, evidencing interests in Trusts consisting primarily of direct or indirect interests in Ginnie Mae Certificates, as further described in the related Offering Circular Supplement.
Each series will be issued in two or more classes. Each class of securities of a series will evidence an interest in future principal payments and/or an interest in future interest payments on the Trust assets included in the related Trust. The Trust created for each issue of SMBS will be classified as a Grantor Trust.
: Callable Securities are subject to redemption by the Holder of the Call Class Securities at the time or times specified in the related Callable Trust Agreement. Each Callable Series of Securities will consist of one or more paired Classes: a "Call Class" and a "Callable Class." The Securities will evidence interests in separate trusts (each, a "Callable Trust").
: Section 306(g) of the National Housing Act (12 U.S.C. 1721(g)) Regulations are at 24 CFR Part 330.
: Government National Mortgage Association (Ginnie Mae); Office of Capital Markets.
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