Investors from across the globe to the u. S. Housing market. This promotes the availability of mortgage credit for the 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. Alayna mccarter was sworn in as the ginnie mae 18 president in december, 2021. Previously, she served as Senior Advisor for House Finance to hud secretary marcia fudge. 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 in removing barriers to credit and capital. She also has held Important Roles in the private sector in court logic at jpmorgan chase. From 2000 22012, she worked at fannie mae, focusing on secondary 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 to promote Mortgage Servicing reforms, foreclosure prevention and loss mitigation solutions. Again, thank you for joining us in before we start our conversation, let me remind our virtual audience that if you have questions for our guest, you can post them to eric twitterx account thatbpc bipartisan. You can use the bpclive on view can submit your questions and the youtube chat. We will say sometime at the end to take questions from our in person audience and our virtual audience. Let me just begin i think alayna, ginnie mae is certainly one of the most important financial agencies in washington but i think its also one of the least understood. For those in the Virtual World and here in the room, might not be as familiar with the Critical Role of ginnie mae, could you start off by briefly going through the Organizations Mission . Thank you for having me and its good to be at the bipartisan policy center. Its been a long time since i been here so i appreciate the invitation and the opportunity to talk about ginnie mae. It is true, very important to the Housing Finance system, not only in the u. S. But globally given our Investor Base and very not well known and i learned this when i was going through my confirmation process because i would tell people that President Biden has nominated me to be the president of the Government NationalMortgage Association and nobody knew what that was except for you guys in the room and those close to housing. It was really interesting. Ive been really spending my time explaining what we do and all the great work and great Public Service servants that are working in their careers at ginnie mae. We are a government owned corporation. Thats unique and we are housed within the department of housing and urban development. We provide explicit good faith and credit of the United States government on our mortgagebacked Security Program. We basically guarantee timely payments to investors. Every single month, principal and interest on mortgage are collateralized by the federal government. The federal housing administration, the v. A. And usda and Rural Housing and as you mentioned the indian Loan Guarantee programs are all mortgage Lending Programs that provide access to credit to communities and people really underserved, a lot with moderate incomes and specialized populations so we do singlefamily and multifamily and we back the Health Care Program at fha and for hospitals and senior care facilities and thats less known. We pretty much back 100 , almost 100 of the multifamily Affordable Housing program out of fha. There is 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 through the process. We are also we have really two critical stakeholders in the secondary market. Issuers are one of them which is banks and nonbanks, mortgage banks that are doing mortgage lending but also investors around the globe who are investing in ginnie mae mortgagebacked securities which enables us to pour money back into the system and allows lenders to make more loans. To people and communities that need them. Its really a Critical Role and thats the place where we play. Our issuers are a volunteer army. Doing issuance is a different model than fannie and freddie. We have a heavy reliance on those issuers which are primarily of nonbanks today. That was different than where we were 10 years ago where was primarily banks. The dynamics, the risk profile, everything in her business is really changed fundamentally since the great financial crisis. I look forward to getting into all of that with you and talking more about it. The lenders are insured by federal agencies are most of the times, the lenders the issuers of the securities . Yes, the lenders are the issuers of security for ginnie mae. Its a very different model than the gses. can you explain that a little bit . How people are more familiar with fannie mae and freddie mac as opposed to ginnie mae. One of the biggest differences, fannie and freddie are involved in the underwriting, in the creating of a policy underlying the loans that are made in the Mortgage Market. They also issue and have a different a completely different been this business model. There also in a different credit loss situation. Ginnie mae, because of our issuerbased model with every explicit guarantee, we are essentially in a position that means we stand behind a number of counterparties before we take any losses in the government. We essentially do not create underwriting guidelines. We secure loans that are made under the guidelines of federal agencies that make mortgages. We dont influence that process. We work with those agencies closely to make sure we understand the guidelines we understand whats in the securities underlying those. And then we obviously manage the risk of the counterparties and their counterparties are the issuers. Its a very different model that puts us in a better loss position than you might see. I should have mentioned this at the top on august 1, ginnie mae celebrated its 55th birthday. 55 years of great work without interruption on behalf of the federal government. Going from a 500 million enterprise to an almost 2. 5 trillion organization so the growth has been incredible. The story of the 55 years has been pretty transformative for a federal Government Agency to keep pace with all of the change that has happened whether its technologically or otherwise in our Housing Finance system in america. It has played a crucial role in making sure access to credit and Affordable Housing has been made available to low to moderate income families, our veterans, our seniors. I shouldve mentioned that at the top. You mentioned the fourth loss position and i worked on the bbc Housing Commission report and a key part of the report was envisioning a new Housing Finance system for the u. S. In the wake of the 2008 financial crisis. We were tracking the model of ginnie mae. Youve been president for almost two years, approaching two years. Give us your top priorities. Its been an interesting time as you can all imagine as you are all experiencing yourselves in the Housing Market these last two years. Coming out of the pandemic, we started their. We did a lot of work focused on how we in the secondary market could support the programs that are being put in place against loss mitigation. We did some Creative Things in the secondary market and created a fortyyear Security Program called extended term program. We did a repooling program and then enabled billions of dollars of modified loans to be able to be resecuritized and put back to the marketplace. Weve done a lot of development and thats where we started. When we got here, the pandemic was very much real was a real driver of what we were seeing and we saw in the government sector, the largest number of defaults in mortgages. There was a lot of support and liquidity that are is your is needed through thatperiod. We focus there and have been really, our Risk Management program was the number one thing that we think about every single day. Are the core issuers in good health . As i mentioned at the top, we have seen a transformation of the underlying issuer base that supports us. Independent Mortgage Bankers and 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. That has been on our minds and that is a huge shift from pre2008 and postpandemic. We have a whole new landscape that we are supporting, that is supporting this part of the Housing Market. We just are doing everything we can to stay on top of and collect data and understand whats happening, watching the various factors we watch every single day like prepayments and defaults because of the sector we operate in. Thats been a top priority for us including the recent announcement about eligibility requirement changes we did in conjunction with fha and director thompson. We partnered to make sure we are aligned with that because thats so important as an underpinning of the Housing Finance system. Those are some of the things. Weve got some work going on to try to expand access to the platform. This is not a way we had talked about or thought about ginnie mae but we have the power to create and enable scale. There is a lot of small Financial Institutions, credit unions, even the Housing Finance agencies at the state level that do net have access to is because our eligibility read armand require a huge volume to be able to participate and be in issuer. We are doing work with federal home loan banks and some others to figure out ways to maybe aggregate and get communitybased lenders to get access to the platform. As you know, one of the first things President Biden did when he came into office was he put out an executive order about equity. It focused a lot on equity in housing. It challenged every Single Agency and secretary futch looked across hud and the agency heads look across their businesses and we were charged to look at how ginnie mae can be a bigger player in making assets to financing more equitable. We think there is an Important Role that ginnie mae can play their. In order to do that, not only do we need to be helping and serving who we serve today but we need to make our platform more accessible to smaller players and others who were doing that lending in the community that we care so deeply about. Thats been a huge focus for us as well. You mentioned the nonbanks becoming a much larger segment of the lenders in the fha program. What particular nonbanks as i understand it dont have access to the fed window when there is a problem, they dont have a customer base, a deposit base to tap into if there is a financial problem. What are the unique concerns . You are talking about something that is real. The dynamic at the beginning of the pandemic that everybody was fearful about which is what is the liquidity that will there was a real concern that things would stop at the beginning. You remember this. In march of, 2020, we thought we would have a serious issue here. We were saved thankfully i would say the nonbank issuers and others were really able to maintain and even grow because of the refinancing and the low monetization we were in a low Interest Rate environment. That really kept folks going and afloat so they didnt need the facilities. At the time, ginnie mae put their program in place for liquidity. It is not perfect. It doesnt help and always. It had a lot of limitations. There were a lot of people at the time who were asking for the government to figure out ways for the nonbanks to tap into some of the other liquidity facilities available to the banking sector. That didnt get where it needed to get. Nonbank liquidity is sort of the biggest challenge of our time especially now. We are not in a two or 3 Interest Rate environment. The cost for them to borrow for the nonbanking system to borrow is higher and the lack of being in a purchase market with no refinances is a huge stress on the system. We are thinking about and focus on this every day and work with our partners at treasury and elsewhere to figure out how we can support what ways the government can support in the future a more robust facility for the nonbanking sector. We havent figured it all out yet but definitely, its a huge speaking for myself, probably one of the biggest needs we need to figure out. We dont need to enter another crisis downturn and not have not know how we will support these institutions. They are incredibly important to the system and this and the constituents we all serve. Their failure is a major would be a major problem for all of us. I think we have to figure out what that will look like and thats been some of the work we have been focused on with their colleagues. Thank you for that. You alluded to President Bidens executive order on equity. I know the National Housing conference with numerous organizations is trying to increase the number of black owners by 3 million by 2030. What world do you see ginnie mae playing in closing this gap . We build wealth in this country primarily through homeownership. Closing the racial homeownership gap is important. How does ginnie mae play into that . This work on closing racial homeownership gaps has been my career work. Ive been doing this work for a long time. I feel and i think and i thank President Biden for being thoughtful. It was a day one thing and thats not typical that you think about furthering and advancing Racial Equity and support for underserved communities throughout the federal government. I feel like that really empowered all of us to think deeply about how the mechanisms of agencies we support and accountable for can be a part of that. It made us think outside the box quite a bit. The conversations we would have with their partners, with lending institutions, banks and nonbanks, its sort of there now as a thing for us to continue to think about. I think thats important. It should always be because we do not have the Playing Field has not been leveled and we have a lot of work to do to try to close the major gaps that still persist in our country. The racial homeownership gap has grown. The pandemic, there was a boost, a lot of homeownership created throughout the pandemic which i think is a great thing. Now, we are in a position or situation where home prices are very high and Interest Rates are very high and the ability to afford anything in terms of Monthly Payments is very hard especially for firsttime homebuyers. Ginnie mae supports the majority of firsttime homebuyers through the federal housing programs. It is important to me that we continue as i mentioned, the work we are doing to try to expand access to the ginnie mae platform, i am a believer and i say this and have said it before that in order to really expand homeownership opportunities for black and brown communities and the like and low to moderate income communities, we have got to talk about government lending. That is where many firsttime homebuyers getting their first opportunity in homeownership, thats where they are getting their loans. Expanding, having more participants doing fha lending, doing v. A. Lending and usda rural lending, creating that scale, thats where we can make a difference. We have been focused on where we can play to create scale in the system really to help to close these gaps. That has been sort of a priority and and focus for us at ginnie mae every single day. Thank you for that. You think of ginnie mae as the demandside organization, promoting liquidity and access. I was surprised when i was reading the federal housing supply action from President Biden and a reference to ginnie mae where it includes a proposal to make the recently relaunched federal Financing Banks risksharing program which provides lowinterest loans to state and local Housing Finance agencies permanent and creating a Financing Mechanism through ginnie mae. Can you explain all that and how would it work and what is your role . In simple terms, there is currently a multifamily risksharing program that really provides gaps for multifamily development all over the country. It is run through the state Housing Finance agencies in connection with fha and the desk on the multifamily side. Its a terrific program and it supported by treasury and the federal Financing Bank. It was stood up i forget what year, in 2014 or Something Like that. It was a temporary program to help spur more development and support of financing in communities. It was shut down in the last administration so it was allowed to expire. That was a tremendous amount of financing to communities and states that was out of the picture for a little while. As soon as the biden administration, one of our first priorities was to get back up and running. The federal Financing Bank and treasury reinstituted the program which is currently in place but its temporary. We have been pushing at ginnie mae and got into the president s budget for 2024 creating a Permanent Program. We believe this is an important source of financing. Together, fha and jamaican work to create a program for these risksharing loans. The risksharing happens between the state Housing Finance agencies and fha. Its supported by the Financing Bank inside of treasury. We think there is a model that can be created and thats what we are pushing to get the funding and authorization to do from congress so we can play a Critical Role in a Permanent Program in the future. It doesnt mean thefsb program goes away but it means we can scale because fsb is limited to i think 19 states and maybe a few more. Its hard as a state if you think about it to make a commitment to a program like that and invest in operationalizing that when its temporary and it may go away again as measures change. I think thats unfair to ask states to do that and i think if we had a permanent solution and they can build their systems and infrastructure to support that, that would be a win win and its a great way to spur and support these great Affordable Housing developments that are happening on the multifamily sound side we need to see in our supply picture. We definitely need more affordable multifamily housing, also known as rental housing. When the ppc 10 years ago propose this new Housing Finance system would be based on the ginnie mae model, we got pushback from people and using the ginnie mae platform, using ginnie mae and expanding ginnie mae, people said ginnie mae has Outdated Technology and outdated processes. They have workforce issues. I know you are making increase investment in technology and modernization including a full moderation to the cloud. Dont ask me what that means but i understand thats what you are doing. Yes. I would say as federal agencies go, i think ginnie mae is the top of the house in terms of the platform that has been built to support the securitization engine, the partners we have a network is crucial. We run billions of dollars every single month in payments to investors without fail. Weve done that successfully forever. We have never missed a payment, weve never missed a meeting. The technology has been there to really support this. I think we are the leading edge and we certainly are in our migration to the cloud. That was a huge milestone for the agency. It enables us to be a lot more nimble. We were working with old symbols and antiquated systems. This transition of our applications enables us to work more efficiently with their issuers. It just speeds of time and helps us with visibility. One of the most important things we have done is improve the data that we have that is helping to enable our business. We have done a lot of work, not only moving to the cloud which is an enabling baseline, but we had worked to secure now all of the underlying data. I will say that i was shocked to learn i am a data person i come from a data background i was shocked to learn that ginnie mae did not have access to all of the federal agenciesunderlying data at the loan level. Interesting. Wouldnt it be great fha loans we dont have all the underlying data at our fingertips. All of that. We have mous and agreements in place with all the insuring agencies that we package. We now have that data and access and that enables a lot of analytics and tools and so many things we can do. Its a big part of the is g program and enables us to get investors and transparency in what is in the bonds and that has been important. I dont know weekly will talk about esg but if you want to talk about what were doing in that space but this data enablement and this Cloud Foundation is really advancing our ability to support our issuer base and be very transparent with our investors on whats happening. Thats why the technology is so crucial for us. Lets talk aboutesg which is environmental, social and governance factors which is a hot button issue in washington. Tell me what you are doing. This is work thats interesting. As i travel the world and talk to investors, they are demanding more information and they have mandates from their government or from their boards or whatever they may be, to do more work that is socially conscious, sustainable, supporting climate and the different environmental factors. They are looking at us and saying we do big investing in you, can you tell us what it is in these securities . Our ability to do that was required that we had heads arouw banks could get credits. So i believe a lot of banks do have reports that are coming out and programs so i think there is an opportunity to figure out a way to give banks credit for that, and we are hopeful again that we will see the rulemaking that is supposed to come out any day now. We are hopeful that credit for investment on the investment side will be part of that, because we think that is a great, great driver of more production that could be a really, really positive thing, and also keep banks involved, which banks have been involved, with transitions from a 9010 banknonbank to now completely flipped where nonbanks are dominant. But if we keep the incentives there on the investment side of banks participating in that program, it feels like a winwin and a great way to continue to keep the banks involved and engaged in a meaningful way. Its another idea. Many ideas were put on the table during the rulemaking and we are just interested to see where everything lands with that. Anybody else have a question here . Any questions from the virtual audience . Are there any updates on jenny mays efforts to reform the title i effort for personal property loans for manufactured homes . So there are updates. Last year or maybe earlier this year, im losing track of the years, for personal property loans, we are working sidebyside with them and we got a lot of feedback that was ginnie mae specific. Things that made it very difficult to prioritize these loans, and we have taken that to heart and are working on making pretty substantial upgrades and updates to how the manufactured housing title i program, how those will work in the future and open up opportunities for more issuance of that title collateral. And again, when you talk about affordable, collateral type that would benefit greatly from the ability to do more and scale, this is another sweet spot for us, so we are doing everything we can to try to really make the program more attractive. As i mentioned earlier, almost 99 of it ends up in ginnie mae security. That tells us that when new programs are put out, if we can make sure we prioritize them to put them back in the market, that is a good outcome and more of it will be done. This is another place where you will see some policy action from fha and ginnie mae in the future, the near future. Great. Any more questions from the virtual audience . We have another question, which is how can ginnie mae support Community Land trusts . Communities are adopting shared equity approaches to provide a step on the first rung of the housing ladder, but mortgage financing can be unavailable. Thats a good question. Its a great question. I know there are a lot of shared equity models that have been tested. I dont want to say controversy, but i know there are a lot of people thinking about the shared equity approaches. If youre trying to advance black homeownership, for example, why does a black homeowner have to share equity . People are trying to understand how these approaches benefit the borrower, and can we be equitable about how that works . I 100 agree, communities that are adopting shared equity approaches, we almost need them, especially with these really unaffordable prices where it is almost impossible to buy. I dont know if they make sense everywhere, but i definitely think in highcost markets it makes a lot of sense. And i would say getting on the first rung of the housing ladder, the role they can play in that is having banks and other Financial Institutions and nonbanks support fha lending and that kind of lending. So that mortgage financing would be available as long as we have participants in the communities that are working with the Community Land trust making those loans. This is where again, i think the work we are doing to expand Housing Finance agencies to the platform, doing more government lending, i feel like all of that works together to really enable this approach to work better. There could be special programs if ginnie mae could support those. That would be a way to get those types of initiatives off the ground. Great, anymore questions . Someone who knows what hes talking about. Its good to see a former leader of pnr and the current leader on the stage, i feel right at home. One thing you mentioned was kind of the differences between ginnie and the gse market. Last fall, fha announced they were undertaking a pretty large transition in credit score, including new models and the use of alternative Credit Scores as well. So far that has been kind of confined to the conventional market. Whenever these things come up, there is the question of what other Government Agencies going to do because obviously bifurcation between the Government Programs and the gf seek, that market kind of always raises interest and concerns from the industry and Market Participants as well. And so my question i guess, have there been thoughts of migrating the kind of credit score, current requirements on the government lending side, how does ginnie think about that . Would love your thoughts on that. Weve been really in a lot of dialogue with the insuring agencies. And with director thompson about what they are doing on the conventional side. Your point is a great one and an important one. Most people enter the government lending space through a platform. Most lenders put their information in on a borrower and it goes to engines and tells you what the products are and what is coming on the end of that. And if there are differences, they are usually the first place people look. That goes through down to government lending. If you cant easily flow down to the government Lending Program because you have a different construct than what the government is expecting, that is a problem. That is a barrier to access potential. That means you are slowing down. If you have only does coke Credit Scores in a different system or whatever in the government is not affecting that, youve got an issue. Weve just spent a lot of time talking about how we can get to the place that makes sense, which is that we have one way in which we look at things and that is a lot of work to determine how they want to, how they are going to, or what modifications they would add to make it so we could have one system that flows. The Government Agencies dont have underwriting engines. So that is the lens in which im looking at it from, making sure that weve got these insuring agencies at the table and that they are thinking about the implications and that they are going to make changes because it is really important, especially in this space. Im glad you raised that one. Theres other issues like that. Beyond credit scoring. But that has been a big one. And i know because ive talked about this, we are going to Work Together and work through this. Weve been collaborating really well, i feel like, with f hsa and that is important to me and to director thompson that we do that, and commissioner gordon at fha and others have been ready and willing to be at the table to talk through how we can do this so we dont disrupt or create barriers in the future. Thank you for that question and thank you for that answer. You had really a remarkable career in the private sector, and the nonprofit think tank world. Government service, now leading a major financial institution. It seems like the Common Thread is mission, Public Service. What pearls of wisdom would you convey to those young people out there who are looking for a career in Public Service the way you have . I encourage young people to get interested in the Mortgage Market because i think we need very talented young people to do this work. It is a massive industry and theres a lot of different opportunities at different points, and we have a lot of names. However, new appraisers, new folks getting into mortgage lending, folks getting into the federal government. Ginnie maes hiring, we do constantly look for new talent. We have been very successful. I should mention it is kind of one of those underpinning things that happens in the background. Weve been working really hard to expand the budget and resources, and fast. We have been both fully under resourced. If you look at our account to the size of the portfolio that is now under our control, not to mention along the way, sometimes institutions fail. And what that means is we have a portfolio, too. So we have a Balance Sheet and assets we are managing whether it is reverse mortgages or even forward mortgages from prior defaults. That is when we step in and we have to take on that operation. We become the issuer. Theres a lot of capacity we need to build so that we can do that very well. Doing that well matters to taxpayers and that is a big area that we are focusing on. Weve gotten a ton of support, and we have made some strides on increasing our budget. All that to say we are hiring, looking for talent. And i should say, the Public Servants that are working there who work very closely with a lot of contracts for supports that we have all of the industry, topnotch. We have such a Phenomenal Team of career Public Servants. Again, a little overworked at the moment, but so dedicated, looking to find ways to drive forward, ways to innovate. Even with our limited capacity at times. I just want to say a shout out to my team who are incredible. Everyone who has worked with them would agree. Many of them have been there for a long, long time. We would not be where we are without them. Unfortunately we are out of time resident mcarthur, i want to thank you very, very much for joining us here. I think this was a very insightful and informationrich conversation. Millie appreciate that. I also want to thank everyone who joined us today both here in person but also in the Virtual World. Have a great rest of the day, everyone. [applause]