Ginnie Mae says it completed a record 65 Platinum mortgage-backed securities transactions in March 2021, far exceeding the typical 19 to 22 Platinum transactions seen monthly. Those 65 MBS deals represented approximately $5.6 billion of business.
“March demonstrates the success of our Platinum automation and expansion of the Platinum product suite and user base,” says Richard Perrelli, Ginnie Mae product manager for multiclass securities.
Platinum demand was additionally driven by the effect near-record-low interest rates had on MBS prepayment activity, which shrank the outstanding size of many Ginnie Mae MBS pools, the company says. Smaller pools are, all else equal, more expensive and time-consuming to administer. By combining smaller MBS securities into Platinum securities, investors increase operational efficiency and reduce costs.
Platinum securities can be constructed from fixed-rate underlying Ginnie Mae securities that have uniform coupons and original terms to maturity. Platinum securities can also be constructed from Ginnie Mae adjustable-rate mortgage (ARM) securities through the weighted average coupon (WAC) ARM program.
A Ginnie Mae Platinum security may be used in structured financings, repurchase transactions, and general trading.
Photo by Giorgio Trovato (@giorgiotrovato)