Ginnie Mae CEO Resigns After 1 Year on Job

Oh this is getting rich.... smart man, Mr. Murin. We just noted Wednesday how the next massive bailout will be FHA / Ginnie Mae as supported by an excellent editorial in the Wall Street Journal [WSJ - The Next Fannie Mae: FHA / Ginnie Mae] Mr. Murin is obviously no dummy and sees what is coming down the pike, and I'd be doing the exact same thing. Who wants to be sitting there in front of Congress trying to explain why things Congress is PUSHING for led to a massive default in his agency. Just file this news item in the back of your mind as we hit circa 2012 so we can look back and say together "who could ever have guessed how things would turn out?"....

Via Bloomberg

• Joseph Murin, the president of government-run mortgage bond insurer Ginnie Mae, will step down tomorrow after about 13 months on the job, according to two people familiar with his plans. Murin, who joined Ginnie Mae on July 1, 2008, plans to pursue private business opportunities, according to the people, who asked not to be named because an announcement has yet to be made.
  
• His resignation would be the third departure this year of the top executive for the main companies responsible for the majority of U.S. mortgage financing.
• Ginnie Mae, long overshadowed by government-sponsored enterprises Fannie Mae and Freddie Mac, has seen its business almost double in the past two years as a lack of financing options pushes borrowers into government loan programs.
  
• The new business has brought more risk because Federal Housing Administration loans, the main collateral for Ginnie Mae securities, have lower credit-score and down-payment requirements than private-label loans.

We're not the only one who is telling you way ahead of time of this implosion. So when your Congress people tell you in a few years "no one could see it coming" make sure to vote for someone who is not an incumbent.

• “Many if not most of the new Ginnie Mae loans are very likely to default,” said Julian Mann, who helps manage $5.5 billion in fixed income securities at First Pacific Advisors LLC in Los Angeles. “You have to be out of your mind to be at the top of one of these GSEs now. Who in their right mind would wants to be in the position of managing these toxic assets?”

Basically FHA is now a slush fund for the same type of mortgage loans that got us here in the first place. We do not learn - hence we deserve our fate. No one wants to call their local representative on the carpet for their behavior, so we'll just pony up more dough as subsidization for the "new ownership class" (many of which will be back renting in 3 years after defaulting)

• The agency, which issues the only mortgage bonds to carry the “full faith and credit” of the U.S. government, packaged a record $43.5 billion in federally backed loans into securities in June. The agency’s mortgage bond volume almost doubled in the first half of this year, to $207 billion from $107 billion during the same timeframe a year ago, as the mortgage markets seized and borrowers turned to federally supported mortgage financing.
• FHA mortgages represent about half of new loans for home purchases, up from about 10 percent at the start of last year

Easy as that - 1 in 2 mortgages are now being funneled through the easiest agency to get a loan. And with the cost of living adjustments Congress passed in 2008 to get as many people as possible under government mortgages FHA loans as high as $700Ks are now being placed in states like California.

Overlay that with FHA's original purpose of providing home loans for low income borrowers with blemished credit. Now it's just a whirlpool for everyone - including people who can afford $700K homes.

Start shaking down your kids and grandkids for their share of the bailout...