In February, Cleary Gottlieb closed 21 Freddie Mac, Fannie Mae and Ginnie Mae REMIC transactions, aggregating more than $15 billion of mortgage-backed securities. The firm represented the underwriters, including Barclays, Citigroup, Countrywide, Goldman, Greenwich, JP Morgan Chase, Lehman, Morgan Stanley, UBS and Nomura.
These “agency REMIC” transactions involve the issuance of mortgage-backed securities, guaranteed by Freddie Mac, Fannie Mae or Ginnie Mae. Ginnie Mae is an association wholly owned by the U.S. government. Freddie Mac and Fannie Mae are government-sponsored, publicly owned companies. In each transaction, the underlying assets were residential mortgage loans.
Cleary Gottlieb pioneered this type of mortgage securitization, originally known as a CMO (collateralized mortgage obligation), in 1983. REMICs now account for roughly one-third of the total debt issuances on Wall Street. Economists estimate that the existence of this type of transaction has reduced prevailing mortgage rates in the United States by about ½ of 1% per annum during the 20 years since the CMO was introduced.