Mortgage Scene: Should Fannie and Freddie Fear Ginnie Mae 'Choice' Proposal?(Brief Article)

Do Fannie Mae and Freddie Mac really have much to worry about if the recently-introduced Ginnie Mae "Choice" program becomes operative?

Ginnie Mae Choice would allow the government agency to securitize privately-insured mortgages for the first-time ever. In theory, Fannie and Freddie could lose business to Choice - but when you think about it, mortgage banking (and commerce, in general) isn't always about building a better mousetrap.

In fact, Choice may not be a better mousetrap at all. Mortgage banking (and commerce, in general) is as much sales and marketing as it is creating a great product. Is Choice really a great product? Since it exists only on paper, and in the minds of its private-sector backers, including GE Capital Mortgage Insurance, it's hard to tell.

A new product, such as Choice, needs to be marketed to the mortgage industry. Is Ginnie Mae, GECMS and the rest of the gang, up to the task? Do you see 'GNMA Choice' being actively marketed to mortgage lenders looking for "another" choice besides Fannie and Freddie? Don't bet on it.

Marketing means branding, it means direct-mail campaigns, it means having booths at industry trade shows, it means creating and advertising an image, it means putting a logo, website and phone number on coffee mugs, baseball hats and T-shirts. It means hiring a Marine for a sales manager and aggressive account executives. Do you really see the Government National Mortgage Association doing this? I don't and I don't see GECMS doing much of it either.

I'm sure the attitude will be: if we build it, they will come. Life doesn't always work that way. Personal computer historians might recall the Microsoft vs. Apple battles of the ...