In July, Cleary Gottlieb closed 20 Freddie Mac, Fannie Mae and Ginnie Mae real estate mortgage investment conduit (REMIC) transactions, representing a total of more than $34 billion of mortgage-backed securities. The firm represented the underwriters, including Countrywide, Lehman, JP Morgan, UBS, Morgan Stanley, Goldman Sachs, Citigroup, Credit Suisse First Boston, Greenwich and Nomura. To date in 2003, the firm has handled more than $240 billion of these deals, backed by approximately two million home mortgages.
These agency REMIC transactions involve mortgage-backed securities issuances, each with a Freddie Mac, Fannie Mae or Ginnie Mae guarantee. Ginnie Mae is an association, wholly owned by the U.S. government, and Freddie Mac and Fannie Mae are government-sponsored, but publicly owned companies.
Cleary pioneered this type of mortgage securitization in 1983. Originally known as collateralized mortgage obligations (CMOs), REMIC transactions now account for roughly one-third of the total debt issuance on Wall Street. Economists estimate that this type of transaction has reduced prevailing mortgage rates in the United States by about 1/2 of 1% per year during the 20 years since the CMO was introduced.