By the Numbers
Rising Ginnie Mae custom pool issuance weakens TBA
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Ginnie Mae custom pool issuance has surged over the last few years, raising concerns about the deteriorating quality of TBA-deliverable pools. New multiple issuer pools have larger loan sizes and higher VA concentrations, both associated with faster refinancing and more negative convexity. And there is room for both trends to continue since some issuers still place low loan balance FHA and rural housing loans into multi-pools. The trend could eventually make the Ginnie Mae TBA a true lemon. For policymakers, a weaker TBA would raise mortgage rates for all government-insured loans.
Custom pools accounted for nearly 30% of all Ginnie Mae pools last year and have been close to 40% of issuance so far in 2025 (Exhibit 1). This is a huge increase since the pandemic, when custom volume was roughly 15% of issuance. And in 2014, customs only accounted for 5% of production. Comparable conventional pools—single-issuer pools and multiple-servicer specified pools created at the cash window—account for about 50% of conventional production. This indicates that lenders remain less efficient at making Ginnie Mae specified pools than they are at making conventional specified pools, although the gap is narrowing.
Exhibit 1. Ginnie custom pool issuance has over doubled since 2022
Fixed rate 30-year pools.
Source: Fannie Mae, Freddie Mac, Ginnie Mae, Santander US Capital Markets.
Higher custom pool issuance has contributed to larger average loan sizes in the Ginnie II multi-pools (Exhibit 2). Investors are typically only interested in custom pools that have better convexity than the TBA, so customs siphon off better loans from the multi pools, leaving more negatively convex loans behind.
Exhibit 2. The average loan size of G2 multi pools is growing
Fixed rate 30-year pools.
Source: Fannie Mae, Freddie Mac, Ginnie Mae, Santander US Capital Markets.
The average loan size gap between Ginnie multi pools and generic conventional multiple servicer pools has narrowed since custom pool production took off in 2023.
The portion of the multi-pools backed by VA loans grew in 2024 and so far in 2025 and is approaching the levels during the pandemic (Exhibit 3). Custom pools backed by only FHA loans became more popular in 2024 after VA prepayments jumped at the start of the year. VA borrowers refinance very quickly when rates fall, so those loans are more negatively convex than FHA loans.
Exhibit 3. The VA share of multi pools is also growing
Fixed rate 30-year pools.
Source: Ginnie Mae, Santander US Capital Markets.
Although custom pool issuance has grown, lenders are still placing loans that match specified pool characteristics into the multi pools (Exhibit 4). For example, roughly 10% of loans in recent multi pools have original loan sizes less than $250,000; about half of those are FHA or rural housing loans. Almost all similar conventional loans are placed in specified pools. The history shows that lenders are less efficient at creating Ginnie Mae specified pools than conventional specified pools.
Exhibit 4. Ginnie Mae multi pools still contain many low loan balance loans
Specified pooling of loans between $200,000 and $250,000 began in 2020. Fixed rate 30-year pools.
Source: Fannie Mae, Freddie Mac, Ginnie Mae, Santander US Capital Markets.
It is easy to see how the TBA could keep deteriorating. These small balance loans could start to get pooled separately, pushing the average loan size and VA concentration of the multi pools even higher. This would lift pay-ups and lift the incentive to create even more specified pools with higher balance FHA loans. As the multi pools approach 100% VA, then even low loan balance VA pools could command a pay-up over TBA, and eventually the TBA would be dominated by high balance VA loans.
Custom pools are not deliverable into TBA contracts, and that may explain why the Ginnie Mae market is less efficient at creating specified pools than the conventional market. A large portion of custom pools are placed into CMOs, much higher than other types of pools (Exhibit 5). This makes CMO demand an important driver of custom pool issuance.
Exhibit 5. Typically, over 60% of customs are used for CMOs
Fixed rate 30-year pools.
Source: Fannie Mae, Freddie Mac, Ginnie Mae, Santander US Capital Markets.
The presence of the VA program poses particular risk for Ginnie Mae multi pools and TBA. These loans are much more negatively convex than the rest of the Ginnie Mae program. But unlike jumbo loans, there is no de minimis limit on VA loans in the multi pool. It is possible that the lack of deliverability of custom pools is the only thing that prevented development of a more liquid market for these pools and prevented the race to the bottom for TBA quality—pools backed only by high balance VA loans. There may be value in trading these pools despite the fact they cannot be delivered into TBA contracts, but that is a story for another day. Regardless, the trend is worrisome.
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