Ginnie Mae seemed to waste no time in coming up with a more acceptable proposal last week, following a negative reaction from the dealer community to the government-sponsored enterprise's poorly received original proposal.

Last week, the agency proposed using its $7 billion of reserves to purchase Ginnie Mae mortgage-backed securities instead of Treasury securities. By focusing on Ginnie Mae II's, it could accomplish the same goal as Ginnie Mae's original proposal. Lehman Brothers said that by doing this, it could improve execution for loans that do not currently qualify for Ginnie Mae I's.

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