This week, TheStreet and RealMoney will be exploring the aftermath of Lehman Brothers' bankruptcy filing and the ensuing market chaos it brought to a head almost a year ago.

WASHINGTON (

TheStreet

) -- Joe Murin stepped down as the president of

Ginnie Mae

last month, after overseeing the government's mortgage guarantor through a tumultuous year.

Ginnie was forced to expand its presence in the mortgage market, filling gaps created by the hobbled finance agencies

Fannie Mae

( FNM) and

Freddie Mac

( FRE).

The company's role is to be a guarantor of last resort in the mortgage-securities market. So, if a borrower stops paying his or her mortgage and the Federal Housing Administration or Department of Veterans Affairs loans can't cover the bill, Ginnie will step in.

At one point, that safety was less attractive than Fannie and Freddie MBS, but the risk-rewards scenario has shifted out of necessity. Ginnie set new records for MBS issuance over the past five months, with its exposure expected to hit the $1 trillion mark by the end of next year -- more than double the scale of 2007. And while Fannie and Freddie are now in conservatorship, with the government having injected nearly $100 billion into the firms to keep them alive, Ginnie is still profitable.

Still, all that backing has come under fire as the government has become a more active participant in the mortgage space. Critics have assailed the FHA for continuing the subprime debacle by covering loans with weak underwriting standards that are underpinned by taxpayer dollars.

Murin stepped down from his role at Ginnie on Aug. 13 to join the Washington-based consulting firm Collingwood Group, which advises the financial industry. He also joined the board of technology and outsourcing company

iGate Corp.

(IGTE)

, which is seeking new business in the financial sector.

He spoke with

TheStreet

about the

mortgage industry's proposed structure for the future of Fannie and Freddie. The proposal would be similar to Ginnie Mae's, with explicit government backing, rather than the implicit support those two firms received before entering conservatorship a year ago.

TheStreet: Is this structure the best option for the two firms?

Joe Murin: It can also be looked at as Fannie and Freddie will continue down the path that they're going, and this new enterprise would ... replace it if you will. I don't know if that's the case; I'm saying you have to look at it from that perspective as well.

What's needed in the market right now is a very robust housing financial sector. And we don't have that right now... What the proposal is saying is that we need to be moving forward, that we need to be looking at a different structure.

Under this proposal, what would happen to shareholders?

As it would relate to the current shareholders? Well, where are the current shareholders now? It's been trading under $1 for the past year. I really don't know what that means one way or another, but I think ultimately that decision will be made at some point in the future.

While you were at Ginnie Mae, it got a lot more involved in the mortgage space. Can you talk about that a little bit?

When the market needed liquidity, Ginnie Mae stepped up and did what it had to do and it's been -- the last 18 to 24 months, it has probably been 25 to 30% of the market's liquidity. I think on a go-forward basis, I think Ginnie Mae will continue to provide the liquidity to the marketplace at some point in time when it normalizes, you know, 15% to 20% of the market, which I think is the right blend.

I get the sense that if these agencies didn't exist -- with the government backing that they have, implicitly or explicitly -- the housing market would have ground to a halt.

No question ... Without the federal backing, there would be no housing market right now.

Part of the criticism of these firms is simply the government's involvement in the first place. Critics say it shouldn't be a hybrid; it should be private or public. What do you think of that?

Somebody asked me

the other day, What don't I like about the McG proposal? And I said, The government backing. But you know, it's a necessary thing right now. We cannot do without it. Maybe there's a time limit set on this proposal -- maybe it's five years, maybe it's 10 years, maybe it's something like that.

I would agree with the critics who say that you have a public, and you have a private. But right now, you can't just step into that. That transition isn't going to be that abrupt

What about all their assets that aren't doing well -- what's to be done with all that?

We've got, what, $5 trillion or $6 trillion worth of assets? ... You're not going to solve that problem in a short period of time ... But if we're sitting around saying that, "Well, we can't do anything with Fannie and Freddie until we deal with these issues," my God, that's going to be five, 10 years down the road. I mean, that's impossible.

Why didn't Fannie and Freddie survive as they were?

Just the way their business model worked. Whether they had to do it because they were pseudo public-private -- I mean, who knows why. If you take a look at it, they really just became big hedge funds. Did they do it because they had shareholders they had to please? I don't know, I wasn't in that seat to drive that bus.

Is it better to have a bunch of smaller entities around the country?

Who these big aggregators become -- whether there's two, three, four or five -- time will tell, but I think that they're going to have to be structured around their capital base, their abilities, and to be able to create as much overall liquidity while having as much competition in the market as possible.

So you don't think that size is really the main factor here?

I don't, not from my perspective anyway.

Why did you step down from Ginnie Mae last month?

I think it was time for me. I had the opportunity to serve under two administrations. We moved Ginnie Mae through probably the most difficult time in its 40-year history. The last 18, 19 months were very, very difficult, very demanding and we had to create a whole new risk environment to oversee the risk of this.

There's a lot of criticism out there right now about FHA and Ginnie Mae, but in all regard, the people at FHA and Ginnie Mae don't get incented to do that work. They're required to do that work...

It was just time for me to get back in the private sector. I did my stint and I'm proud of it and it was time for me to move on.

--

Written by Lauren Tara LaCapra in New York.