Question:

Who are the government national mortgage association (GNMA, Ginnie Mae) and what they do?

Answer:

The Government National Mortgage Association (GNMA), also known as Ginnie Mae, was established in 1968, as a government-owned corporation within HUD. At that time mortgage funds needed to be available to more Americans and that was Ginnie Mae's purpose - to make housing possible for more moderate- and low- income households across USA.

GNMA fulfilled its mission by pioneering mortgage-backed securities (MBS) - the only securities offering full credit guaranty of the US government. By converting individual mortgages into safe securities for global investing Ginnie Mae helped directing global capital to the nation's housing markets.

In other words, Ginnie Mae allowed mortgage lenders to obtain better mortgage loan prices in the secondary market which let those lenders use proceeds to make new loans available.

Unlike the common misperception, Ginnie Mae does not buy home loans, sell home loans, or issue mortgage-backed securities. What it does is guarantee a timely payment of interest and principal on mortgage-backed securities that are backed by federally guaranteed or insured loans.

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