Government National Mortgage Association
Definition and meaning of Government National Mortgage Association in real estate.
The Government National Mortgage Association, commonly known as Ginnie Mae, is a government-owned corporation within the Department of Housing and Urban Development that guarantees mortgage-backed securities. Unlike Fannie Mae and Freddie Mac, Ginnie Mae only backs pools of loans that are federally insured or guaranteed.
In more detail
Established in 1968, the agency plays a crucial role in the housing market by ensuring liquidity for lenders that issue government-backed loans. These loans include those insured by the Federal Housing Administration, the Department of Veterans Affairs, and the Department of Agriculture. Ginnie Mae does not originate, purchase, or sell loans directly; instead, it provides a federal guarantee that investors will receive timely payments of principal and interest.
This government guarantee makes mortgage-backed securities attractive to global investors, which keeps interest rates lower for affordable housing programs. For home buyers, Ginnie Mae makes it easier to secure low-down-payment mortgages through government programs.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Also known as | Ginnie Mae (GNMA) |
| Federal Department | U.S. Department of Housing and Urban Development (HUD) |
| Eligible Loans | FHA, VA, USDA, and Public and Indian Housing loans |
An investment firm purchases a pool of mortgage-backed securities, confident in the investment because the underlying loans are backed by the federal guarantee of the Government National Mortgage Association.
Frequently asked questions
How does Ginnie Mae differ from Fannie Mae and Freddie Mac?
Ginnie Mae is a government-owned corporation that exclusively guarantees government-backed loans, whereas Fannie Mae and Freddie Mac are government-sponsored enterprises that purchase both conventional and government loans.
Does Ginnie Mae lend money to home buyers?
No, Ginnie Mae does not issue mortgages to borrowers; it only guarantees the securities backed by mortgages originated by private lenders.