Ginnie Mae - Government National Mortgage Association - GNMA


DEFINITION of 'Ginnie Mae - Government National Mortgage Association - GNMA'

A U.S. government corporation within the U.S. Department of Housing and Urban Development (HUD). Ginnie May aims to:

1. Ensure liquidity for government-insured mortgages, including those insured by the Federal Housing Administration (FHA), the Veterans Administration (VA) and the Rural Housing Administration (RHA).
2. Bring investors' capital into the market for these types of loans, so that the issuers have the means to issue more.

Most of the mortgages securitized as Ginnie Mae mortgage-backed securities (MBSs) are those guaranteed by FHA, which are typically mortgages for first-time home buyers and low-income borrowers.

BREAKING DOWN 'Ginnie Mae - Government National Mortgage Association - GNMA'

Ginnie Mae neither issues, sells or buys pass-through mortgage-backed securities, nor does it purchase mortgage loans. It simply guarantees (insures) the timely payment of principal and interest from approved issuers (such as mortgage bankers, savings and loans, and commercial banks) of qualifying loans, such as those issued by the FHA and RHA.

Unlike its cousins Freddie Mac, Fannie Mae and Sallie Mae, Ginnie Mae is not a publicly-traded company. An investor in a GNMA security will not know who the underlying issuer of the mortgages is, but merely that the security is guaranteed by GNMA, which is backed by the full faith and credit of the U.S government, just like U.S. Treasuries.

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