DEFINITION of 'Tandem Plan'

A mortgage purchase program subsidized by the U.S. government. Tandem loans provide monetary assistance to builders and developers of non-profit public housing. Under the Tandem Plan, the Government National Mortgage Association (GNMA / Ginnie Mae) buys mortgages at discounted market price and then sells them through the Federal National Mortgage Association (FNMA / Fannie Mae) and the Federal Home Loan Mortgage Corp. (FHLMC / Freddie Mac).

BREAKING DOWN 'Tandem Plan'

Under the Tandem Plan, GNMA foots the difference between the purchase and sale price of the mortgages that it buys. This type of structure allows home buyers to receive low interest rate loans, often to those who would not be able to afford them otherwise.

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RELATED FAQS
  1. How does Fannie Mae (FNMA) make money?

    Fannie Mae is a government-sponsored enterprise (GSE) established in 1938 to expand the flow of mortgage money by creating ... Read Answer >>
  2. What is a Ginnie Mae security?

    A Ginnie Mae, or Government National Mortgage Association security, functions similarly to the process of lending someone ... Read Answer >>
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    Fannie Mae (the Federal National Mortgage Association, or FNMA) is a government-sponsored enterprise established to expand ... Read Answer >>
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