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Ginnie Mae

Definition - What does Ginnie Mae mean?

Established in 1968, the Government National Mortgage Association (GNMA), commonly referred to as Ginnie Mae, was created to encourage affordable home ownership and financing within the United States for low-income and first-time home buyers.

Unlike Freddie Mac and Fannie Mae, which are privately owned government-sponsored enterprises receiving governmental support, Ginnie Mae is a government-owned corporation within the Department of Housing and Urban Development (HUD).

Justipedia explains Ginnie Mae

Although the goals of Freddie Mac, Fannie Mae, and Ginnie Mae are similar—to increase the available opportunities for mortgage lending and create a secondary home mortgage market—Freddie Mac and Fannie Mae actually purchase mortgages from other lenders, pool them together and then resell them to other investors as mortgage-backed securities. Fannie Mae also has additional responsibilities that are not required by Ginnie Mae. For example, if there are defaults or repossessions of homes, Fannie Mae must deal with the reselling and marketing of the defaulted home loans.

Ginnie Mae does not, however, issue or sell mortgage-backed securities, nor does it consolidate or pool mortgages together, nor is it involved in buying home loans. Instead, all of these financial activities are performed by the independent financial companies.

Ginnie Mae does, however, provide mortgage lenders, savings and loans, and commercial banks-guaranteed payments for principal and interest backed with the full faith and credit of the United States government.

Prior to 2008, many believed that explicit backing of the federal government for Ginnie Mae bonds might ensure more security than Fannie Mae and Freddie Mac investments. This higher level of security for Ginnie Mae bonds (as contrasted to those of Fannie Mae and Freddie Mac ), was challenged, however, when the federal government was willing to bail out Fannie Mae and Freddie Mac to ensure that they did not go bankrupt.

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