Government National Mortgage Association (GNMA), commonly known as Ginnie Mae, is a government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Its primary role is to guarantee mortgage-backed securities (MBS).
How Ginnie Mae Works
Securitization: Lenders bundle together a group of FHA-insured, VA-guaranteed, or USDA-backed mortgages. These pools of mortgages are then converted into securities.
Guarantee: Ginnie Mae guarantees the timely payment of principal and interest on these securities. This guarantee is backed by the full faith and credit of the U.S. government.
Investment: Investors purchase these Ginnie Mae-guaranteed securities, providing funds to lenders, which in turn can originate more mortgages.
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The Government National Mortgage Association is a government-owned corporation that gives mortgages to people who want to purchase their own house but they don't have money.
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