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| Ginnie Mae Helps With Affordable Housing |
How Ginnie Mae Works To Help Low
Income Americans Find Affordable
Housing
November 10, 2011
We know a lot about Fannie Mae and Freddie Mac, but not enough about Ginnie Mae. A
guaranty from this Government Sponsored Enterprise (GSE) allows lenders to get a better price
for their mortgage loans in the secondary market. The lenders then have fresh money to fund
new mortgages.
Ginnie Mae does not buy or sell mortgage loans. Also, it does not issue Mortgage Backed
Securities (MBS). Therefore the balance sheet does not show long term debt.
The appeal of Ginnie Mae is the confidence it gives investors. The principal and interest
payments are made on time on MBS backed by federally insured or guaranteed loans. These
are loans insured by the Federal Housing Administration (FHA) or loans guaranteed by the
Department of Veterans Affairs (VA), Other loans used as collateral for a Ginnie Mae guaranty
are the Department of Agriculture's Rural Housing Service (RHS) and HUD's Office of Public
and Indian Housing (PIH).
Ginnie Mae securities are the only Mortgage Backed Securities that carry a 100% credit
guaranty of the United States of America. If the mortgage payment is not made, the investor still
gets the principal and interest if the investment is a Ginnie Mae MBS. This means that this is the
safest investment one can make, even in the toughest economic times.
Basic features of a Ginnie Mae MBS.
>> All mortgages in the pool must be the same type, for example, single family houses.
>> Each mortgage must be insured or guaranteed by the FHA, VA, PIH or RHS.
>> The mortgage interest rate must all be the same.
>> The mortgages can be issued by one issuer (Ginnie Mae 1 MBS) or by several issuers
(Ginnie Mae 2 MBS).
>> The minimum pool size is $1 million for a single issuer, or in the case of several issuers
$250,000.
The Ginnie Mae portfolio has experienced great growth in recent years. The outstanding MBS
is over a trillion dollars representing about 7 million single family and multi-family homes. The
number of issuers has risen to 220. Mortgage bankers make up 65% of the issuers.
The liquidity of Ginnie Mae MBS makes it easy for the investor to resell the MBS on the
secondary market.
Income Americans Find Affordable
Housing
November 10, 2011
We know a lot about Fannie Mae and Freddie Mac, but not enough about Ginnie Mae. A
guaranty from this Government Sponsored Enterprise (GSE) allows lenders to get a better price
for their mortgage loans in the secondary market. The lenders then have fresh money to fund
new mortgages.
Ginnie Mae does not buy or sell mortgage loans. Also, it does not issue Mortgage Backed
Securities (MBS). Therefore the balance sheet does not show long term debt.
The appeal of Ginnie Mae is the confidence it gives investors. The principal and interest
payments are made on time on MBS backed by federally insured or guaranteed loans. These
are loans insured by the Federal Housing Administration (FHA) or loans guaranteed by the
Department of Veterans Affairs (VA), Other loans used as collateral for a Ginnie Mae guaranty
are the Department of Agriculture's Rural Housing Service (RHS) and HUD's Office of Public
and Indian Housing (PIH).
Ginnie Mae securities are the only Mortgage Backed Securities that carry a 100% credit
guaranty of the United States of America. If the mortgage payment is not made, the investor still
gets the principal and interest if the investment is a Ginnie Mae MBS. This means that this is the
safest investment one can make, even in the toughest economic times.
Basic features of a Ginnie Mae MBS.
>> All mortgages in the pool must be the same type, for example, single family houses.
>> Each mortgage must be insured or guaranteed by the FHA, VA, PIH or RHS.
>> The mortgage interest rate must all be the same.
>> The mortgages can be issued by one issuer (Ginnie Mae 1 MBS) or by several issuers
(Ginnie Mae 2 MBS).
>> The minimum pool size is $1 million for a single issuer, or in the case of several issuers
$250,000.
The Ginnie Mae portfolio has experienced great growth in recent years. The outstanding MBS
is over a trillion dollars representing about 7 million single family and multi-family homes. The
number of issuers has risen to 220. Mortgage bankers make up 65% of the issuers.
The liquidity of Ginnie Mae MBS makes it easy for the investor to resell the MBS on the
secondary market.