Definition
Ginnie Mae is a government entity that ensures liquidity in U.S. mortgage markets.
Analysis
Ginnie Mae is a nickname for the Government National Mortgage Association (GNMA). It was established as an agency within the Department of Housing and Urban Development (HUD) after it was split from the Federal National Mortgage Association (Fannie Mae) in 1968.
Ginnie may is government sponsored, and the mortgage backed securities (MBS) that it sells are guaranteed by the full faith of the U.S. Government. The loans that Ginnie Mae buys are generally FHA loans, VA loans or the USDA Rural Housing Service, which are federally insured.
Ginnie Mae buys loans from lenders, which allows those lenders to immediately make those funds available to new borrowers. This allows for greater liquidity in the primary mortgage markets.
