Business
Ginnie Mae guarantees the timely payment of principal and interest payments on residential mortgage-backed securities (MBS) to institutional investors worldwide. These securities, or “pools” of mortgage loans, are used as collateral for the issuance of securities on Wall Street. MBS are commonly referred to as "pass-through" certificates because the principal and interest of the underlying loans is "passed through" to investors.
Ginnie Mae guarantees only securities backed by single-family and multifamily loans insured by government agencies, including the FHA, Department of Veterans Affairs, the Department of Housing and Urban Development’s Office of Public and Indian Housing and the Department of Agriculture’s Rural Development.
Ginnie Mae neither originates nor purchases mortgage loans. It does not purchase, sell, or issue securities. Accordingly, Ginnie Mae does not use derivatives to hedge and it does not carry long-term debt (or related outstanding securities liabilities) on its balance sheet. Instead, private lending institutions approved by Ginnie Mae originate eligible loans, pool them into securities, and issue the Ginnie Mae MBS. These institutions include geographically diverse mortgage companies, commercial banks, and thrifts of all sizes, as well as state housing finance agencies.
Read more about this topic: Government National Mortgage Association
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