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Ginnie Mae Frequently Asked Questions
What is the Government National Mortgage Association (Ginnie Mae)?
The Government National Mortgage Association (Ginnie Mae) was created in 1968 as a wholly- owned government corporation within the U.S. Department of Housing and Urban Development (HUD). Ginnie Mae guarantees the principal and interest payments on mortgage-backed securities (MBS) issued by program participants. The securities are collateralized by the cash flows from loans insured or guaranteed by the Federal Housing Administration (FHA), Department of Veterans Affairs Home Loan Program for Veterans (VA Loans), Office of Public and Indian Housing (PIH), and the U.S. Department of Agriculture (USDA) Rural Development Housing and Community Facilities Programs. The Ginnie Mae guarantee assures investors that they will receive their monthly principal and interest (P&I) payments on outstanding securities in a timely manner. The guarantee is the only MBS backed by the full faith and credit of the United States Government.
What is the purpose of Ginnie Mae?
Ginnie Mae's mission is to expand affordable housing by linking global capital markets to the nation's housing markets. Ginnie Mae achieves its mission by guaranteeing investors the timely payment of principal and interest on their MBS. Bundling mortgage loans into MBS makes it easier to sell large groups of them in the secondary market.
The ability of lenders to package these loans into securities for sale to investors worldwide enables the lender to then use the proceeds to make more mortgage loans. Repeating this cycle increases the availability, accessibility and affordability of mortgage funds for more Americans and provides a save, secure and liquid investment for investors. Since its creation, Ginnie Mae has helped more than 32 million families achieve the dream of homeownership, guaranteeing over $2.6 trillion of MBS.
What is the difference between Ginnie Mae, Fannie Mae and Freddie Mac?
Ginnie Mae is a self-sustaining, profitable government institution. Ginnie Mae securities are the only MBS that enjoys the full faith and credit guaranty of the U.S. government.
Fannie Mae and Freddie Mac are both federally chartered corporations. In September 2008, the Government-Sponsored Enterprises (GSEs) were placed under government conservatorship.
Ginnie Mae does not purchase mortgages, nor does it buy, sell or issue MBS or debt securities. Private lending institutions approved by Ginnie Mae issue the MBS for which Ginnie Mae provides a guarantee. Moreover, Ginnie Mae only securitizes federally-insured or guaranteed loans.
Originally, Ginnie Mae and Fannie Mae began as one organization, known as the Federal National Mortgage Association (FNMA). However, in 1968, Congress partitioned FNMA into two entities: Fannie Mae to support the conventional market and Ginnie Mae to support the market for FHA, VA, RD and PIH loans.
How are the Federal Housing Administration (FHA) and Ginnie Mae connected?
Ginnie Mae serves in effect as the banker for the FHA, VA and other government mortgage insurers. FHA and other government agencies insure or guarantee the lender in case of a borrower default, while Ginnie Mae insures the investor in case of a lender default.
FHA insures approximately two-thirds of the loans backing Ginnie Mae securities. Lenders originate the FHA mortgage loans and package them into MBS, which are then guaranteed by Ginnie Mae. Ginnie Mae securitizes more than 98 percent of FHA mortgages.
Since Ginnie Mae is wholly-owned government corporation within the U.S. Department of Housing and Urban Development, the President of Ginnie Mae and the FHA Commissioner both report to the Secretary of HUD.
Does Ginnie Mae buy loans?
No, Ginnie Mae does not make or purchase mortgages from mortgage lenders. Rather, it is the guarantor of securities issued by approved lenders who participate in its programs. Ginnie Mae guarantees MBS originated by "approved" issuers (mortgage lenders who meet the requirements and are approved to issue Ginnie Mae MBS).
How is Ginnie Mae funded?
Ginnie Mae is a self-financed corporation that uses the fees it collects to fund its operations. Operations are financed by a variety of fees including Guarantee Fees, New Issuer Application Fees, Commitment Fees, Handling Fees, and Transfer of Service Fees. In addition, Ginnie Mae receives revenue from the interest earned on its capital reserves.
For FY 2008, Ginnie Mae had revenue of more than $1 billion and expenses of only $59 million resulting in net revenue of $906 million and $13.5 billion in reserves.
How does one become an approved Ginnie Mae issuer?
Issuers of Ginnie Mae MBS (program participants) make an important contribution to the expansion of affordable housing in America. Therefore, applicants must demonstrate that they have the organizational, financial, procedural and quality assurance processes that will qualify them to participate in the program.
The following is a list of some of the application requirements:
- Approved FHA mortgagee in good standing
- Audited financial statements
- Adjusted net worth of $250,000 for the single-family program and $500,000 for the multifamily program program (Single-Family MBS and HMBS programs will need to meet minimum net worth requirements of $1 million by October 1, 2010)
- Fidelity Bond and Errors and Omission insurance coverage
- Disclosure of all related party/affiliate related party transactions
- Cross-default agreements (if applicable)
- Corporate Guarantee Agreements (if applicable), quality control plan for underwriting, originating, and servicing mortgage loans as well as secondary marketing
- Resumés of officers
- Third-party reports on officers and the company
- Status with Government-Sponsored Enterprises (GSEs) and primary regulator
The Ginnie Mae Mortgage-Backed Securities Guide is an excellent resource when applying for issuer status. Please visit www.ginniemae.gov to view this document and other forms containing these requirements. For additional information on becoming a Ginnie Mae issuer, please contact an account executive at Ginnie Mae's Office of Mortgage-Backed Securities at
(202) 708-1535.
How can one obtain Ginnie Mae updates?
Ginnie Mae's program updates are primarily communicated through an "All Participants Memorandum" (APM) or through Multiclass Participants Memorandums (MPM). APMs and MPMs are sent periodically to Ginnie Mae business partners and are also available on Ginnie Mae's Web site.
Is Ginnie Mae involved with reverse mortgages [Home Equity Conversion Mortgages(HECM)?
Yes, Ginnie Mae does securitize FHA HECMs. Ginnie Mae's first Home Equity Conversion Mortgage Backed Securities (HMBS) was issued in November 2007.
Has Ginnie Mae launched any new programs?
Ginnie Mae is always seeking new and innovative ways to improve upon its programs. To receive timely updates about Ginnie Mae programs, visit our website at www.ginniemae.gov and subscribe to the "Ginnie Mae's E-alert" service. You will then be notified of important announcements or changes to the program.
What is the difference between Ginnie I and Ginnie II?
Ginnie Mae operates two MBS pass-through securities: the Ginnie Mae I MBS and the Ginnie Mae II MBS. Securities issued under the Ginnie Mae MBS program carry the same guarantee; however, each MBS has different characteristics. The following chart highlights some of the differences between the two programs:
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GINNIE MAE I MBS PROGRAM
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GINNIE MAE II MBS PROGRAM
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Except in the case of securities backed by manufactured home loans, all of the mortgages in a pool must bear the same interest rate The interest rate must be 50 basis points above the pass-through rate of the pool. For single family mortgages six basis points of the 50 basis point servicing fee are paid to Ginnie Mae as a guarantee fee.
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The interest rates on the mortgages in a pool may vary. The interest rate of a mortgage loan in a pool must be at least 25 basis points but no more than 75 basis points above the pass-through rate of the pool. Six basis points of the servicing fee are paid to Ginnie Mae as a guaranty fee.
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In addition to single-family mortgages, one or more multifamily mortgages may be pooled. *
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Only single-family
mortgages may be pooled.
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Each pool must be formed by
a single issuer.
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Pools may be formed by a single issuer or by multiple issuers. HMBS pools must be formed by a single issuer.
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All securities must bear a
fixed rate of interest.
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Some securities may bear an adjustable rate of interest. The interest rate on both fixed rate and adjustable rate HMBS securities is the weighted average coupon of the interest rates on the underlying Participations.**
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Minimum pool size
$1,000,000 (single family).
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Minimum pool size
$250,000-$1,000,000 depending on pool type.
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Investors receive payment
on the 15th of the month.
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Investors receive payment on the 20th
of the month.
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Minimum certificate size is
$25,000; $1 increments.
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Minimum certificate size is
$25,000; $1 increments.
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* Single-family and multifamily loans cannot be commingled in a pool.
** Fixed rate and
adjustable rate mortgages cannot be commingled in Ginnie Mae II pools.
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For more information about Ginnie Mae, please contact Terry Carr, senior advisor, Marketing and Communications, at (202) 475-7812.
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