Ginnie Mae GNMA

The Housing and Urban Development Act of 1968, signed on August 1, 1968, split the old Federal National Mortgage Association in two. Fannie Mae became a privately owned company, and the Government National Mortgage Association, known as Ginnie Mae, remained a wholly owned government corporation inside HUD. In February 1970 it guaranteed the first modern mortgage-backed security, a financial innovation that reshaped American housing finance. It is led by a President appointed by the President of the United States.

Ginnie Mae does not make or buy loans. Private lenders and servicers pool mortgages insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, USDA Rural Development, and HUD's Indian housing program, and issue securities backed by those pools. Ginnie Mae guarantees investors will receive timely payments, backed by the full faith and credit of the United States, which lets lenders sell the loans and make new ones. Its outstanding guarantees total well over two trillion dollars.

Unlike Fannie Mae and Freddie Mac, which were placed in government conservatorship in 2008, Ginnie Mae is funded by guarantee fees and has consistently returned money to the Treasury. Most of its securities are now issued by nonbank mortgage companies rather than banks, raising concern among regulators about whether those firms could keep advancing payments to investors in a downturn. Debates over ending the conservatorship of Fannie and Freddie have also renewed questions about Ginnie Mae's role in any future system.