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Ginnie Mae

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Ginnie Mae stands for the Government National Mortgage Association. Ginnie Mae is a self financed and wholly-owned government corporation created in 1968. Ginnie Mae is part of the Department of Housing and Urban Development (i.e. HUD). Ginnie Mae guarantees timely payment of principal and interest on certain mortgage-backed securities (i.e. MBS). In particular, Ginnie Mae guarantees payment timeliness on loans backed by the Federal Housing Administration (FHA), the Department of Agriculture's Rural Housing Service (RHS) and the Department of Housing and Urban Development's Office of Public and Indian Housing (PIH). Ginnie Mae does not buy or sell mortgage-backed securities, it only insures them. Ginnie Mae protects an investor in mortgage-backed securities in the event the lender defaults. Much like with US Treasuries but unlike Fannie Mae mortgage-backed securities, a Ginnie Mae mortgage-backed security is backed in full by the US government. Ginnie Mae insures two types of mortgage-backed securities, the Ginnie Mae I MBS and the Ginnie Mae II MBS. Both offer the same guarantee but they have different specifications. A Ginnie Mae II MBS, for example, can only include single-family loans whereas a Ginnie Mae I MBS can also include multifamily loans. A lender must qualify as a Ginnie Mae issuer prior to to offering Ginnie Mae securities. To do so, such lender will need to complete the Ginnie Mae issuer application process. Examples of Ginnie Mae issuers are mortgage bankers, savings and loans, commercial banks, or credit unions.

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