Series 7: 2.14.1.2 Ginnie Mae

2.14.1.2  Ginnie Mae

There is another important player in the mortgage-backed securities world—the Government National Mortgage Association, more commonly known as Ginnie Mae. Unlike Freddie Mac and Fannie Mae, Ginnie Mae is not a GSE; instead, it is a public government agency. It does not buy or sell mortgages or issue mortgage-backed securities. Ginnie Mae securities are often issued by private companies, such as banks. Ginnie Mae guarantees the timely payment of interest and principal of certain mortgage-backed securities, and it has the full faith and credit of the U.S. federal government to do so. So if an exam question describes an investor who buys a Ginnie Mae mortgage-backed security, remember that the investor is buying a security with interest and principal payments that are backed by the full faith and credit of the U.S. government. Despite their differences, mortgage-backed securities issued by Fannie Mae and Freddie Mac and those backed by Ginnie Mae are all referred to as agency bonds.