What is the difference between Ginnie Mae I and Ginnie Mae II MBS?

Ginnie Mae I and Ginnie Mae II Mortgage-Backed Securities (MBS) are both issued by the Government National Mortgage Association (GNMA), but there are key differences between the two. Ginnie Mae I MBS are backed by loans originated by government agencies such as the Federal Housing Administration (FHA) or Veterans Affairs (VA), primarily composed of fixed-rate, low- to moderate-income residential loans. On the other hand, Ginnie Mae II MBS include loans originated by approved private lenders, composed of a wider range of mortgage types such as adjustable-rate mortgages (ARMs). Additionally, Ginnie Mae II MBS offer investors a higher yield but may carry a slightly higher level of risk due to the mix of loans involved. Ultimately, the difference lies in the origin of the loans and the risk characteristics associated with each program.