What is the role of Ginnie Mae in the mortgage market?

Ginnie Mae, also known as the Government National Mortgage Association, plays a vital role in the mortgage market. Its primary function is to support the availability of affordable housing by guaranteeing mortgage-backed securities (MBS). Ginnie Mae does not originate or purchase mortgages but rather provides a government-backed guarantee on MBS issued by approved private lenders. This guarantee ensures that investors receive timely payments of principal and interest on the underlying mortgages. As a result, Ginnie Mae encourages lenders to offer affordable mortgage financing options, especially for low-to-moderate income individuals and first-time homebuyers. Moreover, this government backing makes Ginnie Mae MBS highly attractive and secure investments for both domestic and international investors, contributing to the stability and liquidity of the mortgage market.