Definition
Ginnie Mae guarantees mortgage-backed securities backed by FHA, VA, and USDA loans. Unlike Fannie Mae and Freddie Mac, Ginnie Mae doesn't purchase mortgages—it guarantees securities. Its guarantee is backed by the full faith and credit of the U.S. government.
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Unlike Fannie Mae and Freddie Mac, Ginnie Mae does not purchase mortgages directly. Instead, it guarantees securities backed by government-insured loans. This guarantee allows investors to purchase mortgage-backed securities with confidence that they'll receive timely payments even if borrowers default. Ginnie Mae's guarantee is backed by the full faith and credit of the U.S. government.
Pro Tip
Ginnie Mae loans tend to have strict servicing requirements; lenders must fund loans quickly and handle payments efficiently, which often means lower interest rates.
Example
A mortgage banker bundles FHA mortgages together and has Ginnie Mae guarantee a security based on those loans. Investors purchase the Ginnie Mae security knowing the government stands behind the guarantee.