Series 66: 2.4.16.1.2 Ginnie Mae

Taken from our Series 66 Online Guide

2.4.16.1.2  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. Instead, 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 securities.

Issuers of Agency Securities

Backing

Type of Entity

Function

Purpose of Entity

Freddie Mac

Implied guarantee from federal government

Government-Sponsored Enterprise

Issues MBSs* and CMOs

Bring more funds into the housing sector to encourage home ownership

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