Legal Definitions - Government National Mortgage Association

The Government National Mortgage Association (GNMA), also known as Ginnie Mae, is a government-owned corporation that operates under the U.S. Department of Housing and Urban Development. Its primary responsibility is to guarantee mortgage-backed securities that are composed of FHA-insured or VA-guaranteed mortgage loans.

GNMA purchases residential mortgages from local lenders on the secondary market and issues federally insured securities backed by these mortgages. This helps to provide liquidity to the mortgage market and makes it easier for lenders to offer mortgages to homebuyers.

Let's say a local lender originates a mortgage for a homebuyer. The lender can then sell that mortgage to GNMA on the secondary market. GNMA will then issue a security backed by that mortgage, which can be sold to investors. This provides the lender with cash to make more mortgages, while also providing investors with a safe and secure investment.

Another example would be if a veteran applies for a VA-guaranteed mortgage. The lender can sell that mortgage to GNMA, which will issue a security backed by that mortgage. This helps to ensure that veterans have access to affordable mortgage financing.

Overall, GNMA plays an important role in the mortgage market by providing liquidity and making it easier for lenders to offer mortgages to homebuyers.