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What is Ginnie Mae?

Ginnie Mae is a short name for the Government National Mortgage Association. This organization used to be the Federal National Mortgage Association, but it was split into Fannie and Ginnie Mae in 1968.

Ginnie Mae has a specific purpose. It is to support the market for Public Indian Housing loans, Rural Development loans, Veterans Association loans and Federal Housing Administration loans.

Ginnie Mae is not government sponsored. Instead, it's backed by the U.S. government openly and has a guarantee of payments being on time. Additionally, it does not have shareholders and is run completely by the government. To get the benefits of this program, you need to be an approved lender. This type of loan is not given directly to consumers.

Ginnie Mae works with lenders like mortgage companies and banks to provide loans. It guarantees on-time payments, even if there is a time of hardship. That means that even in difficult times, interest rates can be kept low and loans can continue to be given to deserving individuals. Essentially, Ginnie Mae makes sure the loan provider can make payments even if the homeowner or business owner defaults on his or her payments.

As a consumer, you'll never directly deal with Ginnie Mae, but as a business that lends to others, you could. Ginnie Mae is a way to hedge your bets, so you know that you won't get left with a deficit because of defaulting loans. It's a safety net that works well for those in banking and lending industries, because the government itself is willing to guarantee the funds.

Source: Cornerstone Mortgage, Inc., "What is Ginnie Mae?," accessed Oct. 05, 2017

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