A Primer and Perspective on Ginnie Mae


Several housing finance reform models, including the Treasury and HUD plans recently issued at the direction of the White House, support an expanded role for Ginnie Mae in the future housing finance system. Understanding Ginnie Mae’s functions and the structural challenges it faces in the current housing finance system is an essential first step in analyzing these proposals effectively.

This papermainly intended to inform policy makers and staffprovides operational insight into Ginnie Mae’s two primary functions: guaranteeing mortgage-backed securities (MBS) issued within the government mortgage channel, and operating a common securitization platform through which all such MBS are issued. The author has a unique perspective on Ginnie Mae, having served the longest term of any Ginnie Mae president.

By performing its critical role over the last 50 years, Ginnie Mae has successfully enabled MBS issuers to leverage the government’s guarantee and transfer interest rate risk to the capital markets and credit losses to insurers. For Ginnie Mae to continue to operate at maximum effectiveness, and, if called upon, assume an expanded role in the housing finance landscape, the agency and the government must address key challenges to Ginnie Mae’s evolution.

Updated/Published October 17, 2019