Showing posts with label GSE. Show all posts
Showing posts with label GSE. Show all posts
Monday
What is Ginnie Mae?
The Government National Mortgage Association (GNMA), or Ginnie Mae as it is nicknamed, is responsible for allowing mortgage lenders to obtain a better price for their loans in the capital markets. Recently, Ginnie Mae announced that it has guaranteed more than $41 billion in mortgage-backed securities (MBS) as of December 2012. These are a dependable source of liquidity for loan originators who work with government-backed mortgages.
Ginnie Mae finances housing mortgage insurance programs that are run by the FHA, the VA, and other programs, by raising capital from investors in the global credit market. This ensures liquidity for affordable rental and homeownership for everyone across the nation.
Unlike Fannie Mae and Freddie mac, who are "government-sponsored enterprises" or GSEs, Ginnie Mae is a wholly owned government corporation. Ginnie Mae is the guarantor of MBS issued by government-approved securities issuers who participate in Ginnie Mae's program.
It has always been Ginnie Mae's mission to expand affordable housing throughout the US. Ginnie Mae is an essential part of the housing finance market and its economy recovery.
Fannie Mae vs Freddie Mac: What is the difference?
You may hear the names Fannie Mae and Freddie Mac often. But what are they exactly?
They are both Government Sponsored Enterprises (GSE) in the home mortgage business. They are very similar. they both buy mortgages on the secondary market, pool them, and then sell them as mortgage-backed securities to investors in the open market. The way they handle government guarantees, subsidies and direct government funding are the same.
Their main difference is that Fannie Mae primarily buys mortgages issued by banks while Freddie Mac buys mortgages issued by thrifts.
Fannie Mae was a federal program that was created in 1938 as part of the New Deal, and Freddie Mac was chartered by Congress as a private corporation in 1970. Fannie was monopolizing the mortgage market as a government agency until it became a private corporation in 1968. Freddie Mac was brought into the market to compete with Fannie Mae's monopoly so that lenders and bankers would have two options instead of just one. Today, Fannie Mae is a privately-owned corporation while Freddie Mae is a stockholder-owned corporation.
Fannie Mae allows guarantee on multiple properties owned by a single person up to 10 units, while Freddie Mac allows guarantee on no more than 4 units. They do have a slight difference in rules regarding down payments as well. Fannie Mae asks as little as 3% from home loan borrowers and Freddie Mac requires at least a 5% down payment, which means that it does not allow loans of more than 95% loan-to-value.
They both have a common goal in mind: to provide affordability to homeowners. They aim to provide a stability to the mortgage market so that it can continue to function. While Fannie and Freddie compete with each other in the same market, they really are very similar and have the same basic foundation and goals to help you, as a homeowner, get the most affordable loan that you can. Ask your loan officer what is best for you.
They are both Government Sponsored Enterprises (GSE) in the home mortgage business. They are very similar. they both buy mortgages on the secondary market, pool them, and then sell them as mortgage-backed securities to investors in the open market. The way they handle government guarantees, subsidies and direct government funding are the same.
Their main difference is that Fannie Mae primarily buys mortgages issued by banks while Freddie Mac buys mortgages issued by thrifts.
Fannie Mae was a federal program that was created in 1938 as part of the New Deal, and Freddie Mac was chartered by Congress as a private corporation in 1970. Fannie was monopolizing the mortgage market as a government agency until it became a private corporation in 1968. Freddie Mac was brought into the market to compete with Fannie Mae's monopoly so that lenders and bankers would have two options instead of just one. Today, Fannie Mae is a privately-owned corporation while Freddie Mae is a stockholder-owned corporation.
Fannie Mae allows guarantee on multiple properties owned by a single person up to 10 units, while Freddie Mac allows guarantee on no more than 4 units. They do have a slight difference in rules regarding down payments as well. Fannie Mae asks as little as 3% from home loan borrowers and Freddie Mac requires at least a 5% down payment, which means that it does not allow loans of more than 95% loan-to-value.
They both have a common goal in mind: to provide affordability to homeowners. They aim to provide a stability to the mortgage market so that it can continue to function. While Fannie and Freddie compete with each other in the same market, they really are very similar and have the same basic foundation and goals to help you, as a homeowner, get the most affordable loan that you can. Ask your loan officer what is best for you.
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