What is a GNMA or Ginnie Mae? GNMA stands for Government National Mortgage Association. Ginnie Mae allows for lenders to improve their standing by obtaining top tier prices for loans in what is known as the capital markets. When leaders need the flexibility to try to make new mortgage loans available to more borrowers, it is GNMA that can assist.
A GNMA functions the same pretty much as any other standard lending process. The biggest difference, though, is that Ginnie Mae does not actually issue, sell, or buy any mortgage-backed securities. It also does not purchase loans. GNMA approves loans that go into a pool to form securities. These then get issuance as instruments, making the more valuable and helping with flexibility. GNMA is the most popular type of mortgage-backed security in the world. The U.S. government guarantees the securities, which is why they are so popular. While they still carry risk, you do not have to worry about their collapse.