Ginnie Mae - Government National Mortgage Association
The Government National Mortgage Association, more often called “Ginnie Mae” or GNMA, is an entity of the US government under the Department of Housing and Urban Development (HUD) which provides the guarantee of payment for those invested in mortgage-backed securities through Ginnie Mae lenders, who back mortgages for the underserved.
Ginnie Mae, like some other government organizations, tries to provide an avenue for underserved folk to become homeowners. For instance, Ginnie Mae and the FHA rub shoulders a lot, working together (you know, the Federal Housing Administration, which provides super-low-cost mortgages for qualifying (poor and/or first-time) borrowers. GNMA also works with the VA (Veterans Admin) and the RHA (Rural Housing Admin).
Because this corporation ensures that interest and principal payments will be made (in a timely manner, of course) to investors, mortgage lenders can charge more for Ginnie Mae MBSs as compared to the regular MBSs markets (low risk usually costs more). With more capital flowing into Ginnie Mae, they can give out more mortgages to underserved folk.
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Finance: What are Bonds?393 Views
Finance a la shmoop what is a bond? well a bond is your word your promise your [Women shake hands]
handshake your John Hancock on a contracted piece of paper your mortgage
your credit card debt yeah their bonds to your "I swear I'm not a deadbeat"
declaration... that's your bond right well bonds come [Man lying on a sofa]
in many complex flavors and compositions simply put bonds are loans aka debt you
borrow money or you promise or you you bond that
you'll pay it back when you borrow money the amount you borrow is called the
principal you pay rent on that amount borrowed and that rent is called [rent appears at bank]
interest to the entity loaning you the money that interest is called yield
thank you very much for the yield like if the lender rents you a grand for a
year and you pay them a thousand 80 bucks at year-end paying back the
principal and then the rent on the money while the lender will have had a yield [Yield of lender appears]
of 8% on the grand that they loaned you so that's a bond you borrow money you
pay it back and if you don't the person who loaned you the dough well they [Person stamped with property of shmoop bank]
generally own your tuchus and yeah you know what Shakespeare said about bonds
yeah that's what he said so if you don't really know what you're doing don't do
it...