What is the role of Ginnie Mae (Government National Mortgage Association)?

The role of Ginnie Mae, or the Government National Mortgage Association, primarily involves providing a guarantee for mortgage-backed securities that are composed of loans insured by federal agencies such as the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA). This guarantee helps to ensure that investors in these securities receive timely payments, which in turn encourages lenders to make more affordable mortgage loans.

This guarantee effectively lowers the risk associated with these loans, promoting broader access to home financing for borrowers who might otherwise struggle to obtain conventional loans. By backing FHA and VA loans, Ginnie Mae helps support the housing market and keeps mortgage rates more competitive, benefiting both lenders and consumers. The other options do not accurately reflect Ginnie Mae's functions, as it does not directly create new loans, insure all commercial real estate loans, or regulate interest rates. The focus on guaranteeing specific types of loans highlights Ginnie Mae's significant role in the U.S. housing finance system.