The Government National Mortgage Association, known as Ginnie Mae, is a small agency that plays a huge role in American communities. It transforms a global supply of low-cost capital into mortgages and has made homeownership and rental financing available and affordable for more than half a century. Ginnie Mae attracts domestic and international investors, strengthening market confidence and keeping borrowing costs low. In fiscal year 2024 alone, it supported 1.3 million households, with more than 46 percent of loans (PDF) going to first-time homebuyers and veterans.
Ginnie Mae is a government corporation that is fully owned and operated within the US Department of Housing and Urban Development with a staff of under 280 people, and it guarantees and manages trillions of dollars’ worth of mortgage-backed securities (MBS), ensures MBS investor confidence in the obligations of hundreds of private mortgage lenders (“issuers”), and generates billions of dollars in profits every year. As a result, these lenders can borrow money in capital markets at low interest rates through all economic cycles, which they use to make mortgages. This stability provides a vital resource to first-time homebuyers, veterans, and rural families. It also protects taxpayers from footing the bill if one of Ginnie Mae’s issuers fails to meet its obligations.
But staffing cuts and disruptions threaten this stability, putting at risk Ginnie Mae’s core operations and increasing the chances that taxpayers will have to assume the debts of private sector issuers of Ginnie Mae-guaranteed MBS.
Cutting Ginnie Mae staff too deeply could incur long-term costs for the American people
Cutting staff could disrupt a positive stream of income for the government. Ginnie Mae generates substantial profits annually for taxpayers. In fiscal year 2024, its MBS portfolio stood at $2.64 trillion, and its activities generated 3.88 billion in revenue and $3.05 billion (PDF) in net earnings. In fact, Ginnie Mae programs are self-funded through investment income and lender fees. This is not an example of inefficient government operations—along with its sister mortgage guarantee programs at the US Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA), these are some of the most financially sound in the federal system.
Cutting staff could affect mortgage affordability and availability. Any contraction in mortgage availability via the Ginnie Mae market would lead to
- higher costs for borrowers;
- reduced credit availability for borrowers;
- consolidation of lenders, which will reduce competition; and
- deterioration of credit quality of the loans in FHA, VA, and Rural Housing Service mortgage portfolios that are collateralizing the MBS obligations Ginnie Mae is guaranteeing.
How disruptions at Ginnie Mae put the system at risk
Ginnie Mae works with approximately 300 issuers, ensuring that they have enough money to lend to homeowners and that investors in government-backed MBS receive timely payments. Its work is highly technical, from investor reporting, to monitoring issuer financial and operation risk, to ensuring continuity of mortgage servicing when issuers do fail, to running a securitization platform and serving as the central paying agent for the MBS.
Ginnie Mae’s work is also increasingly complex. Before the housing crisis, 75 percent of Ginnie Mae–backed mortgage lenders’ MBS borrowings were made by depository institutions regulated for safety and soundness by prudential regulators like the US Comptroller of the Currency or the Federal Deposit Insurance Corporation. Today, approximately 90 percent of the MBS guaranteed by Ginnie Mae are issued by independent mortgage bankers who do not have a prudential regulator and are overseen by state regulators and the Consumer Financial Protection Bureau, which is facing instability and uncertainty. Independent mortgage bankers tend to have very different financial structures and less access to stable liquidity sources than depositories. This change in issuer base has required deep expertise across issuer management, payment operations, risk management, and cybersecurity. These functions are not optional—an issuer’s failure to pay timely principal and interest payments on MBS obligations could put taxpayers on the hook for the failed issuers obligations.
Despite Ginnie Mae’s consistent and steady growth and essential role in the mortgage market alongside Fannie Mae and Freddie Mac, budget constraints have required Ginnie Mae to keep a lean workforce; it only recently received funding to hire and backfill for critical positions.
Today, like so much of the federal government, Ginnie Mae’s core functions are executed through a combination of staff and contracted services. Proper levels of staffing and support contracts are integral to operating more than $2.6 trillion in taxpayer guarantees and an associated securitization program.
Only four senior managers remain in place out of nine positions (with the chief risk officer currently doubling as acting president), and the risk that cuts to critical career staff and outsourced functions will lead to delays or mismanagement has grown.
Policymakers have a chance to protect this national asset
Ginnie Mae has upheld its mission for more than 55 years, including through major financial crises. It has consistently been a stabilizing force, ensuring mortgages are available even when markets falter. But this stability depends on its ability to function effectively, something that is now at risk.
Policymakers must recognize that Ginnie Mae is a pillar of the US financial system—a government corporation structured to generate revenue and ensure market liquidity. It is a core part of a secondary mortgage market that is trusted across the globe and uniquely enables the long-term fixed-rate mortgage, which is the hallmark of American homeownership.
Actions that weaken Ginnie Mae’s staffing, impair its ability to manage internal operations and vital contracts, or increase the chance that the government guarantee will be called upon when issuers default on their obligations could have real consequences for the stability of the housing finance system.
Alanna McCargo is a housing policy adviser and served as the most recent Senate-confirmed president of Ginnie Mae. She has held key leadership roles in financial services and with the leading housing finance policy research firm in Washington, DC. She is a national policy expert and influential voice on matters related to housing affordability, mortgage finance and servicing, and community and economic development.
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