General Mortgage Knowledge · 20% of the SAFE exammedium
Correct answer: Fannie Mae and Freddie Mac PURCHASE loans from lenders; Ginnie Mae does NOT buy loans — it GUARANTEES mortgage-backed securities backed by government loans (FHA/VA/USDA)
This is a critical distinction. Fannie Mae and Freddie Mac are GSEs that actually PURCHASE conforming conventional loans from lenders, then securitize them into agency MBS. Ginnie Mae is a government agency that does NOT buy any loans. Instead, Ginnie Mae GUARANTEES the timely payment of principal and interest on MBS that are backed by government-insured loans (FHA, VA, USDA). The original lender or an approved issuer creates the MBS; Ginnie Mae's guarantee makes those securities attractive to investors. This guarantee function — rather than purchasing — is what makes Ginnie Mae unique.
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