Ginnie Mae MBS

More than half of all home mortgages originated each year are sold to investors as pass-through securities. Here is how it happens:

A mortgage lender makes a mortgage loan commitment to a home buyer, to finance or refinance a home mortgage loan.
The mortgage lender obtains a guarantee from Ginnie Mae.
The buyer (or refinancer) settles and the mortgage is obtained.
The lender pools similar mortgages and delivers the pool of loans to a securities dealer. The lender still is responsible for servicing the loans (i.e., collecting payments from the borrowers).
Securities dealers then sell mortgage-backed securities, guaranteed by Ginnie Mae, to investors. The securities dealer advises Ginnie Mae of the sales.
The lender continues to collect monthly principal and interest payments from the borrower and forwards the funds to Ginnie Mae.
Ginnie Mae disburses payments to investors. Ginnie Mae disbursements occur even if the payments have not been received from the borrower.


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