Ginnie Mae Is a Pillar of the Housing Finance System. Staffing Cuts Threaten Its Stability

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.