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Who Is Ginnie Mae Serving? Providing Access to Homeownership With FHA

For the past 55 years, Ginnie Mae has connected the US housing market to global capital in order to make the production of affordable housing and affordable homeownership a reality for millions of Americans. Since its inception in August 1968, Ginnie Mae has guaranteed approximately $9.8 trillion in mortgage-backed securities (MBS) in total, and currently has over $2.45 trillion in outstanding guaranteed unpaid principal balance.

Government mortgage insurance programs enable lenders to serve borrowers who are insufficiently served by the private market, while Ginnie Mae’s program allows lenders to scale their efforts by giving them access to global capital. Each of our insuring agency partners play a critical role in ensuring that American households can obtain affordable access to mortgages and rental opportunities.

This blog post is the first in a four-part series focusing on each of the government insuring agencies and the borrowers they serve. We will begin with the Federal Housing Administration (FHA) program, the largest contributor to Ginnie Mae’s portfolio and a program that has had a significant impact on access to credit and wealth formation for millions of lower income and minority households nationwide. FHA is not only Ginnie Mae’s largest portfolio contributor, but also its first, as the partnership between the two agencies dates back to 1970.

FHA-insured loans are the second most common type of mortgages in the market and the most prevalent type of government insured mortgage. Since its inception in 1934, FHA has endorsed more than 53 million single-family mortgages. Slightly under 99 percent of FHA's single family traditional fixed mortgages insured since Ginnie Mae's inception have been securitized in GNMA MBS. Currently, 96 percent of all active single family traditional loans insured by FHA are collateralized in GNMA MBS.

Since 1970, Ginnie Mae has securitized 63 million single-family mortgage loans, two thirds of which were insured by FHA. During that time, Ginnie Mae has also securitized 47 thousand multi-family mortgage loans, 96 percent of which were insured by FHA.

FHA insurance incentivizes lenders to serve borrowers who often cannot obtain credit through conventional mortgages. By insuring private lenders against losses resulting from defaulted mortgage loans, FHA insurance provides a path to homeownership for households with limited access to conventional mortgage financing. As a result, FHA acts as a vital catalyst for wealth creation, particularly for low- and moderate-income households. A study by the National Association of Realtors (NAR) has shown that over the 10-year period between 2012 and 2022, the value of a median-priced home in the U.S. increased by $190,000, making it that much more difficult for families of modest means to achieve homeownership. Acquiring a home is critical to wealth creation for most Americans, particularly for lower-income and minority households. The aforementioned NAR study also found that a typical homeowner's net worth is 40 times higher than that of a renter, demonstrating the centrality of homeownership in building wealth.

For millions of Americans, FHA-insured loans are an important first step in homeownership and wealth-building, especially first-time homebuyers, households from historically underserved communities, and borrowers with lower credit scores who may have difficulty in qualifying for a conventional loan or would only be able to obtain one at a prohibitively high interest rate.

Typically, upwards of 80 percent of purchase mortgages insured by FHA annually are made to first-time homebuyers. Data from the National Survey of Mortgage Originations (NSMO) shows that since the onset of the COVID-19 pandemic, 25%, or one out of every four first-time homebuyer mortgages, was an FHA loan.

FHA has been central not only to first-time homebuyers, but also to households of color. FHA’s analysis has determined that it currently serves Black borrowers at triple the rate of the rest of the market, and Hispanic borrowers at twice the rate of the rest of the market. Historical data on FHA-insured single family loans for which borrower ethnicity or race was disclosed show that 77 percent of the loans made to Hispanic borrowers and 76 percent of those provided to Black households were pooled into GNMA MBS.

FHA has also been an important means of homeownership access for borrowers with credit scores below 680. Analysis based on FICO score distribution figures included in the Urban Institute’s “Mortgage Insurance Data at a Glance 2021 Report” shows that nearly four out of five (79.3%) borrowers with credit scores below 620 who received single-family loans used FHA-insured financing. Close to three out of five (58.3%) of their counterparts with credits scores between 620 and 679 used FHA-insured mortgages. Based on the data reported and included in HUD's administrative records, since its inception, GNMA has securitized close to 96 percent of all FHA-insured single family traditional loans provided to borrowers with credit scores below 620.

Traditionally, GNMA’s mortgage-backed securities (MBS) have been the primary source of liquidity for FHA-approved lenders. Without Ginnie Mae’s contribution, millions of qualified potential FHA borrowers would be left unserved. For example, in 2022, FHA-insured mortgages accounted for 62 percent of issuance in Ginnie Mae pools. Ginnie Mae’s portfolio of Single-Family FHA-insured loans grew in 2022 to $1.13 trillion, compared to $1.03 trillion at the end of 2021.

FHA’s successful track record in promoting affordable and sustainable homeownership for underserved borrowers has generated broad positive social impact for the nation. And the liquidity afforded by Ginnie Mae’s programs has significantly expanded FHA’s reach. Together, FHA and Ginnie Mae make the dream of homeownership – and the wealth building opportunity it affords – a reality for millions of American families. ​​

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