The Government National Mortgage Association (GNMA), also known as Ginnie Mae, is a U.S. government agency that operates within the Department of Housing and Urban Development (HUD). Established in 1968, GNMA is a crucial player in the mortgage-backed securities (MBS) market.

GNMA functions as a guarantor for mortgage-backed securities, specifically those backed by federally insured or guaranteed loans, such as loans issued by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). It provides a guarantee on the timely payment of principal and interest to investors who purchase these securities.

By guaranteeing these mortgage-backed securities, Ginnie Mae helps to ensure the availability of affordable mortgage financing for low- and moderate-income borrowers. It encourages lenders to make more loans by reducing the risk associated with mortgage-backed securities. Investors are attracted to Ginnie Mae securities due to their government backing, which makes them highly secure investments.

Overall, GNMA plays a vital role in promoting homeownership and providing liquidity to the mortgage market, contributing to the stability of the U.S. housing finance system.