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A guaranteed mortgage loan gives lenders the ability to qualify borrowers with looser eligibility requirements, allowing for lower credit scores, higher debt loads and more.
The loans are made by private lenders with the caveat that the government will pay off the loans if the company defaults on them. Chrysler did not go into default. Another example was the creation of the Emergency Loan Guarantee Board to administer $250 million in US government loan guarantees made to private lenders on behalf of Lockheed in 1971.
Fannie Mae buys loans from approved mortgage sellers and securitizes them; it then sells the resultant mortgage-backed security to investors in the secondary mortgage market, along with a guarantee that the stated principal and interest payments will be timely passed through to the investor.
Ginnie Mae is similar to Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) with the difference being that Ginnie Mae is a wholly owned government corporation whereas Fannie Mae and Freddie Mac are "government-sponsored enterprises" (GSEs), which are federally chartered corporations ...
Conventional loans – A conventional mortgage is not backed by the government or government agency; instead, it is made and guaranteed through a private-sector lender (bank, credit union ...
Types of loans: Fannie Mae and Freddie Mac make a market in conventional loans — mortgages originated and backed by private lenders — while Ginnie Mae solely focuses on government-agency ...
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