Why Ginnie Mae securities are flat amid a declining bond market

SOURCE: Mortgage News Feed

Ginnie Mae TBAs represent the mortgage-backed security for government mortgage loans while Fannie Mae TBAs represent the usual conforming loan—the plain vanilla Fannie Mae 30-year mortgage—Ginnie Mae TBAs are where the government loans like FHA and VA loans go. The biggest difference between a Fannie Mae MBS and a Ginnie Mae MBS is that Ginnies have an explicit guarantee from the Federal government. Fannies do not, although there is a “wink wink, nudge nudge” guarantee. As a result, Ginnie Mae MBS trade at a premium to Fannie Mae TBAs. There are also two different Ginnie Mae TBAs: Ginnie 1s and Ginnie 2s.

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