What is the name of the government-owned entity that supports the secondary mortgage market by guaranteeing mortgage-backed securities?

The correct choice is Ginnie Mae, which stands for the Government National Mortgage Association. Ginnie Mae plays a crucial role in the secondary mortgage market by guaranteeing mortgage-backed securities that are issued by approved lenders, ensuring the timely payment of principal and interest to investors in those securities. This government backing enhances the attractiveness of these investments by reducing the risk associated with them, ultimately promoting liquidity and stability within the mortgage market.

The function of Ginnie Mae is vital for helping lower-income individuals and families achieve homeownership by making mortgage financing more accessible. It specifically focuses on loans that are insured or guaranteed by the FHA, VA, or other government entities.

In relation to the other entities mentioned, Fannie Mae and Freddie Mac primarily operate in the secondary mortgage market by buying loans from lenders and pooling them into mortgage-backed securities, but they are not directly government-owned like Ginnie Mae, which has a clear governmental guarantee associated with its offered securities. HUD refers to the Department of Housing and Urban Development, which oversees various housing-related programs but does not directly guarantee mortgage-backed securities.