The Government National Mortgage Association, better known as Ginnie Mae, is a government-owned CORPORATION that primarily provides INSURANCE for MORTGAGEs originating through Federal Housing Administration (FHA) and Veterans Administration (VA) government-loan programs. Ginnie Mae does not make mortgage LOANS; its mission is “to support expanded affordable housing in America by providing an efficient government-guaranteed secondary market vehicle linking the CAPITAL MARKETs with Federal housing markets.” Ginnie Mae helps make mortgagebacked securities more attractive to investors, thereby increasing the availability of mortgage credit. Ginnie Mae was created in 1968 as a wholly owned corporation within the Department of Housing and Urban Development (HUD). Its purpose is to serve low-tomoderate- income homebuyers. The National Housing Act was enacted on June 27, 1934, as one of several economic recovery measures during the GREAT DEPRESSION. It provided for the establishment of a Federal Housing Administration (FHA) to be headed by a federal housing administrator. Title II of the act provided for the insurance of homemortgage loans made by private lenders as one of the FHA’s principal functions. Title III of the act provided for the chartering of national mortgage associations by the federal housing administrator. These associations were to be private corporations regulated by the administrator, and their chief purpose was to buy and sell the mortgages to be insured by FHA under Title II. Only one association was ever formed under this authority, the National Mortgage Association of Washington, which was created on February 10, 1938, as a subsidiary of the Reconstruction Finance Corporation, a government corporation. That same year the association’s name was changed to the FEDERAL NATIONAL MORTGAGE ASSOCIATION (known as Fannie Mae). By revision of Title III in 1954, Fannie Mae was converted into a mixed-ownership corporation, its preferred stock to be held by the government and its COMMON STOCK to be privately held. By amendments made in 1968, the Federal National Mortgage Association was partitioned into two separate entities, one known as the Government National Mortgage Association (Ginnie Mae), the other, Federal National Mortgage Association. Ginnie Mae remained in the government, and Fannie Mae became privately owned by retiring the government-held stock. Ginnie Mae has operated as a wholly owned government association since the 1968 amendments. Ginnie Mae issues securities that pass through payments of principal and interest received on a pool of federally insured mortgage loans. These pools of loans are originated by commercial banks, mortgage bankers, and other mortgage-lending institutions. Ginnie Mae dictates the specifications regarding which loans can be placed into the pool; does not purchase the loans from originators; and guarantees that payments will be made on a timely basis, reducing the risk to investors. Because most mortgages are repaid before their maturity (on average, Americans change homes every seven years), holders of Ginnie Mae securities recover most of their principle investment well before the scheduled maturities of the pool of loans. In 2002 proposed legislation would allow Ginnie Mae to securitize conventional mortgage loans. SECURITIZATION is the process of aggregating a pool of debt instruments and issuing securities backed by the pool of loans. The legislation would authorize Ginnie Mae Choice and allow the government-owned corporation to compete directly with Fannie Mae and Freddie Mac (the FEDERAL HOME LOAN MORTGAGE CORPORATION) in the secondary mortgage-loan market.