Or contact your local HUD office
December 13, 2001
GINNIE MAE TO BACK HIGHER VA HOME LOANS
WASHINGTON � Housing and Urban Development Secretary Mel Martinez today announced that the maximum amount of a VA-guaranteed home loan that can be placed in a Ginnie Mae mortgage backed security will be increased to $300,700, effective January 1.���
The $97,700 increase from $203,000, Martinez said, will allow lenders to use the Ginnie Mae program for these loans and is expected to lower the costs of loans to lenders and veterans who seek larger loans.�
"This is great holiday news for many hard-working families across the U.S. because it enables them to become homeowners,� Martinez said.� �Higher Ginnie Mae loan limits for VA loans will help continue to push the nation's homeownership rate to record heights."
Loans between $203,000 and $300,700 will require a downpayment sufficient to cover 25 percent of the loan when combined with the VA guaranty.� For example, a veteran who has a full VA entitlement will make a downpayment of $24,425 on a $300,700 loan.
Ginnie Mae last raised the ceiling in October 1994.� The change in the program is expected to save up to $3,000 in interest and lender fees for the largest loans.
Ginnie Mae, a government corporation within HUD, guarantees securities backed by home loans from lenders.� In doing this, Ginnie Mae supports federal housing initiatives by providing liquidity to the secondary mortgage market and by attracting capital to residential mortgage markets.� Its lower cost of doing business will provide the cost savings to the lenders and veterans for these larger loans.
Ginnie Mae differs from its cousins Fannie Mae and Freddie Mac because it only guarantees securities with mortgage loans backed by the Federal Housing Administration, also part of HUD, the Department of Veterans Affairs, and the Rural Housing Service.
Investors in Ginnie Mae securities receive guaranteed monthly payments of principal and interest on the pooled mortgages that back their securities, even if borrowers or issuers default on their obligations.
As a result, Ginnie Mae securities are some of the most widely held and traded mortgage-backed securities with more than $1.7 trillion issued since the program's inception in 1970.� Proceeds from the transactions have financed homeownership opportunities for more than 24.5 million American households.
Veterans who need more information should visit the HUD Veteran Resource Center, or call HUDVET toll free at (800) 998-9999.� Hearing impaired veterans may call (800) 483-2209.
Read the November 30, 2001, transmittal letter announcing the increase to Ginnie Mae program participants and more detailed information regarding statutory requirements of the mortgage-backed securities program.