Government National Mortgage Association's Secondary Mortgage Market Activities

CED-77-28: Published: Mar 8, 1977. Publicly Released: Mar 8, 1977.

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The Government National Mortgage Association participates in the buying and selling of mortgages in the secondary mortgage market.

The Association attempts to accomplish its legislatively assigned missions primarily by: (1) issuing to mortgage originators commitments to purchase mortgages with primarily below-market interest rates; (2) purchasing and selling such mortgages; and (3) guaranteeing securities, backed by pools of mortgages, that are issued by approved mortgage originators. Review of the Association's sales activity identified a number of alternatives that warrant study by the Association because they have potential to increase revenues or otherwise improve operations. The sale of Association mortgages directly to the Federal Financing Bank would allow the Association to adhere to the Office of Management and Budget's imposed outlay ceiling, while it would eliminate the need to sell the mortgage in the private market under unfavorable conditions.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Association might be able to receive a better return on the sale of securities if it sold the securities directly to investors rather than by blocks to syndicates which resell them at a profit. The Associations should also consider reducing the amount required for a security issue to an amount less than the present $1 million.

    Agency Affected:


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