2020 

ANNUAL 

REPORT

CONTENTS

4 A Word from the Secretary of

Housing and Urban Development

5 A Word from Ginnie Mae

6 Executive Summary

8 Ginnie Mae: Modernizing the MortgageBacked Securities Platform to Strengthen

Affordable Housing Finance

15 Management's Discussion and Analysis of 

Financial Condition and Results of Operations
A MESSAGE FROM THE SECRETARY

Since the first government guaranteed mortgage-backed security (MBS) was

issued 50 years ago, Ginnie Mae has been a consistent source of low-cost financing

for American housing. That consistency and reliability was never more important

than in 2020. This past year saw remarkable economic upheaval brought on

by a global health emergency. The nation’s housing market could have slowed

considerably, or even ground to a complete halt, because of this crisis. It didn’t,

though, in large part because of the work of Ginnie Mae and its government

guaranteeing and insuring partners: the Federal Housing Administration, the

Department of Veterans Affairs, and the United States Department of Agriculture.

Ginnie Mae and its government partners moved quickly to adapt to the rapidly

changing market conditions, keeping to their mission and commitment to provide

homeownership and rental housing finance safely and affordably for American families, all while protecting the U.S.

taxpayers. The result was a record-breaking year that saw $749 billion of MBS issued, and more than 2.8 million

families access quality homeownership and rental housing. Additionally, more than 965,000 families achieved the

dream of homeownership for the first time in 2020 through the Ginnie Mae MBS program. The year ended with

$2.12 trillion of Ginnie Mae MBS outstanding, another record. A remarkable achievement in a remarkable year.

While navigating unprecedented economic times, Ginnie Mae also kept innovating for the future. Leadership and staff

continued to drive the MBS program forward with the release of important long-term customer initiatives. Product

and program innovations such as Digital Collateral, which was accelerated in response to the pandemic to increase the

speed and security of MBS issuances, and MyGinnieMae, the company’s online business portal, will help secure and

accelerate the lending market’s ability to meet the financing needs of consumers, without additional risk to taxpayers.

Moreover, Ginnie Mae continued to build a culture of innovation in 2020 that positions it well for any new

responsibilities that may arise from President Trump’s Housing Finance Reform Plan. Ginnie Mae will always

adhere to its core principles as it responds to market challenges of mitigating risk exposure for American

taxpayers, maximizing the strengths of its model, and firmly establishing Ginnie Mae as a 21st-century company,

fully capable of attracting the global capital necessary to keep America’s housing market thriving.

Thank you to the dedicated and professional staff of Ginnie Mae for their unwavering service during

an extraordinary period to support the world’s finest housing finance system and facilitate affordable,

sustainable homeownership, and housing opportunities for millions of American households.

BENJAMIN S. CARSON, SR.

SECRETARY

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

4 | Our Guaranty Matters
A MESSAGE FROM GINNIE MAE

DEAR MR. SECRETARY, 

I am pleased to report that, during the 2020 Fiscal Year, Ginnie Mae continued its

history of effectively sourcing capital from the U.S. and around the globe on behalf

of homeowners and renters who rely on a housing market supported by governmentinsured lending programs — specifically, the programs administered by the Federal

Housing Administration, Department of Veterans Affairs, Department of Agriculture’s

Office of Rural Development, and the Office of Public and Indian Housing. As a

result, Ginnie Mae was able to help a record number of Americans achieve both

sustainable homeownership and access to quality, affordable rental housing.

During an unprecedented economic environment brought on by a national

health emergency, Ginnie Mae was an important stabilizer for the economy by serving as a steady conduit of

capital through our lender partners. As a result, Ginnie Mae achieved record business results and helped more

than 2.8 million homeowners and renters. Ginnie Mae issuance of MBS reached $749 billion this year, while

the total value of Ginnie Mae’s mortgage-backed securities (MBS) portfolio increased to $2.12 trillion.

We achieved these results even as our team moved to full-staff remote work in the middle of the fiscal year. We

maintained our focus on positioning our business platform for the future, processing record day-to-day business

volumes, all while leading an ambitious policy response to the unprecedented market disruptions resulting from the

pandemic. The most notable policy action was the expansion of an existing relief program into a national emergency

market liquidity facility: The Pass-Through Assistance Program (PTAP). PTAP was enhanced to help servicers who may

face a liquidity shortfall due to the unprecedented level of borrower delinquency. PTAP represented an adaptation

for emergency conditions of statutory duty to ensure the timely and full payment of P&I to Ginnie Mae investors.

In fiscal year 2020, Ginnie Mae held firm its top priorities to protect taxpayers, maintain ironclad support

for the government guarantee, ensure the vitality of the Ginnie Mae security, and safeguard the market

value of the Ginnie Mae MBS. Ginnie Mae made significant progress on these priorities by continuing to

enhance our management of counterparty risk, improve the technology infrastructure of the agency and

modernizing the MBS program to attract more capital to support government mortgage lending.

For example, in response to the pandemic, we accelerated steps toward the development, implementation

and acceptance of loan instruments that exist only in electronic form (“digital collateral”), an essential program

evolution to continue meeting the needs of an innovative government loan market. We continued to monitor

Issuer performance for activities that could jeopardize the performance of our securities and took steps to prevent

transactions that may negatively affect the market. We also supported Issuer liquidity by adding flexibility to

our Acknowledgement Agreement, creating additional financing options for holders of Ginnie Mae servicing.

The combination of these actions underscored our forward-looking commitment to the future of the Ginnie

Mae program for the benefit of the many Americans who rely on federally insured lending programs.

We will continue to invest in modernization efforts in the upcoming fiscal year and work toward meeting our mid- and

long-term strategic goals, while preparing for known macroeconomic risks such as the impending phase-out of LIBOR.

Our commitment remains undimmed as we stay true to our vision of maintaining an attractive security for investors,

facilitating liquidity in the U.S. housing market, and operating a fiscally sound program that minimizes risks to taxpayers.

ERIC BLANKENSTEIN 

EXECUTIVE VICE PRESIDENT,

CHIEF OPERATING OFFICER

Ginnie Mae 2020 Annual Report | 5
EXECUTIVE SUMMARY

Throughout Fiscal Year 2020 (FY 2020), Ginnie Mae delivered

strong results that fulfilled its mission, in addition to soundly

managing its finances and operations. Ginnie Mae’s FY 2020

production was supported by a strong domestic and international

investor base that financed the purchases and refinances of singlefamily and rental housing for more than 2.8 million households.

The global demand for Ginnie Mae securities remains

strong, driven by an array of investors including central

banks, sovereign wealth funds, and multinational

financial institutions. In FY 2020, investors purchased

a record $749 billion in newly issued mortgage-backed

securities (MBS) guaranteed by Ginnie Mae. Ginnie Mae

ended FY 2020 with $2.12 trillion of MBS outstanding.

Ginnie Mae maintained a laser-like focus on its mission

to support mortgages insured by the Federal Housing

Administration (FHA), Department of Veterans Affairs

(VA), U.S. Department of Agriculture Rural Development,

and Office of Public and Indian Housing (PIH). FHAinsured mortgages accounted for 51.1 percent of FY

2020 loan issuance in Ginnie Mae pools, VA-guaranteed 

mortgages accounted for 43.8 percent, and Rural

Development and PIH loans contributed the remainder.

6 | Our Guaranty Matters

The availability of Ginnie Mae MBS helps provide access

to credit for middle- and lower-income Americans,

many of whom are first-time homebuyers, through the

federally insured mortgage programs. By securitizing

these loans into MBS, explicitly guaranteed by the full

faith and credit of the U.S. Government — the only

MBS with this kind of backing — Ginnie Mae is able to

lower the cost of mortgage funding and pass along

the savings to support housing and homeownership 

in American communities. For more than 50 years,

Ginnie Mae has provided liquidity and stability through 

all market cycles, serving as the principal financing

arm for government-insured loans and ensuring 

that mortgage lenders have the funding necessary

to provide loans to all qualified consumers.

This annual report is designed to provide

background on Ginnie Mae and its current financial

situation to policymakers and other interested

parties. The report is prepared annually to satisfy 

applicable legal requirements in accordance with

and pursuant to the provisions of Government

Corporation Control Act, 31 U.S.C. Section 9106.
Ginnie Mae 2020 Annual Report | 7
GINNIE MAE: MODERNIZING THE

MORTGAGE-BACKED SECURITIES

PLATFORM TO STRENGTHEN

AFFORDABLE HOUSING FINANCE

Chartered as a government corporation within the

Department of Housing and Urban Development (HUD),

Ginnie Mae is the only federal agency tasked with the

administration and oversight of an explicit full faith and

credit guaranty on mortgage-backed securities (MBS).

8 | Our Guaranty Matters
Ginnie Mae has been an integral part of the U.S.

housing finance system for more than 50 years. The

government guaranty the organization manages 

ensures the timely payment of scheduled principal

and interest due to the owner of the security.

Because of that guaranty, mortgage lenders can 

obtain a better price for their mortgage loans in the

secondary mortgage market. Lenders can then use 

the proceeds to make new mortgage loans to firsttime homebuyers, veterans, rural homeowners, low-to

moderate-income borrowers and others who qualify 

for support under federal mortgage programs. This

increases liquidity in the housing finance system,

which in turn leads to a lower cost of homeownership

for borrowers who use the federal housing finance

programs Ginnie Mae’s MBS program supports.

Ginnie Mae has seen unprecedented growth in

securities issued over the past decade. In fiscal

year (FY) 2020, the total value of its MBS principal

outstanding reached $2.12 trillion. The past year’s

growth is due to the broad strength of the American

housing market, fueled by record-low mortgage

rates, as well as Ginnie Mae’s stewardship of the

MBS program and its continuing ability to attract

investment capital from around the world.

In FY 2020, the organization did the following:

• Moved further along the path of platform

modernization with the full launch of the

MyGinnieMae portal for program participants. 

• Progressed toward the acceptance of digital collateral

for securities. 

• Implemented other technological improvements that

position Ginnie Mae to remain vital through the everchanging dynamics in the housing finance market.

Importantly, in FY 2020 Ginnie Mae launched its

NextGen transformation effort. In the initial stage,

Ginnie Mae staff comprehensively reexamined the

MBS program and platform to identify opportunities

for reengineering that will position the organization

to continue to thrive over the decades ahead.

Ginnie Mae also aggressively responded to the

COVID-19 national emergency. The organization

redirected its own resources and collaborated with other

government agencies to implement an unprecedented

number of program changes, demonstrating Ginnie 

Mae’s flexibility. This work supports stakeholders

navigating the ongoing pandemic while also laying

the foundation for increased resilience in the future.

In short, Ginnie Mae’s staff is building the agency for

the future of housing finance and positioning Ginnie

Mae to remain the significant source of mortgage

capital that diverse market participants rely on and

that investors and policymakers can count on as

housing finance reform takes shape in coming years.

To that end, in FY 2020 Ginnie Mae made strides

toward each of its three strategic goals:

1. Maintaining the vitality of the MBS program.

2. Protecting the government guaranty.

3. Safeguarding the Ginnie Mae security.

Ginnie Mae 2020 Annual Report | 9
STRATEGIC GOAL 1: MAINTAINING THE

VITALITY OF THE MBS PROGRAM

To maintain the vitality of the MBS program, in FY

2020 Ginnie Mae introduced program innovations that

provided enhanced value to Issuers and improved

the overall user experience. These enhancements

streamlined the processes by which Issuers package,

securitize, and sell MBS to investors (including

mortgages originated using digital notes); remit

payments to investors; and report data. Each of these

steps is essential to the MBS program’s ability to meet

the needs of a dynamic American housing market.

The COVID-19 emergency led to several new program

enhancements. Ginnie Mae accelerated the rollout of

its interim pilot program for digital collateral. During

the year, the organization finalized the procurement

of an eVault system, published final standards for

eNotes, and began approving participants in the digital 

collateral program rollout. It was a milestone year

in the effort to build on previous work in mortgage

digitalization and bring the government sphere to an

equal footing with conventional MBS. As a result, Ginnie

Mae achieved greater momentum in its wide-ranging

drive to use technology to reduce costs, decrease

risks, and provide a better borrower experience.

10 | Our Guaranty Matters

While Ginnie Mae was driving progress in digitalizing

mortgage instruments, it also was bringing online

the MyGinnieMae portal, its new on-ramp to key

business processes. The organization met targets for

onboarding organization administrators, assigning

user functional roles, and removing legacy credentials.

These successes set the table for fully implementing

the portal (and decommissioning obsolete systems 

and processes) by the end of calendar year 2020.

MyGinnieMae sets the stage for Ginnie Mae to

modernize multiple business applications and 

migrate from legacy systems. It enhances security

and controls, increases transparency, and introduces 

new efficiencies to business transactions.

These externally facing measures are supported by

focused investments in internal enterprise technology,

buttressing an existing environment that supports

continued innovation. In FY 2020, Ginnie Mae’s IT

Consolidation Program team defined an improved

path for leveraging the new cloud solution to

improve system stability on the current platform and

ensure compliance. This new cloud solution is being

developed to support current operations, future

software development requirements, and the Ginnie 

Mae NextGen platform that will be planned in 2021.

Proof of concept projects are underway to show how

Ginnie Mae can migrate all its business applications

and operate them in the new cloud solution.
STRATEGIC GOAL 2: MANAGING RISKS TO

PROTECT THE GOVERNMENT GUARANTY

The Ginnie Mae MBS program relies on a variety of

institutions to issue and service the MBS it guarantees.

As this universe of program participants has

changed over the last decade, Ginnie Mae’s efforts to

manage “counterparty risk” have also increased.

Ginnie Mae’s approach to managing counterparty risk

recognizes the multifaceted nature of risk in today’s

complex and evolving financial markets. The organization 

works diligently to maintain a risk program that is

appropriate to the environment in which it operates and

increasingly is driven is by new forms of data analysis.

Because of the COVID-19 pandemic, Ginnie Mae

expanded its emergency Issuer liquidity support

program as a safeguard against possible failures at

its counterparties. Most notably, the organization

rolled out an expanded version of the Pass-Through

Assistance Program (PTAP), enhanced to provide 

“last resort” principal and interest advance support

for Issuers on a national level and without the

consequence of being declared in default. 

While PTAP involved Ginnie Mae advancing funding

to Issuers, continuing modernization of the Ginnie

Mae Acknowledgement Agreement in FY 2020 gave

Issuers greater ability to obtain private market financing

to meet their servicing advance needs. Language

supporting new advance facilities was approved

for both the GMSR securitization structure and the

traditional Acknowledgment Agreement structure,

and Ginnie Mae worked to make this additional facility

work for both new and existing Issuer financings.

The ability to make servicing advances via Ginnie

Mae’s Acknowledgement Agreement provides

critical liquidity sources for Issuers and helps mitigate

counterparty risk in the program. This accomplishment

advances Ginnie Mae’s goal of attracting more

long-term, stable capital into the system.

In FY 2020, Ginnie Mae also continued enhancing its

Issuer Stress Testing model framework, most notably

integrating industry feedback received in the FY

2019 Request for Input (RFI) process. The framework

continues to evolve to increase the ability of the model

to inform Ginnie Mae’s understanding of risk, which

in turn affected policy development, institutional

credit decisions, and engagement with Issuers.

Ginnie Mae will continue to evolve its counterparty risk

framework in 2021 and develop policies that ensure

a healthy program and minimize risks to taxpayers.

Ginnie Mae 2020 Annual Report | 11
STRATEGIC GOAL 3: SAFEGUARDING

THE GINNIE MAE SECURITY

Fixed-income investors have a variety of assets to choose

from around the world, and yet Ginnie Mae MBS have

consistently remained an attractive investment. Ginnie

Mae’s MBS are sought-after assets in part because

the organization takes seriously its duty to protect

the integrity of its securities by continually monitoring

and supporting their reliability and performance. 

The COVID-19 national pandemic and its

effect on homeowners and servicers created

unprecedented market conditions in FY 2020, but

Ginnie Mae took steps to meet the challenge.

Among these were actions to address the potential for

negative effects on the prepayment patterns of MBS, as

servicers responded to extraordinary levels of borrower

delinquency and forbearance requests. Recognizing that 

the new circumstances could lead to distortions in how

delinquent loans are bought out of Ginnie Mae pools, the 

organization implemented a new policy for the pooling

of reperforming loans. The intent of the policy is to guard

against loan buyouts that are not driven by borrower

needs or the requirements of the insuring agencies.

THE ROAD AHEAD

Ginnie Mae’s steadfast focus on its mission through

the economic tumult of 2020 is a testament to the

culture of risk management, collaboration, and flexibility

created over the decades. Each day Ginnie Mae staff

members work diligently to maintain the organization’s

strong legacy while also preparing for the future. Ginnie

Mae will continue to explore new ways of applying

the basic principles that have worked so well in all

market conditions since the program’s inception.

12 | Our Guaranty Matters

In FY 2020, Ginnie Mae also improved its multiclass

mortgage securities programs, automating important

processes and diversifying investor support for these

securities, which bolster the price of Ginnie Mae

MBS to the ultimate advantage of homeowners.

The REMIC Gateway project launched in August 2020 is

just one of these improvements. Gateway will modernize

operations, processes, and technology within Ginnie 

Mae’s Multiclass products, and enable the organization to

automate workflows, develop refined quality checks, and

improve communication between market participants. 

Ginnie Mae’s comprehensive approach to safeguarding 

its security balances the interests of investors,

Issuers, taxpayers, and homeowners and maintains

the vibrancy and liquidity of the program.

Ginnie Mae’s key role in the evolving housing policy

landscape is undiminished. In the years ahead, the 

importance the Ginnie Mae security plays in the housing

finance system will help ensure that Ginnie Mae continues

to be a key participant in its evolution. Ginnie Mae

delivered record security production volume in FY

2020, evidence of a flexible business model designed

to seamlessly meet the needs of participants in all

market conditions. The organization is fully equipped

to continue serving the mission given to it by Congress,

and it is prepared to take on any responsibilities

assigned to it in the future. Ginnie Mae will handle any

challenge and seize every opportunity that brings

global capital into the U.S. housing finance market,

all while minimizing risk to the American taxpayer.
Ginnie Mae 2020 Annual Report | 13
14 | Our Guaranty Matters
MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL

POSITION AND RESULTS

OF OPERATIONS1

The following is management’s discussion and analysis

(MD&A) of the financial position and results of operations

of Ginnie Mae for the fiscal year ended September 30,

2020. This MD&A should be read in conjunction with

Ginnie Mae’s financial statements and related notes,

included in this annual report, and issued to Congress.

1 In some cases, percentages and certain numbers may not foot due to rounding

Ginnie Mae 2020 Annual Report | 15
COVID-19 PANDEMIC IMPACT

The COVID-19 pandemic adversely affected the national

economy during the current fiscal year. The impact

of the pandemic differs from previous economic

downturns because of the high level of uncertainty as to

when extensive shutdowns and reductions in business

activities will revert to pre-pandemic levels. As business

and economic stagnation continues, unemployment

levels remain substantially elevated and the U.S. GDP

remains lowered from pre-pandemic levels. The federal

government has passed legislation to reduce the

economic impact of the COVID-19 pandemic, including

an expansion of unemployment benefits, stimulus checks 

to eligible taxpayers, and funds to assist businesses.

Forecasts and expectations relating to the impact 

of the COVID-19 pandemic are subject to significant

uncertainty. Various factors related to the pandemic

are difficult to assess and will have a material impact

on our financial position and operations. Such factors

include the length and severity of COVID-19 outbreaks,

consumer and business behavior following the

pandemic, timing and speed of the economic recovery, 

governmental actions and support, and loan forbearance 

and loss mitigation efforts, among other variables.

Currently, we expect COVID-19 to affect our business

into fiscal year 2021. However, the housing market has

shown signs of recovery with increases in home prices

and high levels of mortgage refinances due to the low

interest rate environment. We expect refinance activity to

remain elevated as interest rates are expected to remain

near record-lows during fiscal year 2021. As increased

unemployment rates continue, some existing renters

will face economic hardship causing delinquencies, loss

mitigation, and buyouts to increase in the near term.

In March 2020, the Coronavirus Aid, Relief, and Economic

Security Act, referred to as the CARES Act, was enacted

to provide financial relief to businesses, individuals, and

public institutions affected by the COVID-19 pandemic.

This Act offers financial institutions relief regarding their

accounting and reporting requirements for troubled debt 

restructurings (TDRs) resulting from loan modification

activities related to the COVID-19 national emergency.

In April 2020, a related Interagency Statement

16 | Our Guaranty Matters

from financial regulators was issued encouraging

financial institutions (issuers, servicers, etc.,) to work

constructively with borrowers impacted by COVID-19 and

providing additional information over loan modifications

to help clarify interactions between the Interagency

Statement and related relief provided by the CARES

Act. Refer to Note 2: Summary of Significant Accounting

Policies and Practices for further details regarding the

CARES Act and Interagency Statement’s impact on

our business and COVID-19 related forbearances.

Ginnie Mae has taken actions to assist over 2.7 million

borrowers, as well as renters, issuers, and servicers to

help alleviate the impact of the COVID-19 pandemic. Our

Pass-Through Assistance Program (PTAP) offers liquidity 

assistance to issuers required to advance payments

to investors. Additionally, we continued to facilitate

usage of mortgage servicing rights (MSRs) as financing

collateral under our Acknowledgment Agreements, and

we approved a private market servicer liquidity facility

which finances the advanced payments that a servicer

makes in connection with individual loans in mortgage

backed securities (MBS) pools. These programs not only

help issuers and servicers with short-term liquidity issues

but also ultimately support the housing market while an

elevated number of borrowers and renters experience 

forbearance due to COVID-19-related economic hardship. 

Ginnie Mae has elected to account for modifications

in accordance with the guidance outlined within the

Interagency Statement on Loan Modifications by

Financial Institutions Working with Customers Affected

by the Coronavirus. For loan modifications subject to

relief under the Interagency Statement, institutions

may presume borrowers are not experiencing financial

difficulties at the time of the modification for purposes

of determining TDR status, and thus no further TDR

analysis is required for each loan modification in the

program. In accordance with the Interagency Statement,

loans subject to relief will continue to be presented

as current within the financial statements. Further,

these loans will continue to recognize interest income

subject to Ginnie Mae’s existing accounting policy.

Refer to Note 10: Mortgage Loans Held for Investment

Including Accrued Interest, Net for further details.
Our business continuity and resiliency plans have allowed us to keep our

employees safe while still fulfilling our mission. Our entire workforce and

the workforce of our key stakeholders (servicers, issuers, strategic

business partners) have worked in a 100% remote environment

since mid-March, limiting exposure to COVID-19. To date, our

internal systems and processes have successfully supported

the transition to the remote working environment despite

the shift in how we operate. We have continued to meet

milestones along our Modernization Roadmap, as well

as, our audit remediation plan without interruption.

Ginnie Mae and the industry have leveraged

technology in the shift to remote work, and

we have reached record high MBS issuance

volumes during fiscal year 2020 despite

the pandemic. We continue to assess

our return to office plan, and the

plan will not compromise the

health and well-being of 

our employees and the 

communities we serve.

Ginnie Mae 2020 Annual Report | 17
PASS-THROUGH ASSISTANCE PROGRAM

The National Emergency declared by the President of the

United States on March 13, 2020 and the supplemental

CARES Act signed on March 28, 2020 provided financial

relief to businesses, individuals and public institutions

affected by COVID-19. In response to these declarations,

Ginnie Mae revised and expanded its PTAP to specifically 

authorize it for use in response to the COVID-19 National

Emergency. The purpose of this program is to assist

our issuers meet their pass-through obligations to MBS

holders by supporting issuers in their administration of

borrower relief measures, such as extended forbearance

and moratoriums on foreclosures and evictions, while

minimizing any disruptions to the mortgage servicing

market. Ginnie Mae entered into a Memorandum of

Understanding (MOU) with the Secretary of the Treasury

in response to the COVID-19 national emergency, in

which Ginnie Mae may issue obligations to the Secretary

of the Treasury in an amount outstanding at any one

time sufficient to enable Ginnie Mae to carry out its

functions under Title III of the National Housing Act.

Ginnie Mae successfully operationalized PTAP for use

by approved Single Family issuers in April 2020, just

30 days after the National Emergency was declared.

PTAP assistance for approved Multifamily issuers

was released the following month (May 2020).

18 | Our Guaranty Matters

To apply for PTAP assistance, issuers must agree to the

overall terms of the PTAP, as well as submit a separate

request for each month that assistance is needed. PTAP

funds may be used only to cover shortfalls related to

principal and interest payments owed to MBS holders

associated with loans that are delinquent but may not

be used to cover other issuer operational or servicing

costs. From April to September 2020, Ginnie Mae has

approved and provided PTAP assistance funding to 

a total of 9 Single Family issuers. The total amount

of PTAP assistance approved through September 

30, 2020 is $11.5 million, with $8.4 million already

repaid by issuers; the total amount of PTAP assistance

outstanding as of September 30, 2020 is $3.1 million.

PTAP information, including historical data, program

FAQs, and links to required application forms

and timeline information are made available on

the official Ginnie Mae website (www.ginniemae.

gov) under the issuers/PTAP Assistance tab.
FINANCIAL POSITION

In fiscal year 2020, Ginnie Mae generated ample cash to fund its operations. As highlighted in Figure 1, total

assets as of September 30, 2020 were $34.7 billion, total liabilities were $8.7 billion and investment of the U.S.

Government was $26.1 billion. As of September 30, 2020, Ginnie Mae held unrestricted cash and cash equivalents

of $24.5 billion which represents 70.5 percent of Ginnie Mae’s total assets, and an additional $1.1 billion in

restricted cash and cash equivalents. Ginnie Mae has increased its total cash and cash equivalents2 balances

for five straight years since 2015. Mortgage loans held for investment including accrued interest, net was $2.1

billion as of September 30, 2020. It has steadily been declining since 2015 as loans get paid down, as a result of

scheduled and unscheduled payments, or moved to foreclosure and to Real Estate Owned (REO) properties.

The guaranty asset was $6.8 billion as of September 30, 2020 which represents 19.4 percent of total assets.

The guaranty liability for the fiscal year 2020 is $8.0 billion, which represents 92.5 percent of total liabilities.

Figure 1 – Selected Financial Data from Balance Sheet

September 30, 2020

(Dollars in thousands)

Assets

Cash and cash equivalents $

Restricted cash and cash equivalents

Mortgage loans held for investment including accrued interest, net

Guaranty asset

Other assets3

24,512,125

1,061,628

2,119,470

6,755,883

298,211

Total Assets $ 34,747,317

Liabilities

Liability for loss on mortgage-backed securities program guaranty $

Guaranty liability

Other liabilities4

43,439

8,041,340

604,098

Total Liabilities $ 8,688,877

Investment of U.S. Government $ 26,058,440

Total Liabilities and Investment of U.S. Government $ 34,747,317

2 Total cash and cash equivalents includes unrestricted and restricted cash

3 Other assets include: Accrued fees and other receivables; Claims receivable, net; Advances, net;

Acquired property, net; Fixed assets, net; Mortgage servicing rights; Reimbursable costs receivable, net;

Pass-through assistance program receivables including accrued interest, net; and Other

4 Other liabilities include: Accounts payable and accrued liabilities; Deferred liabilities and

deposits; Deferred revenue; and Liability for representations and warranties

Ginnie Mae 2020 Annual Report | 19
Ginnie Mae’s primary sources of revenue are guaranty 

fees and commitment fees from the issuance of MBS.

Ginnie Mae reported $25.6 billion total cash and cash

equivalents as of September 30, 2020, of which $24.5

billion and $1.1 billion were unrestricted and restricted,

respectively. Unrestricted and restricted cash and cash 

equivalents included $8.5 billion and $17.0 billion of

U.S. Treasury overnight certificates and Funds with U.S.

Treasury, respectively, as of September 30, 2020.

Ginnie Mae’s MBS guaranty is backed by the full faith and

credit of the U.S. Government. Currently, Ginnie Mae’s

activities are self-financed and do not require financial

assistance from the U.S. Government. Rather, Ginnie Mae

generates income, which increases U.S. Government

receipts. Ginnie Mae’s management believes that the

organization should continue to maintain adequate 

Figure 2 – Balance Sheet Highlights and Liquidity Analysis

capital reserves to withstand downturns in the housing

market that could cause issuer defaults to increase.

Ginnie Mae’s primary uses of cash are for administrative

costs and contractor costs related to the support of its

mortgage backed securities program and non-pooled 

asset portfolio. Refer to Results of Operations and

Expenses section for further detail. Purchases of loans

held for investment were $13.1 million in fiscal year 2020.

Ginnie Mae primarily purchases loans in the event of

issuer default, at which point Ginnie Mae assumes the role

of the defaulted and extinguished issuer. Purchases of

fixed assets were $8.4 million in fiscal year 2020. Ginnie

Mae’s fixed asset purchases include commercial software,

hardware, and internally developed software. See Figure 

2 for Balance Sheet Highlights and Liquidity Analysis.

For the year ended

September 30, 2020

(Dollars in thousands)

Balance Sheet Highlights

Total Cash and cash equivalents5 $

Other

Total Assets

Total Liabilities

25,573,753

9,173,564

34,747,317

8,688,877

Liquidity Analysis

Total UPB Outstanding6 2,117,699,000

Investment of U.S. Government as a Percentage of Average Total Assets 75.9%

Capital Adequacy Ratio7 1.2%

5 Total cash and cash equivalents includes unrestricted and restricted cash

6 Unpaid Principal Balance (UPB) of Ginnie Mae MBS

7 Liability for loss on mortgage-backed securities program guaranty and Investment of U.S.

Government divided by the sum of Total Assets and Average UPB Outstanding

LIQUIDITY AND CAPITAL ADEQUACY

20 | Our Guaranty Matters
RESULTS OF OPERATIONS

EXPLANATION AND RECONCILIATION OF GINNIE MAE’S USE OF NONGAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES

Throughout this MD&A, non-GAAP financial measures are used to provide users with meaningful insights

into Ginnie Mae’s results for the period presented. Non-GAAP financial measures represent the comparable

GAAP financial measure adjusted for certain items outside of normal business operations. Whenever used,

the non-GAAP financial measures are reconciled to GAAP measures to show adjustments applied.

Below are the non-GAAP financial measures used in this MD&A:

NON-GAAP RESULTS OF OPERATIONS (EARNINGS)

To arrive at the non-GAAP earnings, GAAP results of operations are adjusted for expense or income

items that do not involve any real cash flow impact for Ginnie Mae, as shown in the table below:

Figure 3 – Non-GAAP Results of Operations for Fiscal Year 2020

For the Year Ended

September 30, 2020

(Dollars in thousands)

GAAP Results of Operations $

Adjustments for:

Income on guaranty obligation

Total Non-cash Other (Gains)/Losses8

Total (Recapture) / Provision

Fixed asset amortization

1,116,860

(2,529,611)

2,846,007

50,013

22,643

Non-GAAP Results of Operations $ 1,505,912

8 Total Non-cash Other Gains/Losses includes: Gain (Loss) on guaranty asset and Gain (Loss) on mortgage servicing rights

Ginnie Mae 2020 Annual Report | 21
FREE CASH FLOW

As Ginnie Mae is expected to have enough cash reserves to satisfy its guaranty to investors,

its free cash flow has been determined as cash flow from operating activities.

Figure 4 – Free Cash Flow for Fiscal Year 2020

For the Year Ended

September 30, 2020

(Dollars in thousands)

Cash generated from operating activities $

Adjustments for:

Purchases of fixed assets

1,638,887

(8,419)

Free cash flow $ 1,630,468

REVENUES

Ginnie Mae generated positive results of operations (i.e., net gain) of $1.1 billion in fiscal year 2020. Total revenues

were $4.3 billion in fiscal year 2020 which includes income on guaranty obligation of $2.5 billion for amortization on

Ginnie Mae forward program. The total revenues were offset by $317.9 million of total expense and $2.8 billion of fair

value loss on guaranty asset. The fair value loss on guaranty asset was driven by changes in market conditions and

updates made to certain models used to estimate the guaranty asset and guaranty obligations. The combination of

market volatility and model refinements resulted in a significant change in the estimated fair value of the guaranty

asset as compared to prior periods (See Note 5: Financial Guarantees and Financial Instruments with Off-Balance

Sheet Exposure for additional information). Ginnie Mae’s core business and overall cash position remains strong as

evidenced by positive non-GAAP Earnings of $1.5 billion. Ginnie Mae’s non-GAAP Results of Operations (Earnings) as a

percentage of average total assets of 4.4 percent demonstrates its ability to generate net earnings for the year from its

core business and highlights Ginnie Mae’s actual performance and positive cash flow impact for Ginnie Mae. See Figure

5 for Highlights from Statement of Revenues and Changes in Investment of U.S. Government and Profitability Ratios.

22 | Our Guaranty Matters
Figure 5 – Highlights from Statement of Revenues and Changes in Investment of U.S. Government and Profitability Ratios

For the year ended

September 30, 2020

(Dollars in thousands)

Highlights from Statement of Revenues and Changes

in Investment of U.S. Government

MBS program income9

Income on guaranty obligation

Other interest income

Total Revenues

Fixed asset depreciation and amortization

Administrative expenses

Mortgage-backed securities program and other expenses10

Acquired Property expenses, net

Total Expenses

Total Recapture (Provision)11

Total Other Gains / (Losses)12

Results of Operations

GAAP Results of Operations

Non-GAAP Results of Operations (Earnings)

$ 1,679,736 

2,529,611

118,588

4,327,935

(22,643)

(31,102)

(258,658)

(5,512)

(317,915)

 (50,013)

(2,843,147)

1,116,860

1,505,912

Profitability Ratios

Return on Average Total Assets 3.3%

Non-GAAP Results of Operations (Earnings) as a percentage of Average 4.4%

Total Assets

Non-GAAP Results of Operation (Earnings) as a percentage of Total 34.8%

Revenues

Total Expense to Average UPB Outstanding (1.5 basis points)

Total Recapture (Provision) for Losses to Average UPB Outstanding13 (0.24 basis points)

In fiscal year 2020, Ginnie Mae earned total revenue of $4.3 billion. Revenue streams for Ginnie Mae

mainly consist of MBS program income, income on guaranty obligations, and other interest income.

9 MBS program income includes: MBS guaranty fees; interest on mortgage loans held for investment; interest on passthrough assistance program receivable; commitment fees; multiclass fees; and other MBS program income

10 Mortgage-backed securities program and other expenses includes contractor expenses

totaling $245.4 million. Refer to Expenses section for further details

11 Total recapture (provision) includes: recapture (provision) for mortgage loans held for investment including accrued interest, net;

recapture (provision) for pass-through assistance program receivable including accrued interest, net; mortgage-backed program

guaranty; claims receivable; loss on uncollectible advances; loss on accrued interest receivable; and acquired property

12 Total other gains (losses) includes: gains and losses on guaranty asset; mortgage servicing rights (MSR); disposition of investment; and other

13 Total Recapture (Provision) for Loss divided by Average UPB Outstanding

Ginnie Mae 2020 Annual Report | 23
MBS PROGRAM INCOME

MBS program income consists primarily of guaranty fees, interest on mortgage loans held for

investment, commitment fees, multiclass fees, and other MBS program income. For fiscal year 2020,

MBS program income was primarily driven by guaranty fees of $1.4 billion, followed by gross interest on

mortgage loans held for investment of $106.7 million, commitment fees of $152.1 million and multiclass

fees of $31.9 million. Combined, guaranty fees, interest on mortgage loans held for investment and

commitment fees contributed 97.8 percent of total MBS program revenue for fiscal year 2020.

Guaranty Fees – Ginnie Mae guarantees the payment 

of principal and interest passthrough to its MBS

investors and charges a fee for providing this guarantee,

which is backed by the full faith and credit of the U.S.

Government. These fees are received over the life of

the Ginnie Mae securities. Guaranty fees are collected

on the aggregate UPB of the guaranteed securities

outstanding. MBS guaranty fees were $1.4 billion 

in fiscal year 2020. The outstanding MBS portfolio

balance at the end of fiscal year 2020 was $2.1 trillion.

See Figure 6 for UPB Outstanding in Ginnie Mae’s MBS

portfolio from fiscal year 2018 to fiscal year 2020.

Interest on Mortgage Loans Held for Investment –

Ginnie Mae captures interest on mortgage loans

held for investment at the contractual rate (gross

interest) and records an allowance on accrued

interest to the extent interest is uncollectible including

recoverability per insurance guidelines for insured 

loans. In fiscal year 2020, gross interest on mortgage

loans held for investment was $106.7 million.

Commitment Fees - Ginnie Mae earns a fee for providing

approved issuers with the authority to pool mortgages

into Ginnie Mae MBS. This authority expires at the end

of the 12th month from its approval for single family

issuers and 24th month from its approval for multifamily

issuers. Ginnie Mae receives commitment fees as issuers

request commitment authority. Ginnie Mae issued $892.0

billion in commitment authority in fiscal year 2020.

Ginnie Mae recognizes the commitment fees as earned

when issuers use their commitment authority. Total

commitment fees earned in fiscal year 2020 were $152.1

million. Commitment Fees are deferred until earned or

expired, whichever occurs first. As of September 30,

2020, commitment fees deferred totaled $47.0 million.

$2,140

$2,120

$2,100

$2,080

$2,060

$2,040

$2,020

$2,000

$1,980

$1,960

$1,940

Figure 6 – UPB Outstanding in Ginnie

Mae’s MBS Portfolio from Fiscal

Year 2018 to Fiscal Year 2020

U

PB ($ BILLI

O

N

S)

24 | Our Guaranty Matters

$2,093

$2,008

$2,118

2018 2019 2020

FISCAL YEAR
Multiclass Fees - Multiclass fees are one-time upfront

fees related to the issuance of multiclass products.

Multiclass fees are part of MBS program revenue and

consists of Real Estate Mortgage Investment Conduits

(REMIC) and Platinum program fees. Ginnie Mae

guaranteed approximately $23.4 billion of newly issued

Platinum Certificates in fiscal year 2020. Fees earned

on Platinum Certificates totaled $7.6 million for fiscal

year 2020. Ginnie Mae guaranteed REMIC issuances 

of $135.9 billion in fiscal year 2020. Fees earned on

REMIC securities for fiscal year 2020 totaled $24.4

million. Ginnie Mae recognizes the Modification and

Exchange (MX) Combination portion of the REMIC

fee in the period it is received. Platinum program

fees, as well as the guaranty fee portion of the REMIC

fees are deferred and amortized into income evenly

over the contractual life of the underlying financial

instruments. As of September 30, 2020, REMIC and

Platinum program fees deferred totaled $480.3 million.

The outstanding balance of multiclass securities in the

total MBS securities balance on September 30, 2020,

was $559.4 billion, of which $86.7 billion and $472.7

billion were Platinum and REMIC, respectively.

Ginnie Mae 2020 Annual Report | 25
INCOME ON GUARANTY OBLIGATIONS

The guaranty obligation represents the noncontingent liability for

Ginnie Mae’s obligation to stand ready to perform on its guarantee.

Ginnie Mae amortizes its guaranty obligation into revenues based on the

declining UPB of MBS pools. In fiscal year 2020, income on guaranty

obligations was $2.5 billion which is 58.4 percent of total revenues.

OTHER INTEREST INCOME

Ginnie Mae invests the full balance of the Capital Reserve Fund and the

Liquidating Fund in U.S. Treasury overnight certificates. Amount of interest

earned on overnight certificates can be compared to the investments

balance to estimate the return on investment generated. Ginnie Mae’s

interest income decreased in fiscal year 2020 due to a decrease in the

investment in U.S. Treasury overnight certificates. In fiscal year 2020,

interest income on U.S. Treasury overnight certificates was $118.6 million.

EXPENSES

Total expenses were $317.9 million in fiscal year 2020. Total

expenses as a percentage of average UPB of Ginnie Mae guaranteed

MBS was less than one percent in fiscal year 2020.

In recent years, Ginnie Mae’s staffing model has been characterized by modest

levels of permanent staff complemented by private firms or consultants

that provide certain transactional and accounting support services on a

contractual basis. This relationship is integral to operational efficiency and will

continue to be an important part of Ginnie Mae’s approach. In fiscal year 2020,

Ginnie Mae’s total contractor expenses were at 77.2 percent of total expenses.

26 | Our Guaranty Matters
MBS PROGRAMS, ISSUANCES, AND PORTFOLIO GROWTH

3,000

2,500

2,000

1,500

1,000

500

-

Despite the shift to remote work and the economic

impact of the COVID-19 pandemic, Ginnie Mae issued

its largest volume of securities in its history in fiscal

year 2020, with August 2020 marking the highest ever

level of Ginnie Mae MBS issuance in a single month.

Ginnie Mae MBS issuance increased by 65.8 percent to

$749 billion in fiscal year 2020, as shown in Figure 7.

As shown in Figure 8 below, Ginnie Mae supported

approximately 2.8 million units of housing for individuals

and families in fiscal year 2020, a 46.5 percent increase

from fiscal year 2019. The current total outstanding UPB

in Ginnie Mae’s MBS portfolio balance of $2.1 trillion

represents over 11.1 million active loans (excluding Home

Equity Conversion Mortgage (HECM)/HECM mortgagebacked securities (HMBS)). Ginnie Mae has guaranteed

approximately $8.3 trillion in MBS since its inception.

U

NITS OF H

O

U

SIN

G

(T

H

O

U

S

A

N

D

S)

2018 2019 2020

FISCAL YEAR

$800

$700

$600

$500

$400

$300

$200

$100

$-

Figure 7 – Ginnie Mae MBS Issuance from

Fiscal Year 2018 to Fiscal Year 2020

MBS I

S

S

U

ANC

E

($ BILLI

O

N

S)

$435

2018 2019 2020

FISCAL YEAR

Figure 8 – Total Housing Units Financed by Ginnie Mae’s

Single Family, Multifamily, and Manufactured Housing 

Programs from Fiscal Year 2018 to Fiscal Year 2020

$749

$452

2,800

1,886

1,771

Ginnie Mae 2020 Annual Report | 27
Ginnie Mae’s Single-Family Program is the conduit

for government mortgage lending to the worldwide

capital markets. This program allows borrowers in

government programs to reap the benefits of the full

faith and credit of the United States by adding liquidity

into the market in order to lower their borrowing costs.

Ginnie Mae’s Single-Family Program consists of

single-family mortgages originated for the purchase,

construction, or renovation of single-family homes

originated through Federal Housing Administration

(FHA), U.S. Department of Veterans Affairs (VA),

U.S. Department of Agriculture’s Rural Development

Agency (RD) and the Office of Public and Indian

Housing (PIH) loan insurance programs. The vast

majority of the mortgages in Ginnie Mae securities are

insured by FHA and VA. FHA-insured loans accounted

for 51.1 percent of fiscal year 2020 Ginnie Mae MBS

issuances, while VA-insured loans accounted for 43.8

percent; RD and PIH loans contributed to 5.1 percent.

Although other agencies and private issuers may

pool FHA and VA insured loans for their own MBS

or hold them in portfolios as whole loans, almost all

FHA and VA loans are financed through Ginnie Mae 

securities. In fiscal year 2020, 98.0 percent of FHA

fixed-rate loans and 99.4 percent of VA fixed-rate

loans were placed into Ginnie Mae guaranteed MBS.

Although loans underlying our securities may be 

concentrated in specific areas, Ginnie Mae has provided

homeownership opportunities in every U.S. state

and territory. Figure 9 highlights the geographic

distribution of single-family properties securing 

Ginnie Mae securities as of September 30, 2020.

Figure 9 – Geographic Distribution

of Single Family Properties Securing

Ginnie Mae Securities as of

September 30, 2020

LOANS

GREATER THAN 500,000

200,000 TO 500,000

100,000 TO 200,000

LESS THAN 100,000

SINGLE-FAMILY PROGRAM

28 | Our Guaranty Matters
State Loans Percent of Total Loans UPB

Texas 1,062,246 9.6% $167,672,853,732 

Florida 829,846 7.5% $150,720,942,777

California 734,863 6.6% $212,581,433,532

Georgia 501,211 4.5% $77,586,811,562 

Ohio 436,705 3.9% $51,430,170,987

Virginia 434,541 3.9% $100,484,854,489

North Carolina 419,929 3.8% $63,939,557,560

Pennsylvania 404,136 3.7% $56,620,648,177

Illinois 357,913 3.2% $52,492,916,815

New York 319,479 2.9% $61,333,637,950

Top 10 Total 5,500,869 49.6% $994,863,827,581

Ginnie Mae 2020 Annual Report | 29
Ginnie Mae’s Multifamily Program consists of FHA

and RD insured loans originated for the purchase,

construction, or renovation of apartment buildings,

hospitals, nursing homes, assisted living facilities,

and other housing options. By guaranteeing pools of 

multifamily loans that are sold to investors in the global

capital markets, Ginnie Mae enables lenders to reduce

mortgage interest rates paid by property owners and

developers. The guaranty allows mortgage lenders 

to obtain a better price for the mortgage loans in the

secondary mortgage market due to the decreased risk

of default. The lenders can then use these proceeds

to make new mortgage loans available at a reduced

mortgage rate. In addition, these projects stabilize

and bring jobs to communities across the country.

Figure 10 – Geographic Distribution of

Multifamily Properties Securing Ginnie

Mae Securities as of September 30, 2020

LOANS

LESS THAN 100

100 — 249

250 — 499

500 — 1,000

At the end of fiscal year 2020, Ginnie Mae guaranteed

securities comprising 99.2 percent of eligible

multifamily FHA loans. The Multifamily Program 

portfolio increased by $4.9 billion, from $123.1 billion

at the end of fiscal year 2019 to $128.0 billion at the

end of fiscal year 2020. This increase was consistent

across FHA and RD multifamily loans and was largely 

due to the historically low interest rate environment.

Figure 10 below shows the geographic distribution of

multifamily properties securing Ginnie Mae securities 

as of September 30, 2020. Since 1971, Ginnie Mae has

guaranteed $358.0 billion in multifamily MBS, helping

to finance affordable and community-stabilizing 

multifamily housing developments across the nation.

GREATER THAN 1,000

MULTIFAMILY PROGRAM

30 | Our Guaranty Matters
State Loans Percent of Total Loans UPB

Texas 1,225 8.3% $12,964,299,825

Ohio 1,045 7.1% $4,996,796,903

California 1,008 6.8% $8,712,740,067

Illinois 683 4.6% $6,116,642,389

Indiana 680 4.6% $4,030,616,224

North Carolina 638 4.3% $4,490,378,893

Michigan 618 4.2% $4,104,597,187

Florida 606 4.1% $6,935,491,830

New York 564 3.8% $9,397,319,071

Minnesota 462 3.1% $3,684,230,504

Top 10 Total 7,529 50.9% $65,433,112,893

Ginnie Mae’s portfolio of Multifamily FHA loans grew in fiscal year 2020 to an unpaid principal balance

of $126.6 billion compared to $121.8 billion at the end of fiscal year 2019. There were FHA loans in all

50 states, 2 territories and the District of Columbia in Ginnie Mae pools at September 30, 2020.

In addition, Ginnie Mae’s portfolio of Multifamily RD loans, grew in fiscal year 2020 to a

UPB of $1.4 billion compared to $1.3 billion at the end of fiscal year 2019. There were RD

loans in 48 states and 1 territory in Ginnie Mae pools at September 30, 2020.

Ginnie Mae 2020 Annual Report | 31
HMBS PROGRAM 

Ginnie Mae’s HMBS Program provides capital and liquidity for FHA

insured reverse mortgages, an essential financial solution for a growing

number of senior citizens. HMBS issuance in fiscal year 2020 increased

to $9.9 billion from $8.1 billion at fiscal year 2019. The UPB of HMBS

as of September 30, 2020 was $55.4 billion as compared to $54.1

billion as of September 30, 2019. The increases in HMBS issuance

and UPB were caused by an increase in refinances beginning in

December of 2019. Refer to Note 18: Concentrations of Credit Risk for

concentration of risk analysis related to Ginnie Mae’s HMBS Program.

MANUFACTURED HOUSING PROGRAM

Ginnie Mae’s Manufactured Housing Program provides a guarantee 

for mortgage loans insured by FHA for the purchase of a new or used

manufactured home. This program provides liquidity in the market that

in turn lowers costs for borrowers. The manufactured housing program

consists of more affordable housing alternatives for first time low-income

borrowers. Manufactured housing loans (FHA Title I) include loans secured by

a manufactured (mobile) home unit or both the manufactured unit and land.

The limited nature of this program left low-to moderate-income borrowers

with no adequate financing options for manufactured housing. Following

FHA’s modernization of the program, Ginnie Mae also made updates to the

Title I Program to offer a securitization vehicle for manufactured housing that

is backed by the US Government. The Manufactured Housing program’s UPB

was $227.0 million at the end of fiscal year 2020, a decrease from $258.0

million at the end of fiscal year 2019. This decrease was caused by a pause in

manufactured housing issuance due to market conditions by two active Ginnie

Mae issuers. Refer to Note 18: Concentrations of Credit Risk for concentration

of risk analysis related to Ginnie Mae’s Manufactured Housing Program.

32 | Our Guaranty Matters
RISK FACTORS

MODEL RISK

Model risk is the potential for adverse results from decisions based on

incorrect model inputs and outputs. The Office of Enterprise Risk (OER)

uses models to determine the value of, and measurement of risk related

to, guaranty asset and related guaranty obligation, MSR, allowance for 

loan losses for mortgage loans held for investment including accrued

interest receivable, claims, advances and other contingent liabilities. OER

is responsible for developing, testing, and implementing the models.

See Note 2: Summary of Significant Accounting Policies and Practices in

the financial statements for valuations that are based on the model.

Ginnie Mae bears the risk of change in fair value due to uncertainties related

to these underlying inputs and the related difficulty in measurement.

Ginnie Mae’s Modeling and Valuation Committee (MVC) meets quarterly 

in order to review all key model assumptions for applicability and analyzes

trends quarter over quarter. OER performs back testing on a yearly basis

in order to gauge accuracy and effectiveness of modeled estimates.

Furthermore, model validation is performed by an independent thirdparty firm. Refer to Note 13: Fair Value Measurement for illustration

of the potential magnitude of certain alternate judgments (i.e., how

sensitive these assumptions are) based on changes in certain inputs.

Management faces an increased degree of model risk and uncertainty

in the current year due to the unprecedented COVID-19 pandemic and

related economic downturn. As a result, our models require additional

considerations and face significant challenges to accurately forecast

key inputs. Adjustments to existing models due to the current economic

environment will have subjectivity and will require management judgment.

Ginnie Mae 2020 Annual Report | 33
CREDIT RISK

Credit Risk is the risk of loss arising from another

party’s failure or inability to meet its financial and/or

contractual obligations. Ginnie Mae is exposed to both

borrower credit risk and counterparty credit risk.

Borrower credit risk is the risk of loss arising from the

failure or inability of a borrower to meet their financial

and/or contractual obligations. Ginnie Mae’s borrower

credit risk primarily consists of mortgage assets in

the non-pooled loans portfolio which is composed

of loans acquired from defaulted, terminated, and

extinguished issuers of Ginnie Mae guaranteed MBS,

and loans purchased/repurchased out of Ginnie Mae 

guaranteed MBS pools in accordance with Ginnie Mae

MBS guidelines. See Note 5: Financial Guarantees and

Financial Instruments with Off-Balance Sheet Exposure

and Note 10: Mortgage Loans Held for Investment

Including Accrued Interest, Net for further information.

Counterparty credit risk is the risk of loss arising from

the default of an issuer or other counterparty which

may include, but is not limited to, trustees, mortgage

servicers, custodial depository, and other financial 

institutions and document custodians. Ginnie Mae 

considers several factors as part of the counterparty

credit risk assessment process, including the issuer’s

financial and operational vulnerability, credit analysis, 

and other evidence of probability of default, such as

known non-compliance with applicable regulation or 

law, interest rates, and other economic conditions. Refer

to Note 17: Reserve for Loss for further information.

GEOGRAPHIC CONCENTRATION RISK

Concentrations of credit risk exist when a significant

number of issuers are susceptible to similar changes

in economic conditions that could affect their ability

to meet contractual obligations. This concentration

of credit risk may be the result of several factors,

including but not limited to geographic or insurer

concentration within the portfolio. Generally, Ginnie

Mae’s MBS pools are diversified among issuers. All

issuers operate within the U.S. and its territories, and

there are no significant geographic concentrations.

Natural disasters affecting Ginnie Mae’s loan portfolio

(pooled and non-pooled) occur throughout the 

year but are typically concentrated during each

year’s hurricane season. In fiscal year 2020, there

were six natural disasters which occurred that had a

minor impact on the Ginnie Mae loan population.

34 | Our Guaranty Matters

MORTGAGE SERVICING 

Ginnie Mae’s loan servicing functions are contracted

to two Master Sub-Servicers (MSS). As Ginnie Mae

relies on these MSS for servicing data and accounting

reports, any operational or technical failures in MSS’

own controls may negatively impact Ginnie Mae’s

own operations. To mitigate such a risk, Ginnie

Mae performs ongoing reviews and monitoring of

the MSS, including requiring the MSS to provide

attestation reports over their own internal controls.

TRANSITION FROM THE LONDON INTERBANK 

OFFER RATE TO ALTERNATIVE REFERENCE RATES

In July 2017, the United Kingdom’s Financial Conduct

Authority (FCA) announced that it would cease requiring

the submission of quotes supporting the London

Interbank Offered Rate (LIBOR) by December 31, 2021

(fiscal year 2022). As a result, it is unclear whether LIBOR

will continue to be published after that date. Ginnie Mae

has worked closely with key stakeholders, including

other federal agencies, to identify and implement a

course of action that transitions the Ginnie Mae program

away from LIBOR while minimizing disruption to the

MBS Program and its participants. Ginnie Mae has been

collaborating with the Federal Housing Administration

on a LIBOR transition plan since September of

2019 and developed a joint LIBOR transition plan

which has been approved by the HUD Secretary.

In March 2020, we announced new updates in the

agency’s multiclass securities for tranches indexed

to LIBOR issued after March 1, 2020. This update

follows Ginnie Mae’s adopted recommendations 

of the Alternative Rates Reference Committee

(ARRC) for fallback language for LIBOR floating

rate securities issued in March 2020 or later.  The

update adds the Secured Overnight Funding Rate

(SOFR) as an available index for new issuance of

floating rate Multiclass Securities and adoption of

the ARRC recommended SOFR fallback provision.

In September 2020, we announced restrictions on

the pooling of adjustable-rate mortgages (ARM)

with rates indexed to LIBOR. Restriction on LIBOR

based Single-Family Forward is effective with

security issuances dated on or after January 1,

2021. Restrictions on LIBOR-Based Adjustable Rate

Reverse Mortgages (HECM/HMBS) is effective with

HMBS issuances dated on or after January 1, 2021.
Ginnie Mae 2020 Annual Report | 35
INTERNAL CONTROLS

Ginnie Mae management is responsible for establishing,

maintaining, and assessing internal controls to provide

reasonable assurance that the objectives of the Federal

Managers’ Financial Integrity Act (FMFIA) of 1982 and

the Federal Financial Management Improvement Act

(FFMIA) of 1996 are met throughout the organization.

OMB Circular No. A-123, Management’s Responsibility

for Enterprise Risk Management and Internal Control,

sets forth the guidance agencies must follow to meet

the requirements of FMFIA and FFMIA. Ginnie Mae

management is responsible for enacting and ensuring a

strong internal control environment is in place to mitigate

against reporting, operational, and compliance risks the 

organization may face. In addition, Ginnie Mae’s OER

provides guidance and manages the internal controls

framework for the organization, including conducting

internal controls assessments and Enterprise Risk

Management (ERM) activities, coordinating with other

Offices to evaluate their monitoring and assessment

results, and reporting these results to the Department

of Housing and Urban Development (HUD). These

assessments, reviews, and continuous monitoring of

issuers and major contractors enable Ginnie Mae to

strengthen its internal controls and minimize risks

that would negatively impact financial and operating 

results. Additionally, the consolidated evaluation of

these assessments enable management to prepare an

assurance statement to report any assessed significant

deficiencies or material weaknesses to HUD.

In reference to the Enterprise Risk Management

component of OMB Circular No. A-123, Ginnie Mae has

delivered on the requirements and met the standards

in accordance with the circular as of fiscal year 2020.

Ginnie Mae developed a standard three-level risk 

taxonomy to identify, classify, and report the risks

associated with the operations of each of its Offices.

Each Office is assessed on an annual basis. These results

are compiled, analyzed, and aggregated into Ginnie 

Mae’s Risk Register which is provided to HUD leadership.

Ginnie Mae management also uses this Risk Register

to understand organizational challenges and prioritize

activities for Ginnie Mae’s Enterprise Risk Management

program, which has been considered best practice.

36 | Our Guaranty Matters

Ginnie Mae undertook a restructuring of its Management

Internal Control Program during fiscal year 2019 in

order to implement the requirements of the revised

OMB Circular No. A-123 to integrate ERM and internal

control over financial reporting (ICOFR). This change

in structure reflects the requirements of the revised

A-123 and GAO Standards for Internal Control in the

Federal Government (the Green Book) to explicitly

integrate ERM with traditional ICOFR-only views of

risks and controls. OER aligned appropriate resources,

responsibility, and governance to establish the revised

program and has implemented a three-year plan to guide 

its risk management and controls assessment strategy,

while providing sufficient annual assessment support

to comply with the A-123 reporting requirements.

Ginnie Mae began executing against this robust,

integrated A-123 strategy in fiscal year 2019 and

has continued in fiscal year 2020 by enhancing

governance for the revised A-123 program with the

development of new policies and procedures to guide

the program. Additionally, during fiscal year 2020,

Ginnie Mae developed comprehensive documentation

and performed an assessment of internal controls

supporting significant financial statement line items

and classes of transactions, including its non-pooled

assets. Based on the results of this assessments and

other program enhancements, Ginnie Mae was able to

provide reasonable assurance that its internal controls

were operating effectively for fiscal year 2020.

As part of management’s commitment to a strong

internal control environment, Ginnie Mae continues to

establish effective communication procedures amongst 

all the Offices to ensure the timely application of the

internal controls and review of policies, procedures, and

related programs to ensure accounting transactions

are consistently applied throughout the organization.
SECURITY PRODUCTS

SINGLE-CLASS

Ginnie Mae offers two singleclass securities product 

structures – Ginnie Mae I MBS

and Ginnie Mae II MBS:

• Ginnie Mae I MBS are passthrough securities providing 

monthly P&I payments to each

investor. They are single-family,

multifamily, or manufactured 

housing pools of mortgages with

similar maturities and interest 

rates offered by a single issuer.

• Ginnie Mae II MBS are similar

to Ginnie Mae I MBS but allow

multiple-issuers and singleissuer pools. They permit

$600

the securitization of ARMs,

manufactured home loans, 

and HECM, and allows small

issuers unable to meet the dollar

requirements of the Ginnie Mae

I MBS program to participate in

the secondary mortgage market.

Figure 11 – Ginnie Mae I and II Security Products

Issuance from Fiscal Year 2018 to Fiscal Year 2020

$700

$800

$500

$400

$300

$200

$100

$-

GIN

NIE M

AE I A

ND II

IS

S

U

A

N

CE ($ BILLI

O

N

S)

2018 2019 2020

FISCAL YEAR

 GINNIE MAE I GINNIE MAE II

$413.8

$24.3 $22.3

$433.4

$41.3

$712.9

Ginnie Mae 2020 Annual Report | 37
MULTICLASS

$120

$140

$160

$100

$80

$60

$40

R

$20

E

MIC

/

P

L

A

TINUM

IS

S

U

A

N

CE ($ BILLI

O

N

S)

$-

2018 2019 2020

FISCAL YEAR

 REMIC 

Ginnie Mae offers two multiclass securities product

structures — Platinum Securities and REMIC Securities:

• A Ginnie Mae Platinum Security is formed by

combining Ginnie Mae MBS securities into a

new single security. Platinum Securities can be

constructed from both fixed rate and Ginnie Mae ARM

Securities. They provide MBS investors with greater

market and operating efficiencies, and may be used 

in structured financings, repurchase transactions, and 

general trading.

 PLATINUM

• REMIC Securities direct underlying MBS principal and

interest payments to classes with different principal

balances, interest rates, average lives, prepayment

characteristics and final maturities. REMIC Securities

allow issuers to have more flexibility for creating

securities to meet the needs of a variety of investors.

Principal and interest payments are divided into

varying payment steams to create classes with

different expected maturities, differing levels of

seniority or subordination or other characteristics.

Figure 13 – REMIC Security Products Contributions

by Sponsor in Fiscal Year 2020

Figure 12 – REMIC and Platinum

Security Products Issuance from

Fiscal Year 2018 to Fiscal Year 2020

$77.5

$19.8

$94.5

$31.8

$135.6

$21.9

$- $5 $10 $15 $20 $25 $30

REMIC ISSUANCE ($ BILLIONS)

Wells Fargo Bank, N.A. $13.9

BofA Securities, Inc. $12.6

Jefferies LLC $2.4

Amherst Pierpont Securities LLC $0.8

Citigroup Global Markets Inc. $18.6

Morgan Stanley $17.8

Cantor Fitzgerald & Co. $4.2

BMO Capital Markets Corp. $3.0

PNC Capital Markets LLC $0.2

J.P. Morgan Securities LLC $24.4

Credit Suisse Securities LLC $20.9

Nomura Securities International, Inc.

Goldman Sachs & Co. LLC

$8.2

$7.3

Mizuho Securities USA LLC $0.7

Brean Capital $0.5

38 | Our Guaranty Matters
Ginnie Mae 2020 Annual Report | 39
OTHER KEY INFORMATION

AUDIT REMEDIATION UPDATES

The U.S. Department of Housing and Urban Development

Office of the Inspector General (OIG) issued a disclaimer

of opinion on Ginnie Mae’s financial statements since

fiscal year 2015. The disclaimer focused primarily

on Ginnie Mae’s nonpooled loans portfolio that was

acquired from defaulted, terminated, and extinguished

issuers of Ginnie Mae guaranteed MBS. Ginnie

Mae determined that it would require a significant

investment in technology, infrastructure, and personnel, 

spanning multiple years to remediate this finding.

Since fiscal year 2015, Ginnie Mae made continued

progress to address financial reporting control

deficiencies. In fiscal year 2019, Ginnie Mae completed

its remediation efforts associated with the disclaimer

of opinion and informed the OIG that the financial

statements are auditable. This accomplishment was 

highlighted by, but not limited to: (i) the development

of loan accounting policies compliant with U.S. GAAP

standards; (ii) the creation and implementation of 

standard operating procedures (SOPs) to comply with 

new accounting policies; (iii) improving internal controls

and accounting oversight within the organization; (iv)

working with third-party servicers to develop and

transfer standardized servicing details for over 46,000

loans, including millions of related transactional-level

information from the servicers’ off-site systems to

an on-site accounting database; and (v) a significant

investment in accounting and modeling software to

track and account for the non-pooled loans o

from the servicers. The remediation projec

btained

t culminated

with the development and launch of Ginnie Mae’s

Subledger Database (SLDB) solution. The SLDB

solution provides Ginnie Mae with the capability to

translate mortgage loan servicing data into loan-level

accounting entries in an integrated system that supports

appropriate accounting treatment in accordance with

U.S. GAAP and Ginnie Mae’s accounting policies. 

The implementation of the SLDB solution required

significant enhancements to Ginnie Mae’s accounting 

system, financial models and modeling processes, new

system interfaces and protocols for data processing

and movement, and far-reaching changes to the 

processes under which Ginnie Mae personnel performs

critical accounting, reporting, data processing,

technology support and oversight tasks required to 

track and report the non-pooled asset portfolio.

40 | Our Guaranty Matters

During fiscal year 2020, Ginnie Mae continued to

build upon the accomplishments achieved in fiscal

year 2019 as the SLDB solution was operational for

its first full year, while gaining efficiencies through

automation, standardization, and modernization of the 

existing technology. During fiscal year 2020, Ginnie

Mae was able to make significant improvements

to the reliability of the solution, including controls

around the NPA (Non-pooled assets) portfolio, which

have resulted in reductions of processing times and

the volume of manual interventions through the

implementation of various code enhancements to 

support accurate and timely financial reporting. 

Ginnie Mae has also implemented a semi-automated

solution to process HECM which enables seamless

transaction processing, accounting, and reporting of 

Ginnie Mae’s HMBS program through the SLDB.

Ginnie Mae has also placed a high level of emphasis

on strengthening the overall control environment

by enhancing our accounting policy governance 

and improving key processes to drive operational

efficiencies. These activities are helping drive dynamic

change within the finance function at Ginnie Mae, in

an effort to continue to reach our strategic goals and

instill reliability in our financial statements as a whole.

During fiscal year 2020, Ginnie Mae, in collaboration

with HUD, was able to arrive at an official agreement

with the OIG to close out prior year referred findings.

This was a major accomplishment for the organization

as it demonstrates that Ginnie Mae is taking corrective

action to remediate its financial reporting deficiencies.

This is the second year since fiscal year 2015 that

Ginnie Mae has undergone a full financial statement

audit. As noted in the HUD OIG final results of

the audit of Ginnie Mae within our annual report,

CliftonLarsonAllen (or “CLA”) was engaged to audit

the financial statements and notes of Ginnie Mae as of

September 30, 2020. As such, management’s discussion

and analysis included herein will be limited to the

financial position and results of operations of Ginnie

Mae for the fiscal year ended September 30, 2020.
CRITICAL ACCOUNTING ESTIMATES

Certain Ginnie Mae accounting policies require management to use estimates and judgments that affect the

amounts reflected in its annual financial statements. Ginnie Mae has established policies and control procedures

to ensure that estimation methods, including any significant judgments, are appropriately reviewed and

applied consistently from period to period. Such estimates and judgments inevitably involve varying degrees

of uncertainty. Accordingly, certain amounts currently recorded in the financial statements will likely be

adjusted in the future based on new available information, and changes in other facts and circumstances. The

following is a brief description of Ginnie Mae’s critical accounting estimates involving significant judgments.

ASSETS MEASURED AT FAIR VALUE

Ginnie Mae carries a portion of its assets and liabilities

at fair value. Guaranty asset (GA) and Mortgage

servicing rights (MSR) are measured at fair value on

a recurring basis at the end of each reporting period,

while acquired property (AP) is measured at fair

value on a nonrecurring basis as valuations are not

always as of the last date of the reporting period.

See Note 2: Summary of Significant Accounting Policies

and Practices and Note 13: Fair Value Measurement

for details on Ginnie Mae’s processes for determining

fair values for GA, MSR, and AP. Estimating fair value

requires the application of judgment. The type and

level of judgment required is largely dependent

on the amount of observable market information

available to Ginnie Mae. All three assets measured at

fair value use internally developed valuation models

and other valuation techniques that use significant 

unobservable inputs and are therefore classified within 

Level 3 of the valuation hierarchy in accordance with

ASC 820. In arriving at an estimate of fair value for an

instrument within Level 3, Ginnie Mae first determined

an appropriate valuation technique to use and then 

assessed all relevant historical data to derive valuation

inputs that include, for example, the following:

• GA - Key considerations for GA valuation include

default rates, interest rates, discount rate, and

prepayment rates. These significant inputs change

according to macroeconomic market conditions.

Ginnie Mae is responsible for the development of

a model owned by the Office of Enterprise Risk

Management to calculate the net present value of the

expected future guarantee fees over the guarantee 

period as of the reporting date. The amount is based

on the guarantee fee rate for the type of program

(e.g., single family, multi-family, etc.,) to be paid

by issuers on the unpaid principal balance of the

outstanding MBS portfolio. 

• MSR - Key considerations for MSR valuation include

prepayment experience, forward interest rates,

adequate compensation, delinquency rates, and 

discount rates commensurate with the risks involved.

In the event of an issuer default, Ginnie Mae has the

responsibility to service the loans and MBS securities.

It will also be entitled to servicing rights to earn any

related servicing compensation. The MSR assets (or

liability) represent the benefits (or costs) of servicing

that are expected to be more (or less) than adequate

compensation to a servicer for performing the

servicing. Ginnie Mae measures the fair value of MSR

based on the present value of expected cash flows

from servicing the underlying mortgage assets.

• AP - Key considerations for AP valuation include the

valuation waterfall methodology and availability of

appraisal or broker price opinions obtained from

third parties. When valuations are not available from

external sources, internally developed valuation

models are leveraged to determine the fair value

of AP. Ginnie Mae also calculates the estimated

cost to sell to be used in determining the US GAAP

basis for AP properties. Refer to Note 2: Summary

of Significant Accounting Policies and Practices

and Note 12: Acquired Property, Net for further

information.

Ginnie Mae 2020 Annual Report | 41
LOSS ALLOWANCE ESTIMATE

Mortgage loans held for investment, including accrued interest, are reported on Ginnie Mae’s balance

sheet net of an allowance. This allowance is intended to adjust the carrying value of non-pooled loans to

reflect probable credit losses on each balance sheet date. For large groups of homogeneous loans that

are collectively evaluated (pursuant to requirements in Accounting Standards Codification (ASC) 450-

20: Contingencies – Loss Contingencies), Ginnie Mae aggregates its mortgage loans based on common risk

characteristics, for example type of insurance (FHA, VA, RD, PIH) associated with the loan or as uninsured

loans. The allowance for loan losses estimate is calculated using statistical models that are based on historical

loan performance and insurance recoveries. The estimate also includes qualitative factors, where applicable.

Examples of changes in factors that will increase Allowance for Loan and Lease Losses (ALLL) include:

• Increase in foreclosure timeline

• Decrease in house price

• Increase in portfolio delinquency

Ginnie Mae also considers a loan to be impaired when, based on current information, it is probable

that amounts due, including interest, will not be recovered in accordance with the contractual terms

of the loan agreement (pursuant to requirements under ASC: 310-10 Receivables – Overall). Ginnie 

Mae measures impairment based on the present value of expected future cash flows. Refer to Note 10:

Mortgage Loans Held for Investment Including Accrued Interest, Net for further information.

OFF-BALANCE SHEET ARRANGEMENTS

Ginnie Mae enters into commitments to guarantee future MBS issuances in the normal course of business

which are not recognized on the balance sheets. These commitments end when the securities are issued or the

commitment period expires, 12 months and 24 months for single family and multifamily issuers, respectively. MBS

commitments were $234.4 billion in fiscal year 2020 compared to $115.7 billion in fiscal year 2019. These outstanding

commitments are not representative of Ginnie Mae’s actual risk due in part to Ginnie Mae’s ability to limit an issuer’s

request for pools or loan packages from the issuer’s previously approved amount of commitment authority.

Ginnie Mae’s highest potential off-balance sheet exposure to credit losses is related to the outstanding principal

balance of our MBS held by third parties, which was $2.1 trillion at September 30, 2020. The maximum exposure

is not a representation of Ginnie Mae’s actual exposure as it does not consider the impact of insurance, recourse

or the recovery Ginnie Mae would receive by exercising Ginnie Mae’s right to the underlying collateral. Ginnie

Mae recognized guaranty obligation of $8.0 billion at September 30, 2020 related to this portfolio.

42 | Our Guaranty Matters
AGGREGATE CONTRACTUAL OBLIGATIONS

Periodically, Ginnie Mae makes certain representations and warranties and indemnification clauses associated 

with Purchase and Sales Agreements (PSAs) that are enforceable and legally binding. These agreements

may require Ginnie to repurchase loans that were previously sold to a third party or to indemnify the

purchaser for losses if the loans are modified or not insured by the FHA, VA, RD, or PIH. At September 30,

2020, Ginnie Mae recorded $67.7 thousand as a contingent liability to account for these agreements.

FINANCIAL SYSTEM ENHANCEMENTS AND AUTOMATION

Throughout fiscal year 2020, Ginnie Mae’s Financial Accounting System (GFAS) underwent several enhancements

that position Ginnie Mae for end-to-end automated financial reporting and enduring readiness to accommodate future

business and workflow requirements. The combination of a reconfigured Federal compilation process, Statement

of Cash Flow Automation, and an Activity Code Redesign completed in fiscal year 2020 provide six fully automated

principal statements. This automation has led to the financials being in sync with HUD’s statements and minimal to no

reconciling issues being identified during consolidation and reconciliation for any of the Federal Financial Statements.

During fiscal year 2020, the Robotics Process Automation (RPA) team was able to successfully deploy the first

Ginnie Mae bots which automated three previously manual processes. RPA, which uses commercial-off-theshelf software, is a computer coded, rules-based software, known as bots, used to automate process owner

activities for repetitive rules-based tasks. The bot then replicates those actions as many times as necessary at

a very rapid rate with a high level of accuracy. RPA solutions can be directly implemented in a physical (e.g.,

desktop, laptop) or virtual environment (e.g. VMware or Cloud), allowing for quick and cost-effective deployment

onto Ginnie Mae’s existing infrastructure with minimal, if any, impact. The three bots that are now live are:

• Pioneer – Helps the Planning and Budgeting Cloud Services (PBCS) system to support the development of business

planning objectives. 

• Dabo – Pulls LIBOR/CMT rates from WSJ.com on a daily basis.

• RBG – Performs the Commitment Authority Reconciliation process on a daily basis.

Ginnie Mae 2020 Annual Report | 43
Government National Mortgage 

Association,

Washington, DC

Audit of Ginnie Mae’s Fiscal Year 2020 Financial

Statements

Office of Audit, Financial Audits Division

Washington, DC

Audit Report Number: 2021-FO-0002

November 16, 2020
Office of Audit (Financial Audits Division) 

451 7th Street SW, Washington, DC, 20410

Phone (202) 708-0383, Fax (202) 401-5186

Visit the Office of Inspector General website at https://www.hudoig.gov/. 

To: Seth D. Appleton, Ginnie Mae, Principal Executive Vice President, T

//signed//

From: Thomas R. McEnanly, Director, Contracted Financial Audits, Financial Audits

Division, GAF

Subject: Audit of the Government National Mortgage Association’s Fiscal Year 2020

Financial Statements

Attached are the U.S. Department of Housing and Urban Development (HUD), Office of

Inspector General’s (OIG) results of the audit of the Government National Mortgage

Association’s (Ginnie Mae) fiscal year 2020 financial statements and reports on internal control

over financial reporting and compliance with laws, regulations, and contracts.

HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on 

recommended corrective actions. For each recommendation without a management decision, 

please respond and provide status reports in accordance with the HUD Handbook. Please furnish 

us copies of any correspondence or directives issued because of the audit. 

The Inspector General Act, Title 5 United States Code, appendix 8M, requires that OIG post its

reports on the OIG website. Accordingly, this report will be posted at https://www.hudoig.gov.

If you have any questions or comments about this report, please do not hesitate to call me at

202-402-8216.
Highlights

What We Audited and Why

The Chief Financial Officers Act of 1990, as amended, requires the Office of Inspector General

(OIG) or an independent auditor, as determined by OIG, to annually audit the financial

statements of the Government National Mortgage Association (Ginnie Mae) in accordance with

U.S. generally accepted government auditing standards. 

We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP

(CLA) to audit Ginnie Mae’s fiscal year 2020 financial statements in accordance with U.S. 

generally accepted government auditing standards. We conducted oversight of CLA in 

accordance with the Financial Audit Manual of the U.S. Government Accountability Office and 

the Council of the Inspectors General on Integrity and Efficiency.

What We Found

CLA is responsible for the attached Independent Auditor’s Report, dated November 16, 2020,

and the conclusions expressed therein. Our oversight review disclosed no instances in which 

CLA did not comply, in all material respects, with U.S. generally accepted government auditing

standards.

Based on its audit, CLA issued an Independent Auditor’s Report with an unmodified opinion on 

Ginnie Mae’s financial statements. CLA also reported one significant deficiency in its Report on 

Internal Control Over Financial Reporting and no reportable compliance issues in its Report on 

Compliance With Laws, Regulations, and Contracts. 

CLA reported that Ginnie Mae had a significant deficiency in the control design of its

organizational structure for two key functions, estimation model development and model

verification, within its Office of Enterprise Risk. CLA further reported that this control 

deficiency potentially prevents an effective challenge to models used to develop significant

estimates for financial reporting.

Ginnie Mae reports the auditor’s opinion on its financial statements in its Annual Report. 

What We Recommend

To improve Ginnie Mae’s financial management governance, CLA recommended that it create 

separate reporting lines between model development and model validation functions so that both 

critical model functions do not report to the Office of Enterprise Risk, are appropriately 

segregated in accordance with industry guidance, and follow the foundational component of 

internal control standards.

Audit Report Number: 2021-FO-0002

Date: November 16, 2020

Audit of the Government National Mortgage Association’s Fiscal Year 2020

Financial Statements
Table of Contents

.........................................................................

.......................................... .........

............

......................................................................................

Transmittal of Independent Public Accountant’s Audit Report

on the Government National Mortgage Association’s Fiscal Year 2020 

Financial Statements 3 

Independent Auditor’s Report... ... ...5

Exhibit A: Significant Deficiency..............................................................11 

Exhibit B: Management’s Response ................................................13 

Exhibit C: Status of Prior Year’s Findings...................................................15 

Appendix 16

A. Government National Mortgage Association, Fiscal Year Financial

Statements, September 30, 2020............................................................16 

2
3

To: Seth D. Appleton, Ginnie Mae, Principal Executive Vice President, T 

From:

Subject:

//signed//

Thomas R. McEnanly, Director, Contracted Financial Audits, Financial Audits 

Division, GAF

Transmittal of Independent Public Accountant’s Audit Report on the Government 

National Mortgage Association’s Fiscal Year 2020 Financial Statements

Attached are the U.S. Department of Housing and Urban Development (HUD), Office of

Inspector General’s (OIG) results of the audit of the Government National Mortgage

Association’s (Ginnie Mae) fiscal year 2020 financial statements and reports on internal control

over financial reporting and compliance with laws, regulations, and contracts. 

We contracted with the independent public accounting firm of CliftonLarsonAllen LLP (CLA) to 

audit the financial statements of Ginnie Mae as of and for the fiscal year ending September 30, 

2020, to provide reports on internal control over financial reporting and compliance with laws, 

regulations, and contracts. Our contract with CLA required that the audit be performed in 

accordance with U.S. generally accepted government auditing standards, Office of Management

and Budget audit requirements, and the Financial Audit Manual of the U.S. Government

Accountability Office and the Council of the Inspectors General on Integrity and Efficiency. 

In its audit of Ginnie Mae, CLA reported

• That the financial statements as of and for the fiscal year ending September 30, 2020,

were presented fairly, in all material respects, in accordance with U.S. generally accepted

accounting principles.

• No material weaknesses1

 and one significant deficiency2 in internal control over financial

reporting, based on limited procedures performed.

• No reportable noncompliance with provisions of applicable laws, regulations, and

contracts tested.

Regarding the identified significant deficiency, CLA determined that the model development and 

model verification functions both reside within Ginnie Mae’s Office of Enterprise Risk, with 

both respective teams reporting through the same line of authority. CLA determined that such a

1

 A material weakness is a deficiency or a combination of deficiencies in internal control, such that there is a 

reasonable possibility that a material misstatement of Ginnie Mae’s financial statements will not be prevented

or detected and corrected on a timely basis. 2

 A significant deficiency is a deficiency or combination of deficiencies in internal control that is less severe than

a material weakness yet important enough to merit attention by those charged with governance.
deficiency in control design needed to be brought to the attention of those charged with 

governance.

Ginnie Mae presented single-year financial statements for fiscal year 2020 and did not present

comparative financial statements. CLA’s opinion on Ginnie Mae’s financial statements was not

modified with respect to this matter.

In connection with the contract, we reviewed CLA’s reports and related documentation and 

inquired of its representatives. Our review, as differentiated from an audit of the financial

statements in accordance with U.S. generally accepted government auditing standards, was not

intended to enable us to express and we do not express opinions on Ginnie Mae’s financial

statements or internal control over financial reporting or on compliance with laws, regulations, 

and contracts. CLA is responsible for the attached Independent Auditor’s Report, dated 

November 16, 2020, and the conclusions expressed therein. Our review disclosed no instances

in which CLA did not comply, in all material respects, with U.S. generally accepted government

auditing standards. 

4
Independent Auditors’ Report

Inspector General

U.S. Department of Housing and Urban Development 

Principal Executive Vice President

Government National Mortgage Association

In our audit of the fiscal year 2020 financial statements of the Government National Mortgage

Association (Ginnie Mae), we found:

x Ginnie Mae’s financial statements as of and for the fiscal year ended September 30, 2020,

are presented fairly, in all material respects, in accordance with United States of America

(U.S.) generally accepted accounting principles;

x no material weaknesses and one significant deficiency for fiscal year 2020 in internal

control over financial reporting based on the limited procedures performed; and,

x no reportable noncompliance for fiscal year 2020 with provisions of applicable laws, 

regulations, and contracts tested.

The following sections discuss in more detail (1) our report on the financial statements, which

includes required supplementary information (RSI) 1 and other information2 included with the

financial statements; (2) our report on internal control over financial reporting; (3) our report on

compliance with laws, regulations, and contracts; and (4) Ginnie Mae’s response to our findings

and recommendation.

Report on the Financial Statements

We have audited Ginnie Mae’s financial statements in accordance with U.S. generally accepted

auditing standards; the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States; and Office of Management 

and Budget (OMB) Bulletin No. 19-03, Audit Requirements for Federal Financial Statements

(OMB Bulletin 19-03). Ginnie Mae’s financial statements comprise the balance sheet as of 

September 30, 2020, the related statement of revenues and expenses and changes in investment 

of U.S. Government, and statement of cash flows for the fiscal year then ended; and the related

notes to the financial statements. We believe that the audit evidence we obtained is sufficient and

appropriate to provide a basis for our audit opinion.

1The RSI consists of Management’s Discussion and Analysis which are included with the financial statements. 2Other information consists of information included with the financial statements, other than the RSI and the auditors’

report. 

5
Independent Auditors’ Report (Continued)

Management’s Responsibility

Ginnie Mae management is responsible for (1) the preparation and fair presentation of these

financial statements in accordance with U.S. generally accepted accounting principles; (2) 

preparing, measuring, and presenting the RSI in accordance with U.S. generally accepted

accounting principles; (3) preparing and presenting other information included in documents

containing the audited financial statements and auditors’ report, and ensuring the consistency of

that information with the audited financial statements and the RSI; and (4) maintaining effective 

internal control over financial reporting, including the design, implementation, and maintenance

of internal control relevant to the preparation and fair presentation of financial statements that are

free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. 

Government Auditing Standards require that we plan and perform the audits to obtain reasonable

assurance about whether the financial statements are free from material misstatement. We are

also responsible for applying certain limited procedures to RSI and other information included with 

the financial statements.

An audit of financial statements involves performing procedures to obtain audit evidence about

the amounts and disclosures in the financial statements. The procedures selected depend on the

auditors’ judgment, including the auditors’ assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error. In making those risk assessments, the auditors

consider internal control relevant to the entity’s preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

Accordingly, we express no such opinion. An audit of financial statements also involves evaluating 

the appropriateness of the accounting policies used and the reasonableness of significant

accounting estimates made by management, as well as evaluating the overall presentation of the

financial statements. Our audit also included performing such other procedures as we considered

necessary in the circumstances.

Opinion on Financial Statements

In our opinion, Ginnie Mae’s financial statements present fairly, in all material respects, Ginnie 

Mae’s financial position as of September 30, 2020, and its revenues and expenses and changes

in investment of U.S. Government, and statement of cash flows for the fiscal year then ended in

accordance with U.S. generally accepted accounting principles.

Emphasis of Matter

As discussed in Note 3 to the financial statements, Ginnie Mae presented single-year financial

statements for fiscal year 2020 and did not present comparative financial statements. Our opinion

on Ginnie Mae’s financial statements is not modified with respect to this matter.

Other Matters

Prior Year Financial Statements

Ginnie Mae’s financial statements as of and for the year ended September 30, 2019, were 

audited by other auditors, whose Independent Auditors’ Report dated February 7, 2020,

expressed a disclaimer of opinion on those financial statements.

6
Independent Auditors’ Report (Continued)

Required Supplementary Information 

OMB Bulletin 19-03 requires that the RSI be presented to supplement the financial

statements. Although the RSI is not a part of the financial statements, OMB considers this 

information to be an essential part of financial reporting for placing the financial statements

in appropriate operational, economic, or historical context. We have applied certain limited

procedures to the RSI in accordance with Government Auditing Standards, which 

consisted of inquiries of management about the methods of preparing the RSI and

comparing the information for consistency with management’s responses to the auditors’

inquiries, the financial statements, and other knowledge we obtained during the audits of

the financial statements, in order to report omissions or material departures from OMB

guidelines, if any, identified by these limited procedures. We did not audit and we do not 

express an opinion or provide any assurance on the RSI because the limited procedures

we applied do not provide sufficient evidence to express an opinion or provide any 

assurance.

Other Information

Ginnie Mae’s other information has historically contained a wide range of information, 

some of which is not directly related to the financial statements. This information is

presented for purposes of additional analysis and is not a required part of the financial

statements or the RSI. In addition, management typically includes references to

information on websites or other data outside of the Annual Report. As of the date of this

report we were unable to read the other information typically included with the financial 

statements in order to identify material inconsistencies, if any, with the audited financial 

statements, as management has not yet completed the information for our review. Our 

audit was conducted for the purpose of forming an opinion on Ginnie Mae’s financial 

statements. We did not audit and do not express an opinion or provide any assurance on

the other information.

Report on Internal Control over Financial Reporting

In connection with our audit of Ginnie Mae’s financial statements, we considered Ginnie Mae’s

internal control over financial reporting, consistent with our auditors’ responsibility discussed 

below. We performed our procedures related to Ginnie Mae’s internal control over financial 

reporting in accordance with Government Auditing Standards.

Management’s Responsibility

Ginnie Mae management is responsible for maintaining effective internal control over financial

reporting, including the design, implementation, and maintenance of internal control relevant to

the preparation and fair presentation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditors’ Responsibility

In planning and performing our audit of Ginnie Mae’s financial statements as of and for the year

ended September 30, 2020, in accordance with Government Auditing Standards, we considered

Ginnie Mae’s internal control over financial reporting as a basis for designing audit procedures

that are appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of the Ginnie

Mae’s internal control over financial reporting. Accordingly, we do not express an opinion on

Ginnie Mae’s internal control over financial reporting. We are required to report all deficiencies

that are considered to be material weaknesses or significant deficiencies. We did not consider or

7
Independent Auditors’ Report (Continued)

evaluate all internal controls relevant to operating objectives, such as those controls relevant to

preparing performance information and ensuring efficient operations. 

Definition and Inherent Limitations of Internal Control over Financial Reporting 

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel, the objectives of which are to provide reasonable

assurance that (1) transactions are properly recorded, processed, and summarized to permit the

preparation of financial statements in accordance with U.S. generally accepted accounting

principles, and assets are safeguarded against loss from unauthorized acquisition, use, or

disposition, and (2) transactions are executed in accordance with provisions of applicable laws,

including those governing the use of budget authority, regulations, and contracts, noncompliance 

with which could have a material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent, or

detect and correct, misstatements due to fraud or error.

Results of Our Consideration of Internal Control over Financial Reporting

Our consideration of internal control was for the limited purpose described above, and was not

designed to identify all deficiencies in internal control that might be material weaknesses or

significant deficiencies or to express an opinion on the effectiveness of Ginnie Mae’s internal 

control over financial reporting. Given these limitations, material weaknesses and/or significant

deficiencies may exist that have not been identified. However, during our audit, we did not identify

any deficiencies in internal control over financial reporting that we consider to be material

weaknesses. We did identify a certain deficiency in internal control over financial reporting that

we consider to be a significant deficiency. This deficiency is listed below and described in

Exhibit A.

Organizational Structure and Model Risk Governance. Ginnie Mae’s design of its 

organizational structure for two key functions within its model risk governance framework 

is considered deficient in appropriately mitigating the inherent risk presented when 

employing complex models for significant estimates for financial reporting. 

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a 

deficiency, or a combination of deficiencies, in internal control over financial reporting, such that

there is a reasonable possibility that a material misstatement of the entity’s financial statements

will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a

deficiency, or a combination of deficiencies, in internal control over financial reporting that is less 

severe than a material weakness, yet important enough to merit attention by those charged with

governance.

During our 2020 audit, we identified other deficiencies in Ginnie Mae’s internal control over

financial reporting that we do not consider to be material weaknesses or significant deficiencies.

Nonetheless, these deficiencies warrant Ginnie Mae management’s attention. We have

communicated these matters to Ginnie Mae management and, where appropriate, will report on 

them separately.

8
Independent Auditors’ Report (Continued)

Intended Purpose of Report on Internal Control over Financial Reporting

The purpose of this report is solely to describe the scope of our consideration of Ginnie Mae’s

internal control over financial reporting and the results of our procedures, and not to provide an

opinion on the effectiveness of Ginnie Mae’s internal control over financial reporting. This report

is an integral part of an audit performed in accordance with Government Auditing Standards in 

considering internal control over financial reporting. Accordingly, this report on internal control 

over financial reporting is not suitable for any other purpose.

Report on Compliance with Laws, Regulations, and Contracts

In connection with our audit of Ginnie Mae’s financial statements, we tested compliance with 

selected provisions of applicable laws, regulations, and contracts consistent with our auditors’

responsibility discussed below. We caution that noncompliance may occur and not be detected

by these tests. We performed our tests of compliance in accordance with Government Auditing

Standards.

Management’s Responsibility

Ginnie Mae management is responsible for complying with laws, regulations, and contracts

applicable to Ginnie Mae, including ensuring Ginnie Mae’s financial management systems are in

substantial compliance with Federal Financial Management Improvement Act requirements.

Auditors’ Responsibility

Our responsibility is to test compliance with selected provisions of applicable laws, regulations, 

and contracts applicable to Ginnie Mae that have a direct effect on the determination of material

amounts and disclosures in Ginnie Mae’s financial statements, and perform certain other limited

procedures. Accordingly, we did not test compliance with all laws, regulations, and contracts

applicable to Ginnie Mae.

Results of Our Tests for Compliance with Laws, Regulations, and Contracts

Our tests for compliance with selected provisions of applicable laws, regulations, and contracts

disclosed no instances of noncompliance or other matters for fiscal year 2020 that would be

reportable under Government Auditing Standards. However, the objective of our tests was not to

provide an opinion on compliance with laws, regulations, and contracts applicable to Ginnie Mae.

Accordingly, we do not express such an opinion.

Intended Purpose of Report on Compliance with Laws, Regulations, and Contracts

The purpose of this report is solely to describe the scope of our testing of compliance with selected

provisions of applicable laws, regulations, and contracts, and the results of that testing, and not

to provide an opinion on compliance. This report is an integral part of an audit performed in

accordance with Government Auditing Standards in considering compliance. Accordingly, this

report on compliance with laws, regulations, and contracts is not suitable for any other purpose.

Ginnie Mae’s Response to Audit Findings and Recommendation

Ginnie Mae’s response to the findings and recommendation identified in our report is included in 

Exhibit B. In their response Ginnie Mae acknowledges the significant deficiency reported,

however, believes their compensating controls sufficiently mitigates the risk of misstatement. We

believe the control environment inherent risk without the appropriate segregation of duties in

designing and implementing complex modeling for significant estimates within the financial

statements is critical in Ginnie Mae’s internal control system. Ginnie Mae does also state they

have taken immediate action in response to the finding which will address the concern. Ginnie

9
Independent Auditors’ Report (Continued)

Mae’s response was not subjected to the auditing procedures applied in the audits of the financial

statements and, accordingly, we express no opinion on it.

Status of Prior Year’s Control Deficiencies and Noncompliance Issues

We have reviewed the status of Ginnie Mae’s corrective actions with respect to the findings and

recommendations included in the prior year’s Independent Auditors’ Report, dated February 7,

2020. The status of prior year findings is presented in Exhibit C.

CliftonLarsonAllen LLP

Greenbelt, Maryland

November 16, 2020

10
Independent Auditors’ Report (Continued)

Exhibit A

Significant Deficiency

Organizational Structure and Model Risk Governance

Background

Accounting estimates are an approximation of monetary amounts in the absence of a precise

means of measurement. Accounting estimates involve estimation uncertainty, which is the

susceptibility of an accounting estimate and related disclosures to an inherent lack of precision in

its measurement. Ginnie Mae makes significant estimates in a variety of areas including, but not 

limited to, valuation of certain financial instruments; allowance for loss on mortgage loans held for

investment, including accrued interest; claims and other receivables; guaranty assets; and

guaranty obligations. Ginnie Mae utilizes models and estimation methods, some of them complex

and sophisticated, to develop certain significant estimates presented within Ginnie Mae’s financial 

statements. Ginnie Mae’s Office of Enterprise Risk (OER) is responsible for the development, 

testing, and implementation of the models used in calculating the estimates for financial statement

presentation. The testing of the models involves validation, which is a significant set of processes

and activities intended to verify the models are performing as expected and are in line with design

objectives and business uses. Model validation, therefore, serves as a form of quality control for

model development, helping to ensure the soundness of the models through effective challenge.

Condition

The current organizational structure, where OER is responsible for both model development and 

model validation, is a control design deficiency potentially preventing an effective challenge to the

models and possibly not allowing management to appropriately prevent, or detect and correct 

misstatements. Industry leading practices and bank regulatory guidance provide the following key

aspects of effective model risk management:

Board of Governors of the Federal Reserve System Office of the Comptroller of the Currency

(OCC), OCC 2011-12, Supervisory Guidance on Model Risk Management, V. Model Validation

states, “Validation involves a degree of independence from model development and use.

Generally, validation should be done by people who are not responsible for development or use 

and do not have a stake in whether a model is determined to be valid.”

Federal Housing Finance Agency (FHFA), Advisory Bulletin (AB) 2013-07, Model Risk

Management Guidance, Background and Key Points states, “Senior management should create 

an appropriate organizational structure to promote effective organizational challenge of models.”

Further, the U.S. Government Accountability Office (GAO) GAO 14-704G, Standards for Internal

Control in the Federal Government, includes as its foundational component of internal control, the 

control environment. One of the required principals of the control environment is Principal 3 –

Establish Structure, Responsibility, and Authority which states, “As part of delegating authority,

management evaluates the delegation for proper segregation of duties within the unit and in the

organizational structure.”

Given the estimation uncertainty of Ginnie Mae’s significant modeled estimates, and the

corresponding increased inherent risk of misstatement, an appropriate organizational structure

that provides for an effective control environment that engenders the challenging of models and

proper segregation of duties between model development and model validation is necessary.

Without the appropriate organizational structure and control environment, Ginnie Mae’s models

may not have the rigorous review necessary to achieve its objectives and adequately address

related risks.

11
Independent Auditors’ Report (Continued)

Exhibit A

Significant Deficiency

Recommendation

We recommend Ginnie Mae:

1. Create separate reporting lines between model development and model validation

functions so that both critical model functions do not report to OER, are appropriately

segregated in accordance with industry guidance, and follow the foundational component

of internal control standards.

12
Independent Auditors’ Report (Continued)

Exhibit B

Management’s Response

13
Independent Auditors’ Report (Continued)

Exhibit B

Management’s Response

14
Independent Auditors’ Report (Continued)

Exhibit C

Status of Prior Year’s Findings

Our assessment of the current status of the findings related to the prior year audit is presented

below:

Fiscal Year 2019 Findings Type Fiscal Year 

2020 Status

Significant estimates were not reliable, and adequate 

support for material asset balances could not be

provided in time to be audited.

Material

Weakness

Finding 1

Management

Letter

Concerns in addressing deficiencies in internal control

over financial reporting:

1. unable to provide assurance on the

effectiveness of its internal controls;

2. control weaknesses regarding its nonpooled

loan assets; and,

3. weaknesses in its data processing controls

within its nonpooled assets audit remediation

solution.

Material

Weakness

Finding 2

Closed

Not in full compliance with federal information system

controls requirement for its financial accounting 

system.

Significant 

Deficiency

Closed

Noncompliance with the Debt Collection Improvement 

Act (DCIA) of 1996. Noncompliance Management

Letter

In addition to the findings listed above, the audit of Ginnie Mae’s fiscal year 2019 financial 

statements listed 31 prior year audit recommendations associated with past findings that 

remained open at the beginning of fiscal year 2020. Our assessment of the current status of these 

recommendations, at the conclusion of our audit, is that these are considered closed, with the 

exception of one remaining action to be taken regarding the DCIA (listed above).

15
Appendix 

Appendix A 

Government National Mortgage Association

Fiscal Year Financial Statements

September 30, 2020

16
Government National Mortgage Association

Balance Sheet

 Sep 30, 2020 Se tember 30, 2020

(Dollars in thousands)

Assets: 

Cash and cash equivalents equivalents $ 24,5 24,512,125 

Restricted cash and cash equivalents d cash equivalents 1,061,627

Accrued fees and other receivables 118,032

Pass-through assistance program receivable including accrued interest, net 2,672

Reimbursable costs receivable, net 32,681

Claims receivable, net71,916

Advances, net dvances, net 784

Mortgage loans held for investment including accrued interest, net 2,119,470

Acquired property, net 4,603

Fixed assets, net 66,762

Mortgage servicing rights 398

Guaranty asset 6,755,883

Other assets 364

Total Assets l Assets $ 317 34,747,317

Liabilities and Investment of U.S. Government: 

Liabilities:

Accounts payable and accrued liabilities$ 73,443 

Deferred liabilities and deposits and deposits 3,210

Deferred revenue revenue 527,377

Liability for loss on mortgage-backed securities program guaranty 43,439

Liability for representations and warranties ntations and warranties 68 

Guaranty liability 8,041,340

Total Liabilities Total Liabilities $ 877 8,688,877

Commitments and Contingencies (See Note 19) 

Investment of U.S. Government $ 26,0 26,058,440 

Total Liabilities and Investment of U.S. Government $ 34,7 34,747,317 

The accompanying notes are an integral part to these financial statements

17
Government National Mortgage Association 

Statement of Revenues and Expenses and Changes in Investment of U.S. Government

For the year ended

September 30, 2020

(Dollars in thousands)

Revenues: 

Interest Income

Interest income on mortgage loans held for investment $ 106,659 

Interest income on pass-through assistance program receivable eceivable 83 

Other interest income 118,588

Income on guaranty obligation 2,529,611

Mortgage-backed securities guaranty fees ty fees 1,384,005

Commitment fees 152,062

Multiclass fees ulticlass fees 31,914

Mortgage-backed securities program and other income 5,013 

Total Revenues Total Revenues $ 4,327,935 

Expenses:

Administrative expenses penses $ (31,102) 

Fixed asset depreciation and amortization (22,643)

Mortgage-backed securities program and other expenses (258,658)

Acquired property expenses, net (5,512)

Total Expenses Total Expenses $ (317,915) 317,915) 

Recapture (provision):

Recapture (provision) for mortgage loans held for investment including accrued interest, net $ 1,551 

Recapture (provision) for mortgage-backed program guaranty(36,764)

Recapture (provision) for reimbursable cost le cost 589

Recapture (provision) for claims receivable (14,856)

Recapture (provision) for loss on uncollectible advances ollectible advances (79)

Recapture (Provision) for pass-through assistance program receivable including accrued interest(454) 

Total Recapture (Provision) (50,013) (50,013) 

Other Gain (Loss):

Gain (loss) on guaranty asset $ (2,845,137) 

Gain (loss) on mortgage servicing rights (870)

Gain (loss) other 2,860

Total Other Gains / (Losses) s / (Losses) $ (2,843,147)

Results of Operations erations $ 1, 1,116,860 

Investment of U.S. Government at Beginning of Period $ 24,94 24,941,580 

Investment of U.S. Government at End of Period $ 26,05 26,058,440 

The accompanying notes are an integral part to these financial statements

18

$ 
Government National Mortgage Association 

Statement of Cash Flows 

For the year ended 

September 30, 2020

(Dollars in thousands) 

Cash Flows from Operating Activities 

Results of Operations $ 1,116,860

Adjustments to reconcile results of operations to net cash (used for) provided by 

operating activities: 

Depreciation and amortization expense 22,643

Provision (recapture) for mortgage loans held for investment including accrued interest, net (1,551) 

Provision (recapture) for mortgage-backed program guaranty 36,764

Provision (recapture) for reimbursable costs (589) 

Provision (recapture) for claims receivable 14,856 

Provision (recapture) for loss on uncollectible advances 79 

Provision (recapture) for pass-through assistance program receivables including accrued interest 454 

Acquired property expenses, net 5,512

(Gain)/loss on guaranty asset 2,845,137

(Gain)/loss on mortgage servicing rights s 870

(Gain)/loss on liability for representations and warranties 6 

Income on guaranty obligation (2,529,611)

Interest income on mortgage loans held for investment (3,375) 

Interest income on pass-through assistance program (23) 

Changes in operating assets and liabilities: 

Accrued fees and other receivables (3,433)

Pass-through assistance program receivables including accrued interest, net (3,103)

Claims receivable, net 120,021

Advances, net (28)

Reimbursable costs receivable, net (3,992) 

Mortgage loans held for investment including accrued interest, net (4,084)

Other assets Other assets (1,288)

Accounts payable and accrued liabilities (18,912)

Deferred liabilities and deposits and deposits (2,245) 

Deferred revenue revenue 47,918

Net cash provided by operating activities$ 1,638 1,638,886 

Cash Flows from Investing Activities 

Proceeds from repayments and sales of mortgage loans acquired as held for investment $ 220,479

Proceeds from the dispositions of acquired property and preforeclosure sales 16,336

Purchases of loans held for investment including accrued interest, net (13,098)

Purchases of fixed assets (8,418)

Net cash provided by investing activities$ 299 215,299

Cash Flows from Financing Activities 

Net cash (used for) provided by financing activities ancing activities $ -

Net change in cash and cash equivalents ivalents $ 1 ,854,185

Cash and cash equivalents, beginning of the period 23,719,567

Cash and cash equivalents, end of the period $ 25,573,752

Supplemental Disclosure of Non-Cash Activities

Transfers from mortgage loans held for investment including accrued interest, net to claims receivable, net $ 2 3,613

Transfers from mortgage loans held for investment including accrued interest, net to acquired property, net 17,910

The accompanying notes are an integral part to these financial statements

19
Note 1: Entity and Mission 

The Government National Mortgage Association (Ginnie Mae) was created in 1968, through an 

amendment of Title III of the National Housing Act as a wholly owned United States (U.S.)

government corporation within the U.S. Department of Housing and Urban Development (HUD).

Ginnie Mae is a government corporation and, therefore, is exempt from both federal and state

taxes. Ginnie Mae guarantees the timely payment of principal and interest (P&I) on MortgageBacked Securities (MBS) backed by federally insured or guaranteed residential loans to its MBS 

investors. The guarantee, which is backed by the full faith and credit of the U.S. government, 

increases liquidity in the secondary mortgage market and attracts new sources of capital for

residential mortgage loans from investors. Ginnie Mae’s role in the market enables qualified

borrowers to have reliable access to a variety of mortgage products. Ginnie Mae’s market is the 

U.S. and its Territories housing market. 

Among those Ginnie Mae supports through the MBS program are: 

• First-time home buyers; 

• low and moderate-income households; 

• borrowers in rural, or other areas, where credit access is limited; 

• young professionals with unestablished credit histories; 

• borrowers with lower credit scores; 

• working families with little, or no, down payment; 

• borrowers with higher debt to income ratios; 

• the construction and renovation of multifamily housing; 

• senior citizens who need housing and support services; and 

• military veterans who have served the country.

Ginnie Mae requires all mortgages to be insured or guaranteed by government agencies, including 

the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), the 

U.S. Department of Agriculture’s Rural Development Agency (RD), and the Office of Public and 

Indian Housing (PIH)1. Ginnie Mae neither originates, purchases, or guarantees direct loans. 

Ginnie Mae offers two single-class securities product structures – Ginnie Mae I MBS and Ginnie 

Mae II MBS: 

• Ginnie Mae I MBS are pass-through securities providing monthly P&I payments to each 

investor. They are single-family, multifamily, or manufactured housing pools of mortgages

with similar maturities and interest rates offered by a single issuer.

• Ginnie Mae II MBS are similar to Ginnie Mae I MBS but allow multiple-issuer and singleissuer pools. They permit the securitization of adjustable rate mortgages (ARMs),

manufactured home loans, and home equity conversion mortgages (HECM), and allows

small issuers unable to meet the dollar requirements of the Ginnie Mae I MBS program to 

participate in the secondary mortgage market. 

 

1 Ginnie Mae did not have any mortgage loans insured by PIH at September 30, 2020. However, PIH-insured 

mortgage loans may exist within MBS pools.

20
Ginnie Mae offers two multiclass securities product structures – Platinum Securities and Real

Estate Mortgage Investment Conduits (REMIC) Securities: 

• Ginnie Mae Platinum Securities are formed by combining Ginnie Mae MBS securities into 

a new single security. Platinum Securities can be constructed from both fixed rate and 

Ginnie Mae ARM Securities. They provide MBS investors with greater market and

operating efficiencies, and may be used in structured financings, repurchase transactions, 

and general trading. 

• REMIC Securities direct underlying MBS principal and interest payments to classes with

different principal balances, interest rates, average lives, prepayment characteristics and 

final maturities. REMIC Securities allow issuers to have more flexibility for creating

securities to meet the needs of a variety of investors. Principal and interest payments are 

divided into varying payment steams to create classes with different expected maturities,

differing levels of seniority or subordination or other characteristics. 

Ginnie Mae established the following four programs to support both Ginnie Mae I and II MBS, 

which serve a variety of loan financing needs and different issuer origination capabilities: 

• Single-Family Program – consists of single-family mortgages originated for the purchase, 

construction, or renovation of single-family homes originated through FHA, VA, RD, and 

PIH loan insurance programs;

• Multifamily Program – consists of FHA and RD insured loans originated for the purchase, 

construction, or renovation of apartment buildings, hospitals, nursing homes, and assisted 

living facilities;

• HECM Mortgage-Backed Securities (HMBS Program) – consists of reverse mortgage 

loans insured by FHA; and 

• Manufactured Housing Program – allows the issuance of pools of loans insured by 

FHA’s Title I Manufactured Home Loan Program. 

Note 2: Summary of Significant Accounting Policies and Practices 

The following disclosures pertain to current practices followed by Ginnie Mae in accordance with

its accounting policies, except as otherwise indicated.

Basis of Presentation: Ginnie Mae’s functional currency is U.S. dollars and the accompanying 

financial statements have been prepared in that currency. Ginnie Mae is presenting its financial 

statements and footnotes as a single year presentation for fiscal year 2020. The decision to continue

with single year reporting in fiscal year 2020 was made in conjunction with HUD to allow adequate 

time for the audit of HUD’s and Ginnie Mae’s year-end Financial Statements and footnotes. The 

financial statements conform to U.S. GAAP, except as otherwise indicated. 

Going Concern: The accompanying financial statements are prepared on a going concern basis 

and do not include any adjustments that might result from uncertainty about Ginnie Mae’s ability 

to continue as a going concern.

21
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP, which 

requires management to make estimates and assumptions that affect the reported amounts of assets 

and liabilities, the disclosure of contingent assets and liabilities at the date of the financial

statements, the reported amounts of revenues and expenses for the periods presented, and the 

related disclosures in the accompanying notes. Ginnie Mae evaluates these estimates and 

judgments on an ongoing basis and bases its estimates on experience, historical, current and

expected future conditions, third-party evaluations, and various other assumptions that Ginnie Mae 

believes are reasonable under the circumstances. The results of these estimates form the basis for 

making judgments about the carrying values of assets and liabilities, as well as identifying and

assessing the accounting treatment with respect to commitments and contingencies. 

Ginnie Mae has made significant estimates in a variety of areas including, but not limited to, fixed 

assets, valuation of certain financial instruments, such as mortgage servicing rights (MSR), 

acquired property, allowance for loss on mortgage loans held for investment (HFI) including 

accrued interest, claims and other loan receivables, guaranty assets, guaranty obligations, liability 

for representations and warranties, and the liability for loss on MBS program guarantee. Actual 

results could differ from those estimates.

Accounting Changes and Error Corrections: Ginnie Mae may make certain accounting changes 

or discover the need for error corrections. ASC 250 – Accounting Changes and Error Corrections

provides guidance on the accounting for and reporting of accounting changes and error corrections. 

Change in Accounting Principle: A change in accounting principle occurs when “there are two 

or more generally accepted accounting principles that apply or when the accounting principle 

formerly used is no longer generally accepted. A change in the method of applying an accounting 

principle also is considered a change in accounting principle.” Management may make changes in 

accounting principle only if either of the following conditions are met: 1) The change is required 

by a newly issued Codification update or 2) The entity can justify the use of an allowable 

alternative accounting principle on the basis that it is preferable. In instances where management

deems a change in accounting principle is necessary, the change shall be recorded by retrospective 

application in accordance with ASC 250-10-45-5 through 45-8. When retrospective application is

deemed impractical, the change in accounting principle will be made as of the beginning of the

subsequent fiscal year of the period in which the change is made, per ASC 250-10-45-14. 

Management shall make the appropriate disclosures in the financial statements in the period in 

which a change in accounting principle is made. 

Change in Accounting Estimate: Ginnie Mae employs the use of significant estimates and 

assumptions for certain balances disclosed within its financial statements. Accordingly, Ginnie

Mae periodically updates its models and assumptions that are used within financial reporting and

assesses these updates to determine whether they should be accounted for as a change in 

accounting estimate Ginnie Mae accounts for changes in accounting estimates prospectively, in 

accordance with ASC 250.

Disclosures for changes in accounting estimates made in the ordinary course of accounting for 

items (such as for depreciation and amortization) are not necessary, unless the effect of a change 

 

22
in accounting estimate is material. Changes in accounting estimates resulting from a change in

valuation technique used to measure fair value are not subject to disclosure when the resulting fair 

value measurement is in accordance with ASC 820: Fair Value Measurement. If a change in

accounting estimate is a result of a change in accounting principle, the change in accounting 

estimate shall be subject to the disclosure requirements required for changes in accounting 

principle, as noted above. Management shall make the appropriate disclosures for changes in 

accounting estimates in the period for which the change in accounting estimate is made. 

Error Corrections: In the event that Ginnie Mae identifies an error in previously issued financial 

statements, Ginnie Mae will perform a materiality assessment, since the method to correct the error

is dependent on the materiality to both prior year(s) and current year. When the error is material 

to the prior period(s) financial statements, the error is corrected through a restatement including 

the correction of material errors relating to classification and disclosure. For errors that are 

immaterial to prior periods, but the correction would result in a material error in the current period, 

Ginnie Mae adjusts or “restates” the prior period information in the current period financial 

statement and discloses the correction in the footnotes of the current period financial statements 

(i.e., the financial statements that reflect the correction). Errors that are immaterial to both the

current and prior period are typically corrected in the current period.

In fiscal year 2020, management identified errors in previously issued financial statements related

to the guaranty obligation in the amount of $64.4 million. Management determined the error to be 

immaterial to both the current and prior years, and therefore corrected the error in the current year 

financial statements. 

Fair Value Measurement: Ginnie Mae uses fair value measurement for the initial recognition of

certain assets and liabilities, periodic re-measurement of certain assets on a recurring and 

non-recurring basis, and certain disclosures. Fair value is defined as the price that would be 

received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction 

between market participants at the measurement date. Ginnie Mae bases its fair value

measurements on an exit price that maximizes the use of observable inputs and minimizes the use 

of unobservable inputs. 

Fair Value Option: The fair value option under ASC 825: Financial Instruments allows certain 

financial assets and liabilities, such as acquired loans, to be reported at fair value (with unrealized

gains and losses reported in the Statement of Revenues and Expenses and Changes in Investment 

of U.S. Government and related cash flows classified as operating activities). The fair value option

was elected by Ginnie Mae for the guaranty asset. 

Natural Disasters: The occurrence of a major natural disaster, such as a hurricane, tropical storm,

wildfires, flood, and other large-scale catastrophe, in an area where Ginnie Mae’s pooled and nonpooled loans or properties are located could have an adverse impact on our financial condition and

results of operations. An unpredictable natural disaster could negatively affect the ability of

borrowers to continue to make principal and interest payments, increasing Ginnie Mae’s credit

losses. It could cause damage or destroy properties that Ginnie Mae owns, and Ginnie Mae may

not have insurance coverage to offset all the losses. Further, a major disruptive event, such as 

 

23
natural disaster, may negatively impact an Issuer if the Issuer’s portfolio is highly concentrated in 

the affected region. This could lead to an increase in probability of the Issuer’s default and Ginnie

Mae having to step into the role of the Issuer. In doing so, Ginnie Mae would then need to assume

all servicing rights and obligations of the Issuer, including making timely principal and interest

payments to the MBS investors. Finally, a natural disaster could negatively impact the valuation 

of the guaranty asset and mortgage servicing rights assets (MSRs) by having an adverse impact on

significant modeling inputs and key economic assumptions, such as prepayment rates and default 

rates. 

During the fourth quarter of fiscal year 2020, several natural disasters impacted 6 states and 1

territory . Management performed an initial assessment over the pooled and non-pooled portfolios 

in these markets to assess the impact as a result of the natural disasters. Management found that 

there were no materially adverse effects to Ginnie Mae’s financial statements. See Note 18:

Concentration of Credit Risk for additional discussion around the maximum exposure related to

the natural disasters during fiscal year 2020. 

Cash and Cash Equivalents: Ginnie Mae’s cash and cash equivalents consists of cash held by 

the U.S. Treasury (Funds with U.S. Treasury), cash that is held by the MSS and the Trustee and

Administrator of securities on Ginnie Mae’s behalf but has not yet been transferred to Ginnie Mae 

(Deposits in transit), as well as U.S. Treasury short-term investments (securities issued with an 

original maturity date of three months or less). Cash receipts, disbursements, and investment

activities are processed by U.S. Department of Treasury (U.S. Treasury). All cash not classified as 

restricted cash is accessible in the event of an issuer default, termination and extinguishment2

(defined as any failure or inability of the issuer to perform its responsibilities under the Ginnie 

Mae MBS programs).

Funds with U.S. Treasury represent the available budget spending authority of Ginnie Mae 

according to the U.S. Treasury and is the aggregate amount of Ginnie Mae’s accounts with the

U.S. Treasury. 

Deposits in transit include principal, interest, and other payments collected by the MSS and the 

Trustee and Administrator of securities, on Ginnie Mae’s behalf, in custodial accounts that have

not yet been received by Ginnie Mae at the end of the reporting period. 

Ginnie Mae’s U.S. Treasury short-term investments consist of one-day overnight certificates that

are issued with a stated rate of interest to be applied to their par value with a maturity date of the

next business day. These overnight certificates are measured at cost, which approximates fair 

value. Interest income on such securities is presented within “Other interest income” in the 

Statement of Revenues and Expenses and Changes in Investment of U.S. Government. 

Restricted Cash and Cash Equivalents: Cash and cash equivalents are classified as restricted

when the statutes, regulations, contracts or Ginnie Mae’s statements of intentions legally limit the

use of funds. Restrictions may include legally restricted deposits, contracts entered into with

 

2 Extinguishment occurs when defaulted issuer’s right, title, and interest in the pooled mortgages is taken over by Ginnie Mae. 

Note that Ginnie Mae is not required to take over the right, title, and interest from issuers after default.

24
others, or the entity’s statements of intention with regard to particular deposits. Restricted cash 

balances are recorded in a separate line item as restricted cash and cash equivalents. Ginnie Mae

received approval from the Office of Management and Budget (OMB) to invest certain portions 

of restricted cash in U.S. Treasury short-term investments and Ginnie Mae is entitled to the interest 

income earned on these investments. Restricted cash and cash equivalents also include P&I

payments that were not collected by security holders and unclassified funds. 

Escrow Funds (Held in Trust for MBS Certificate Holders or Mortgagors): Escrow funds are 

held in trust for payments of mortgagors’ taxes, insurance and related items, or other fiduciary

funds. These funds are collected by the MSS and held at depository institutions for which Ginnie

Mae does not have access. This amount is $24.8 million at September 30, 2020. The escrow 

balance as of September 30, 2020 is an estimate and represents amounts submitted by the MSS. 

Escrow funds are not owned, invested or controlled by Ginnie Mae and are therefore not included 

in total assets or liabilities on Ginnie Mae’s Balance Sheet. As such, Ginnie Mae receives no

current or future economic benefits thereof, and there is no associated risk or reward to Ginnie 

Mae from the escrow funds. 

Reimbursable Costs Receivable, Net: Costs incurred on both pooled and non-pooled loans

expected to be reimbursed are recorded as reimbursable costs receivable, and reported net of

allowance for amounts that management believes will not be collected. Reimbursable costs arise

when insufficient escrow funds are available to make scheduled tax and insurance payments for

loans serviced by Ginnie Mae, and Ginnie Mae advances funds to cover the shortfall to preserve a 

first lien position on the underlying collateral. In addition, Ginnie Mae advances funds to cover 

servicing related expenses in order to preserve the value of the underlying collateral. The

allowance for reimbursable costs is estimated based on historical loss experience, which includes 

expected collections from the mortgagors, proceeds from the sale of the property, and 

reimbursements collected from third-party insurers or guarantors such as FHA, VA, RD, and PIH.

Accrued Fees and Other Receivables: Ginnie Mae’s accrued fees and other receivables primarily 

include accrued guaranty fees. Guaranty fees are discussed in Note 5: Financial Guarantees and 

Financial Instruments with Off-Balance Sheet Exposure.

Ginnie Mae is a designated recipient agency for criminal restitution payments as a result of court

order in connection with criminal proceedings against certain defendants, primarily for fraud and 

false claims. U.S. District Courts are responsible for receipting payments, disbursing restitution to

victims, and tracking the debt. Ginnie Mae has determined that these receivables are not probable

of collection and have no net realizable value. This assessment is based on Ginnie Mae’s position 

in the recovery hierarchy for debts from defendants, its historical experience with collections on

these accounts, and the overall historical experience for the U.S. Government in collecting on this

category of receivable.

Pass-Through Assistance Program Receivables Including Accrued Interest, Net: When the 

President of the United States declares a major disaster, Ginnie Mae, at its sole discretion, may

extend to Issuers one or more of the Disaster Assistance Programs identified in Chapter 34 of its 

Mortgage-Backed Securities Guide (“MBS Guide”), one of which is the Pass-Through Assistance 

 

25
Program (“PTAP”). Under PTAP, Ginnie Mae assists Issuers with pass-through payments of P&I 

to investors if the Issuers are facing a temporary liquidity shortfall directly attributable to a major 

disaster. Requests for assistance should only be made by an Issuer as a “last resort”. PTAP is not

intended to provide long-term financing, or to address the full extent of solvency issues that an 

Issuer might face as a result of a disaster.

Pass-Through Assistance Program Receivable: An Issuer that receives an eligible pass-through 

assistance advance from Ginnie Mae will be obligated to repay it to Ginnie Mae according to the 

terms set forth in the applicable Supervisory Agreement. Ginnie Mae recognizes each passthrough assistance advance as a financing receivable (hereinafter referred to as “Pass-Through

Assistance Program Receivables”, or “PTAP Receivables”) when the advance is disbursed to the 

Issuer. Ginnie Mae cannot transfer PTAP receivablesto another party and has the intent and ability 

to hold them for the foreseeable future or until maturity. Therefore, Ginnie Mae classifies all

PTAP receivables as HFI and reports their carrying value, which includes the outstanding 

contractual balance (including accrued interest), net of cost basis adjustments, and net of 

allowance. The PTAP Receivables is discussed in Note 6: Pass-Through Assistance Program 

Receivables Including Accrued Interest, Net. 

Accrued Interest Receivable: Ginnie Mae accrues interest on PTAP receivables at the effective 

interest rate based on the interest method, and records an allowance on accrued interest to the 

extent interest is uncollectible. 

Non-accrual: Ginnie Mae places PTAP receivables on non-accrual status upon the earlier of:

1) When Ginnie Mae determines that payment in full is not expected from the Issuer, i.e. 

the PTAP receivable is considered impaired, or 

2) When the PTAP receivable has been due and unpaid for 90 days. 

If PTAP receivables are placed on non-accrual status, Ginnie Mae suspends recognizing additional 

interest income. Previously accrued interest is not reversed but becomes part of Ginnie Mae’s 

recorded investment and is assessed for impairment. Partial repayments received for PTAP 

receivables on non-accrual status are applied to principal before accrued interest, as doubt exists 

about the collectability of principal. Due to the short-term nature of PTAP receivables, non-accrual 

PTAP receivables are generally not returned to accrual status. Forgone interest on non-accrual 

PTAP receivables is only recognized when cash repayment is received.

Allowance for PTAP Receivables: Ginnie Mae performs periodic and systematic reviews of PTAP 

receivables to identify credit risks and assess the overall collectability to determine if (1) available 

information at each balance sheet date indicates that it is probable a loss has occurred and (2) the

amount of the loss can be reasonably estimated. 

When Ginnie Mae determines that it is probable a credit loss has occurred and that loss can be

reasonably estimated, Ginnie Mae recognizes the estimated amount of the incurred loss in the

allowance for PTAP receivables. The allowance consists of two components: (1) an asset-specific 

component for larger-balance PTAP receivables individually evaluated and deemed impaired, and 

(2) a component for PTAP receivables collectively evaluated for impairment. PTAP receivables

collectively evaluated for impairment include smaller-balance PTAP receivables and larger26
balance PTAP receivables not deemed individually impaired. The allowance for PTAP receivables

represents management’s best estimate of probable credit losses inherent in Ginnie Mae’s PTAP 

receivables. The allowance is netted against the recorded investment of PTAP receivables 

presented on the balance sheet. 

Charge off: Ginnie Mae charges off accrued interest and unpaid principal balance (UPB) for PTAP 

receivables when it believes collectability of interest or principal is not reasonably assured. Ginnie 

Mae’s policy is to evaluate individual PTAP receivables on a quarterly basis, to determine whether 

payment in full is expected and charges off the amount deemed uncollectible against allowance 

for PTAP receivables. 

Recoveries: Ginnie Mae records recoveries of PTAP receivables previously charged off when 

repayment received from the Issuer exceeds the recorded investment. The recoveries are recorded 

by crediting the allowance, which results in an indirect credit to earnings through Recapture 

(Provision) for Pass-Through Assistance Program Receivables Including Accrued Interest, Net. 

Claims Receivable, Net: Claims receivable represents receivables from conveyed properties and 

payments owed to Ginnie Mae from insuring or guaranteeing agencies (FHA, VA, RD, and PIH). 

Claims receivable consists of two primary components: 

Short sale claims receivable: As an alternative to foreclosure, a property may be sold for an 

agreed-upon price, at which the net proceeds fall short of the debts secured by liens against the 

property. Accordingly, short sale proceeds are often insufficient to fully pay off the mortgage. 

Ginnie Mae’s MSS analyze mortgage loans for factors such as delinquency, appraised value of the 

property collateralizing the loan, and market locale of the underlying property to identify loans 

that may be short sale eligible. Short sale transactions are analyzed and approved by the Office of 

Issuer and Portfolio Management (OIPM) at Ginnie Mae. For FHA insured loans where the 

underlying property was sold in a short sale, the FHA typically pays Ginnie Mae the difference

between the proceeds received from the sale and the total contractual amount of the mortgage loan 

and delinquent interest payments at the debenture rate (less the first two months of delinquent 

interest). FHA is the largest insurer for Ginnie Mae. Short sales on VA, RD, and PIH guaranteed

loans follow a similar process in which the claims receivable amount is determined in accordance 

with the respective agency guidelines. Ginnie Mae records a short sale claims receivable while it 

awaits repayment of the shortfall amount from the insuring or guaranteeing agencies. 

Once the claims receivable is established, Ginnie Mae periodically assesses its collectability by 

utilizing statistical models, which incorporate expected recovery based on the underlying insuring 

or guaranteeing agency guidelines, and Ginnie Mae’s historical loss experience. Ginnie Mae

records an allowance for short sale claims that represents the expected unrecoverable amounts

within the portfolio. Short sale claims less the allowance for short sale claims is the amount that

Ginnie Mae determines to be collectible. 

Foreclosed property: Ginnie Mae records foreclosed property when the MSS receives title to a 

residential real estate property that has completed the foreclosure process in its respective legal

jurisdiction, or when the mortgagor conveys all interest in the property to Ginnie Mae through its 

27
MSS to satisfy the loan through completion of a deed in lieu of foreclosure process or similar legal 

agreement. These properties differ from acquired properties as Ginnie Mae intends to convey the 

property to an insuring or guaranteeing agency, instead of marketing and selling the properties 

through the MSS. The claimed asset is measured based on the amount of the loan outstanding 

balance expected to be recovered from the insuring or guaranteeing agency. 

Once the claims receivable is established, Ginnie Mae periodically assesses its collectability by 

utilizing statistical models, which incorporate expected recovery based on the underlying insuring 

or guaranteeing agency guidelines and Ginnie Mae’s historical loss experience. Ginnie Mae 

records an allowance for foreclosed property claims that represents the expected unrecoverable 

amounts within the portfolio. Foreclosed property claims less the allowance for foreclosed 

property claims is the amount that Ginnie Mae determines to be collectible. 

Charge off: Once losses are confirmed, Ginnie Mae charges off any uncollectable amounts against 

the corresponding allowance. 

Recoveries: If the claim proceeds received exceed the claims receivable’s carrying amount, Ginnie 

Mae will apply the excess to amounts previously charged-off (i.e., recovery) with any residual 

amounts recognized as a gain on the Statement of Revenues and Expenses and Changes in 

Investment of U.S. Government. 

Advances, Net: Advances represent pass-through payments made to the MSS to fulfill Ginnie

Mae’s guarantee of timely P&I payments to MBS security holders, when there is a shortfall in P&I

payments collected on the pooled loans serviced by the MSS on behalf of Ginnie Mae. Ginnie Mae

reports advances net of an allowance to the extent that management believes advances will not be 

collected. The allowance is calculated based on expected recovery amounts from any mortgage

insurance or guarantee per established insurance or guarantor rates, Ginnie Mae’s collectability 

experience, and other economic factors. 

Mortgage Loans Held for Investment Including Accrued Interest, Net: When a Ginnie Mae 

issuer defaults, and is terminated and extinguished, Ginnie Mae steps into the role of the issuer 

and assumes all servicing rights and obligations of the issuer’s entire Ginnie Mae guaranteed 

portfolio, including making timely pass-through payments. Ginnie Mae utilizes the MSS to service 

these portfolios. There are currently two MSS that service the terminated and extinguished issuer 

portfolios of pooled and non-pooled loans. 

In its role as issuer, Ginnie Mae assesses individual loans within its pooled portfolio to determine 

whether the loan must be purchased out of the pool. Ginnie Mae must purchase mortgage loans

out of the MBS pool when the mortgage loans are ineligible for insurance or guarantee by the 

FHA, VA, RD, or PIH, as well as loans that have been modified beyond the trial modification

period. Additionally, Ginnie Mae has the option to purchase mortgage loans out of the MBS pool

when the mortgage loans are insured or guaranteed but are delinquent for more than 90 days. 

Mortgage Loans Held For Investment: Ginnie Mae has the intent and ability to hold acquired 

loans for the foreseeable future or until maturity, therefore, the mortgage loans are classified as

28
HFI. Ginnie Mae reports the carrying value of HFI loans on the Balance Sheet at the UPB along 

with accrued interest, net of cost basis adjustments, and net of allowance for loan losses including 

accrued interest, as required by U.S. GAAP. In the event that Ginnie Mae clearly identifies

mortgage loans that it intends to sell, as well as develops a formal marketing strategy or plan of 

sale, Ginnie Mae will reclassify the applicable loans from HFI to held for sale (HFS). For loans 

which Ginnie Mae initially classified as HFI and subsequently transfers to HFS, those loans would 

be recognized at the lower of cost or fair value until sold, with any related cash flows classified as 

operating activities. At September 30, 2020, Ginnie Mae had no loans classified as HFS. 

Accrued interest receivable: Ginnie Mae accrues interest on mortgage loans HFI at the contractual

rate and records an allowance on accrued interest to the extent interest is uncollectible for

conventional loans, and to the extent interest is not recoverable per insurance guidelines for insured 

or guaranteed loans. 

Non-accrual and Modified Accrual: Ginnie Mae’s current policy establishes when a loan is 

placed on non-accrual status, the method of recording payments received while a loan is on nonaccrual status, and the criteria for resuming accrual of interest. Ginnie Mae’s policy is to place 

uninsured loans on non-accrual status once either principal or interest is greater than 90 days past 

due (DPD) and Ginnie Mae believes collectability of payments is not reasonably assured. For 

uninsured loans placed on non-accrual status, interest previously accrued but not collected

becomes a part of Ginnie Mae’s recorded investment, and is assessed for impairment under 

Accounting Standards Codification (ASC) 450-20: Contingencies – Loss Contingencies for whole 

loans, and under ASC 310-10: Receivables – Overall for loans deemed to be impaired. While a

loan is on non-accrual status, Ginnie Mae has elected to apply any cash received for uninsured

loans to the carrying value of the loan based on the cost recovery method. 

In accordance with the policy, once insured loans are greater than 90 days, they are placed on 

modified accrual status, whereby interest is accrued at the rate recoverable from the insurer. Only 

loans for which Ginnie has discontinued the accrual of interest are considered non-accrual loans 

(i.e. uninsured loans 90 days past due for which no interest is accrued). Insured loans 90 days past 

due are still accruing interest, although the rate may differ from the contractual rate based on the

level of coverage provided by the applicable insurer/guarantor (i.e. modified accrual). For insured

loans placed on modified accrual status, interest previously recognized at the contractual rate is 

not reversed but becomes a part of Ginnie Mae’s recorded investment, and is assessed for 

impairment under ASC 450-20 for whole loans, and under ASC 310-10 for loans deemed to be

impaired. For FHA insured loans on modified accrual status, cash receipts are applied in 

accordance with the P&I amortization schedule due, to the extent of the coverage provided by 

FHA insurance. For loans insured or guaranteed by other insurers/guarantors (VA, RD, or PIH), 

Ginnie Mae has elected to apply cash received to the carrying value of the loan based on the cost

recovery method. 

Loans can be returned to accrual status if Ginnie Mae is able to determine that all P&I amounts 

contractually due are reasonably assured of repayment within a reasonable period and there is a

sustained period of reperformance. 

29
Allowance for Loan Losses: Ginnie Mae performs periodic and systematic reviews of its loan

portfolios to identify credit risks and assess the overall collectability of the portfolios to determine 

the estimated uncollectible portion of the recorded investment on the loans when (1) available 

information at each balance sheet date indicates that it is probable a loss has occurred and (2) the

amount of the loss can be reasonably estimated. 

For large groups of homogeneous loans that are collectively evaluated (pursuant to requirements 

in ASC 450-20), Ginnie Mae establishes the allowance for loan losses and records an allowance 

against both principal and interest. When Ginnie Mae determines that it is probable a credit loss

will occur and that loss can be reasonably estimated, Ginnie Mae recognizes the estimated amount

of the incurred loss in the allowance for loan losses. Ginnie Mae aggregates its mortgage loans

based on common risk characteristics, primarily by the type of insurance or guarantee (FHA, VA, 

RD, PIH) associated with the loan, as each has a different recovery rate. Ginnie Mae also

categorizes uninsured loans separately from insured loans. The allowance for loan losses estimate 

is calculated using statistical models that are based on historical loan performance and insurance 

or guarantee recoveries, as well as macroeconomic data. The estimate also includes qualitative 

factors, where applicable. 

This allowance for losses represents management’s best estimate of probable credit losses inherent 

in Ginnie Mae’s mortgage loan portfolio. The allowance is netted against the recorded investment

on mortgage loans presented on the balance sheet. 

Charge off: Ginnie Mae charges off accrued interest and UPB when it believes collectability of

interest or principal is not reasonably assured. Ginnie Mae’s policy is to charge off confirmed 

losses against the loan and allowance for loan losses to either fair market value or net recoverable 

value when the asset is at or greater than 180 days delinquent.

Recoveries: Ginnie Mae records recoveries of uninsured loans previously charged-off when cash

is received from the borrower related to P&I in excess of the recorded investment. For insured 

loans, Ginnie Mae records recoveries of previously charged-off accrued interest amounts when 

cash is received from the borrower related to interest in excess of the recorded interest receivable.

Recoveries of loans previously charged off are recognized as an increase to the allowance for loan

losses when payment is received. 

Impaired Loans: Ginnie Mae considers a loan to be impaired when, based on current information, 

it is probable that amounts due, including interest, will not be received in accordance with the 

contractual terms of the loan agreement (pursuant to requirements under ASC 310-10: Receivables

– Overall). Ginnie Mae’s impaired loans include troubled debt restructuring (TDR) and purchased 

credit impaired (PCI) loans. For impaired loans, Ginnie Mae measures impairment based on the 

present value of expected future cash flows. Ginnie Mae’s expectation of future cash flows 

incorporates, among other items, estimated probabilities of default and prepayment based on a

number of economic factors as well as the characteristics of a loan. Additionally, Ginnie Mae

considers the estimated value of the collateral, as reduced by estimated disposition costs, and

estimated proceeds from insurance and similar sources, if applicable.

 

30
Troubled Debt Restructuring: To avoid foreclosure, the MSS, on behalf of Ginnie Mae, may offer

concessions to help mortgagors who have fallen into financial difficulties with their mortgages. 

Various concessions may be provided through modification, including: 

• A delay in payment that is more than insignificant; 

• A reduction in the contractual interest rate to lower than the market interest rate at the time 

of modification; 

• Interest forbearance for a period of time for uncollected interest amounts, that is more than

insignificant; 

• Principal forbearance that is more than insignificant; and 

• Discharge of the mortgagor’s obligation due to filing of Chapter 7 bankruptcy. 

Ginnie Mae considers these modifications concessions granted to mortgagors experiencing 

financial difficulties and classifies these loans as TDRs consistent with ASC 310-40: Receivables –

Troubled Debt Restructuring by Creditors. Ginnie Mae measures the impairment on these loans

restructured in a TDR based on the excess of the recorded investment in the loan over the present 

value of the expected future cash flows, discounted at the loan’s original effective interest rate.

COVID-19 Related Forbearances: In March 2020, the Coronavirus Aid, Relief, and Economic

Security Act, referred to as the CARES Act, was enacted to provide financial relief to businesses, 

individuals and public institutions affected by the COVID-19 pandemic. Section 4013 of the 

CARES Act provides financial institutions the option to temporarily suspend the accounting and 

reporting requirements for TDRs for loan modifications provided they are: 1) related to the

COVID-19 pandemic, 2) the modification occurs between March 1, 2020 through the earlier of

December 31, 2020 or 60 days after the date on which the COVID-19 outbreak national emergency 

terminates, and 3) the loan was not more than 30 days delinquent as of December 31, 2019. The

scope of this Section applies to forbearance arrangements, repayment plans, interest rate

modifications, and any similar arrangement that defer or delays the payment of principal or 

interest.

FHA, VA, and RD insured loans fall in scope of Section 4022 “Foreclosure Moratorium and 

Consumer Right to Request Forbearance” of the CARES Act which grants forbearance rights and 

protection against foreclosure to borrowers with a federally backed mortgage loan3

. Per Section 

4022, upon the borrower’s request, a servicer must provide forbearance for up to 180 days provided 

that the borrower must attest that they have experienced financial hardship due to COVID-19. 

Section 4022 also notes that the forbearance period may be extended for an additional period of 

up to 180 days at the request of the borrower, provided that, the borrower’s request for an extension 

 

3 The term ‘‘Federally backed mortgage loan’’ includes any loan which is secured by a first or subordinate lien on residential

real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from 

1- to 4- families that is either (A) insured by the FHA; (B) insured under the National Housing Act; (C) guaranteed under 

the Housing and Community Development Act of 1992; (D) guaranteed or insured by the Department of Veterans Affairs; 

(E) guaranteed or insured by the Department of Agriculture; (F) made by the Department of Agriculture; or (G) purchased 

or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

31
is made during the covered period, and, at the borrower’s request, either the initial or extended

period of forbearance may be shortened. In August 2020, FHA, VA and RD announced the 

extension of its foreclosure and eviction moratorium to the insured borrowers through December

31, 2020. 

In April 2020, the Board of Governors of the Federal Reserve, Federal Deposit Insurance 

Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, 

and Consumer Financial Protection Bureau, in consultation with state financial regulators, issued 

a revision to the Interagency Statement on Loan Modifications by Financial Institutions Working 

with Customers Affected by the Coronavirus(“Interagency Statement”), which was confirmed with 

the staff of the Financial Accounting Standards Board. The Interagency Statement encourages 

financial institutions to work constructively with borrowers impacted by COVID-19, provides

additional information over loan modifications, and clarifies interactions between the interagency 

statement and related relief provided by the CARES Act. The Interagency Statement allows for an

entity to either choose to account for an eligible loan modification under Section 4013 of the

CARES Act or in accordance with the Interagency Statement’s interpretation of existing US

GAAP (ASC 310-40) in the context of COVID-19. The scope of the Interagency Statement applies

to modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays 

in payment that are insignificant. Loan modifications eligible for relief under the Interagency 

Statement meet all of the following criteria: 1) modification is in response to the National 

Emergency, 2) the loan was not 30 days or more past due at the time the modification program is

implemented, and 3) the modification is short term in nature (e.g. six months). 

Ginnie Mae has elected to account for modifications and take the optional relief provided within 

the Interagency Statement. For loan modifications to meet the criteria for relief under the 

Interagency Statement, one requirement is that borrowers have to be current at the implementation

of the modification program. As such, institutions may presume borrowers are not experiencing 

financial difficulties at the time of the modification for purposes of determining TDR status, and 

thus no further TDR analysis is required for each loan modification in the program. In accordance 

with the Interagency Statement, loans subject to relief will continue to be presented as current 

within the financial statement aging disclosures. Further, these loans will continue to recognize 

interest income subject to Ginnie Mae’s existing accounting policy. Refer to Note 10: Mortgage

Loans Held for Investment Including Accrued Interest, Net for further details. 

Purchased Credit Impaired Loans: Ginnie Mae evaluates all purchased loans and assesses

whether there is evidence of credit deterioration subsequent to the loan’s origination and, if it is 

probable at acquisition that Ginnie Mae will be unable to collect all contractually required 

payments. Ginnie Mae considers insurance and guarantees from FHA, VA, RD, and PIH in

determining whether it is probable that Ginnie Mae will collect all amounts due according to the 

contractual terms. Per U.S. GAAP, Ginnie Mae is required to record realized losses on loans 

purchased when, upon purchase, the fair value is less than the acquisition cost of the loan. 

Additionally, U.S. GAAP requires Ginnie Mae to accrue and recognize the difference between the 

initial investment of the loan and the undiscounted expected cash flows (accretable yield) as

interest income on a level-yield basis over the expected life of the loan.

32
For the loans insured by the FHA, Ginnie Mae expects to collect the full amount of the UPB and 

debenture rate interest (only for months allowed in the insuring agency’s timeline), when the 

insuring agency reimburses Ginnie Mae. As a result, these loans are accounted for under ASC 310-

20: Receivables – Nonrefundable Fees and Other Costs. In accordance with ASC 310-20-30, these 

loans are recorded at the UPB plus accrued interest, which is the amount Ginnie Mae pays to 

purchase these loans. Accordingly, Ginnie Mae recognizes interest income on these loans on an 

accrual basis less an adjustment to arrive at the debenture rate for the number of months allowed 

under the insuring agency’s timeline, if necessary. 

For loans that are delinquent and uninsured, or guaranteed or insured by VA, RD, or PIH, Ginnie 

Mae concludes that it is probable that it will not collect all contractually required payments

receivable. Accordingly, these loans are considered PCI. Historically, Ginnie Mae has not applied 

the full PCI requirements under U.S. GAAP to these loans, because Ginnie Mae has determined 

that non-compliance with the full PCI requirements does not, on its own, preclude the financial 

statements as a whole from being materially compliant with U.S. GAAP. Currently, upon 

acquisition, the PCI loans are recorded at UPB plus accrued interest, less allowance. Ginnie Mae 

measures subsequent impairment on these loans based on the present value of expected future cash 

flows. 

Acquired Property, Net: Ginnie Mae recognizes acquired property when marketable title to the 

underlying property is obtained and the property has completed the foreclosure process, or the 

mortgagor conveys all interest in the residential real estate property to Ginnie Mae to satisfy the

loan through the completion of a foreclosure or a deed in lieu of foreclosure or other similar legal 

agreement. These assets differ from “foreclosed property” as they are not conveyed to the insuring

or guaranteeing agencies and Ginnie Mae will hold the title while the properties are marketed for 

sale by the MSS. 

Ginnie Mae initially measures acquired property at its fair value, net of estimated costs to sell. At 

acquisition, a loss is charged-off against the allowance for loan losses account when the recorded 

investment in the loan exceeds the fair value, net of estimated cost to sell, of the acquired property.

Conversely, any recovery of the fair value less estimated costs to sell over the recorded investment

in the loan is recognized first to recover any forgone, contractually due P&I, and any excess is

recognized in acquired property expenses, net in the Statement of Revenue and Expenses and 

Changes in Investment of U.S. Government.

Ginnie Mae subsequently measures acquired property at the lower of its carrying value or fair 

value less estimated costs to sell. Any subsequent write-downs to fair value, net of estimated costs

to sell, from its carrying value (i.e., holding period write-downs) are recognized through a

valuation allowance with an offsetting charge to acquired property expenses, net. Any subsequent 

increases in fair value, net of estimated costs to sell, up to the cumulative loss previously 

recognized through the valuation allowance are recognized in acquired property expenses, net in

the Statement of Revenue and Expenses and Changes in Investment of U.S. Government. 

Ginnie Mae records gains and losses on sales of acquired property as the difference between the

net sales proceeds and the carrying value of the property, less amounts recoverable from the

33
insuring or guaranteeing agency. These gains and losses are recognized through acquired property 

expenses, net on the Statement of Revenues and Expenses and Changes in Investment of U.S. 

Government. 

Subsequent material development and improvement costs for acquired property are capitalized.

Other post-foreclosure costs are expensed as incurred to acquired property expenses, net on the 

Statement of Revenues and Expenses and Changes in Investment of U.S. Government.

Fixed Assets, Net: Ginnie Mae’s fixed assets consist of leased assets, hardware, and software that

is used to accomplish its mission. Ginnie Mae capitalizes costs based on guidance in ASC 350-40: 

Intangibles – Goodwill and Other – Internal-Use Software and ASC 360: Property, Plant and

Equipment. Additions to fixed assets consist of improvements, new purchased items, and 

betterments. Purchased software is recorded at cost and amortized using the straight-line method 

over its estimated useful life. 

The capitalization of software development costs is governed by ASC 350-40: Intangibles – 

Goodwill and Other – Internal-Use Software if the software is for internal use. After the

technological feasibility of the software has been established at the beginning of application 

development, software development costs, which primarily include salaries and related payroll

costs and costs of independent contractors incurred during development, are capitalized. Research

and development costs incurred prior to application development (for internal-use software), are 

expensed as incurred. Software development costs are amortized on a program-by-program basis 

using a straight-line method commencing on the date when ready for use. Ginnie Mae did not 

develop software to be marketed in 2020. 

Ginnie Mae depreciates its hardware assets using the straight-line basis over a three- to five-year

period beginning when the assets are placed in service. Expenditures for ordinary repairs and

maintenance are charged to expense as incurred. 

Ginnie Mae amortizes its software assets using the straight-line basis over a three- to five-year 

period beginning when the assets are ready for its intended use. Ginnie Mae shall determine and

periodically reassesses the estimated useful life over which the capitalized costs will be amortized. 

Ginnie Mae assesses the recoverability of the carrying value of its long-lived assets, including 

finite-lived intangible assets, whenever events or changes in circumstances indicate the carrying 

amount of the assets may not be recoverable. Ginnie Mae evaluates the recoverability of such 

assets based on the expectations of undiscounted cash flows from such assets. If the sum of the 

expected future undiscounted cash flows were less than the carrying amount of the asset, a loss

would be recognized for the difference between the fair value and the carrying amount. See 

Note 14: Fixed Assets, Net for additional information. 

Mortgage Servicing Rights: MSR represent Ginnie Mae’s rights and obligations to service 

mortgage loans underlying a terminated and extinguished issuer’s entire Ginnie Mae guaranteed 

pooled-loan portfolio. Ginnie Mae contracts with multiple MSS to provide the servicing of its 

pooled mortgage loans. The servicing functions typically performed by Ginnie Mae’s MSS

include: collecting and remitting loan payments, responding to mortgagor inquiries, reporting P&I 

34
payments, holding custodial funds for payment of property taxes and insurance premiums, 

counseling delinquent mortgagors, supervising foreclosures and property dispositions, and 

generally administering the loans. Ginnie Mae receives a monthly servicing fee based on the 

interest portion of each monthly installment of P&I actually collected by MSS on the pooled

mortgage loans. The servicing fee is calculated based on the servicing fee percentage, embedded

in the note rate. Ginnie Mae pays a sub-servicing expense to the MSS in consideration for servicing 

the loans.

In accordance with ASC 860: Transfers and Servicing, Ginnie Mae records a servicing asset (or 

liability) each time it takes over a terminated and extinguished issuer’s Ginnie Mae guaranteed 

pooled-loan portfolio. The MSR asset (or liability) represents the benefits (or costs) of servicing 

that are expected to be more (or less) than adequate compensation to a servicer for performing the

servicing. The determination of adequate compensation is a market notion and is made

independent to Ginnie Mae’s cost of servicing. Accordingly, Ginnie Mae’s determination of 

adequate compensation is based on compensation demanded in the marketplace. Typically, the

benefits of servicing are expected to be more than adequate compensation for performing the

servicing, and the contract results in a servicing asset. However, if the benefits of servicing are not 

expected to adequately compensate for performing the servicing, the contract results in a servicing

liability.

Ginnie Mae reports MSR at fair value to better reflect the potential net realizable or market value

that could be realized from the disposition of the MSR asset or the settlement of a future MSR

liability. Consistent with ASC 820: Fair Value Measurements, to determine the fair value of the 

MSR, Ginnie Mae uses a valuation model that calculates the present value of estimated future net

servicing income. The model factors in key economic assumptions and inputs including 

prepayment rates, costs to service the loans, contractual servicing fee income, ancillary income, 

escrow account earnings, and the discount rate. In addition, the MSR also takes into account future 

expected cash flows for loans underlying the terminated and extinguished issuers’ portfolio 

including credit losses. The discount rate is used to estimate the present value of the projected cash 

flows in order to estimate the fair value of the MSR. The discount rate assumptions reflect the 

market’s required rate of return adjusted for the relative risk of the asset type. Upon acquisition,

Ginnie Mae measures its MSR at fair value and subsequently re-measures the MSR assets or

liabilities with changes in the fair value recorded in the Statement of Revenues and Expenses and 

Changes in Investment of U.S. Government. 

Ginnie Mae’s MSR portfolio consists of FHA, VA, RD, and PIH insured loans with similar 

collateral types and underwriting standard. Since these loans have similar risk profiles, Ginnie

Mae identifies one class of servicing assets and liabilities. As such, although MSRs are valued at

the pool level, they are presented on a net basis (as servicing asset or liability) at the aggregate 

class level.

Financial Guarantees: Ginnie Mae’s financial guaranty obligates Ginnie Mae to stand ready,

over the term of the guaranty, to advance funds to cover any shortfall of P&I to the MBS holders 

in the event of an issuer default. 

35
Ginnie Mae, as guarantor, follows the guidance in ASC 460: Guarantees, for its accounting and

disclosure of its guarantees. ASC 460 requires the guarantor to consider the requirements of ASC 

450-20: Contingencies – Loss Contingencies in assessing whether a contingent loss needs to be

accrued for the guaranty obligation. In the event that, at the inception of the guaranty, Ginnie Mae 

is required to recognize a contingent liability under ASC 450, the liability to be initially recognized

for that guaranty shall be the greater of the non-contingent guaranty liability determined under 

ASC 460, or the contingent liability determined in accordance with ASC 450. It is unusual at the 

inception of the guaranty for the contingent liability amount to exceed the non-contingent amount. 

At inception of the guaranty, Ginnie Mae recognizes the guaranty obligation at fair value. When 

measuring the guaranty liability under ASC 460, Ginnie Mae applies the practical expedient 

provided, which allows for the guaranty obligation to be recognized at inception based on the 

premium received or receivable by the guarantor, provided the guaranty is issued in a standalone 

arm’s length transaction with an unrelated party. The fair value of the guaranty obligation is 

calculated using the discounted cash flows of the expected future premiums from guaranty fees 

over the expected life of the mortgage pools. The estimated fair value includes certain assumptions 

such as future UPB, prepayment rates, and default rates. 

Additionally, as the guaranty is issued in a standalone transaction for a premium, Ginnie Mae 

records a guaranty asset as the offsetting entry for the guaranty obligation. Thus, there is no net 

impact from the initial recognition of the guaranty obligation and asset on the net financial position 

of Ginnie Mae. 

Ginnie Mae subsequently amortizes the guaranty obligations on a quarterly basis as the outstanding 

UPB of the guaranteed MBS declines. In addition, the guaranty asset is recorded at fair value

subsequent to initial measurement with changes in fair value recorded through the Statement of 

Revenues and Expenses and Changes in Investment of U.S. Government. Ginnie Mae elected to

apply the fair value option to the guaranty asset to align accounting treatment with the economics

of the guaranty asset and industry practice. 

Accounts Payable and Accrued liabilities: Ginnie Mae’s accounts payable and accrued liabilities 

generally include obligations for items that have entered the operating cycle, such as accrued

compensated absences and other payables. Amounts incurred by Ginnie Mae, but not yet paid at 

the end of the period(s) presented, are recognized as accounts payable and accrued liabilities. 

Compensated absences: Under the Accrued Unfunded Leave and Federal Employees

Compensation Act (FECA), annual leave and compensatory time are accrued when earned and the

liability is reduced as leave is taken. The liability at period-end reflects cumulative leave earned

but not taken, priced at current wage rates. Earned leave deferred to future periods is to be funded 

by future appropriations. To the extent that current or prior period appropriations are not available

to fund annual leave earned but not taken, funding will be obtained from future financing sources. 

Sick leave and other types of leave are expensed as taken. Compensated absence balances are

provided by HUD and included within accounts payable and accrued liabilities on the Balance

Sheet.

36
Other: Includes payables for fees incurred in the acquisition of services provided by MSS and 

third-party vendors, unclaimed securities holders’ payments, and a refund liability for transfer of 

issuer responsibilities fees. Ginnie Mae uses estimates and judgments, as required under U.S. 

GAAP, to accrue for expenses when incurred, regardless of whether expenses were paid as of 

quarter-end. 

Deferred Revenue: The classification of deferred revenue depends on the reason the revenue has 

not yet been recognized. 

• Deferred revenue – multiclass fees: Deferred multiclass fees revenue represents the 

guaranty fees paid by the REMIC or Platinum Certificate sponsor, which are deferred and 

amortized into income evenly over the weighted average contractual life of the security 

unless truncated by early termination. 

• Deferred revenue – commitment fees: Deferred commitment fee revenue represents

payments received in advance of completion of Ginnie Mae’s performance obligation.

Commitment fee revenue is recognized in income over time as Ginnie Mae completes its

performance obligation. 

Liability for Loss on Mortgage-Backed Securities Program Guaranty: U.S. GAAP requires

Ginnie Mae to recognize a loss contingency that arises from the following: 

• The guaranty obligation that Ginnie Mae has to the MBS holders as a result of a probable

issuer default. The issuers have the obligation to make timely P&I payments to MBS 

certificate holders. However, if an issuer defaults, Ginnie Mae ensures the contractual 

payments to MBS certificate holders are made. When assessing whether an issuer may 

default, Ginnie takes into consideration various factors including the issuer’s financial and 

operational vulnerability, a qualitative and quantitative corporate credit analysis, and other 

evidence of the issuer’s potential default (e.g. known regulatory investigations or actions).

• The obligation that Ginnie Mae has to the Multifamily MBS issuers to reimburse them for

applicable losses in the event of a loan default, pursuant to the Multifamily guaranty 

agreement. 

The contingent aspect of the guaranty obligation is measured initially and in subsequent periods 

under ASC 450-20: Contingencies – Loss Contingencies. 

Refer to Note 17: Reserve for Loss for details on Ginnie Mae’s current practice.

Liability for Representations and Warranties (Repurchase Liability): Ginnie Mae may enter

into business transactions and agreements, such as the sale of an MSR or loan portfolio, which 

provide certain representations and warranties associated with the underlying loans. If there is a

breach of these contractual obligations, Ginnie Mae may be required to repurchase certain loans

or provide other compensation. Ginnie Mae recognizes a loss contingency that arises from these 

obligations when it is probable that Ginnie Mae will be required to repurchase loans or provide 

other compensation. Repurchase liabilities are measured initially and in subsequent periods under

ASC 450-20: Contingencies – Loss Contingencies.

 

 

37
Recognition of Revenues and Expenses: ASC 606, Revenue from Contracts with Customers,

establishes principles for reporting information about the nature, amount, timing and uncertainty 

of revenue and cash flows arising from Ginnie Mae's contracts with customers. ASC 606 requires 

Ginnie Mae to recognize revenue to depict the transfer of promised services to customers in an 

amount that reflects the consideration received in exchange for those services recognized as 

performance obligations being completed. A performance obligation may be satisfied over time or

at a point in time. Revenue from a performance obligation satisfied over time is recognized based 

on the measurement of value to the customer of the services transferred by Ginnie Mae to date 

relative to the remaining services promised under the contract. Revenue from a performance 

obligation satisfied at a point in time is recognized at the point in time the customer obtains control

of the promised service. Commitment fees, Real Estate Mortgage Investment Conduit (REMIC)

modification and exchange (MX) combination fees, and certain MBS program fees, such as

transfer of issuer responsibilities, new issuer applications, certificate handling, and

acknowledgement of agreement fees, are in the scope of ASC 606. Refer to Note 16: Revenue from 

Contracts with Customers for disaggregation of revenue in the scope of ASC 606. 

The majority of Ginnie Mae’s revenues, including interest income on mortgage loans held for 

investment, other interest income, income on guaranty obligation, MBS guaranty fees, REMIC 

and Platinum Certificates guarantee fees, and certain MBS program and other fees, are subject to 

other GAAP requirements for recognition. 

Ginnie Mae recognizes revenue from the following sources: 

• Interest income on mortgage loans held for investment – Ginnie Mae accrues interest for 

performing loans at the contractual interest rate of the underlying mortgage. 

• Interest income on pass-through assistance program receivable – Ginnie Mae accrues

interest for PTAP receivables on accrual status at the effective interest rate based on the

interest method. 

• Other interest income – Ginnie Mae earns interest income on U.S. Government securities 

related to U.S. Treasury overnight certificates and on uninvested funds in the Financing 

Fund. Prior to 2018, Ginnie Mae earned and collected interest on uninvested funds, which 

was calculated using the applicable version of the Credit Subsidy Calculator 2 (CSC2)

provided by the OMB. In September 2018, the U.S. Treasury clarified rules regarding the 

collection of interest on uninvested funds in the Financing Account. Based on additional 

conversations with and clarifications from U.S. Treasury, Ginnie Mae was not entitled to 

earn interest on uninvested funds without a signed borrowing agreement in accordance with 

the Federal Credit Reform Act of 1990. Ginnie Mae is in ongoing discussions with OMB 

and its legal counsel on whether the Financing Account is fully subject to the provisions of 

the Federal Credit Reform Act of 1990. As a resolution of the matter between Ginnie Mae

and OMB is pending, U.S. Treasury and Ginnie Mae agreed that Ginnie Mae will not earn

and collect interest on uninvested funds until the matter is resolved. Due to U.S. Treasury’s 

new criteria for earning and collecting interest on uninvested funds, no interest income was 

recognized in fiscal year 2020. At present, there is uncertainty regarding applicability of

Federal Credit Reform Act of 1990 to Ginnie Mae, and whether Ginnie Mae will be

required to pay or earn such interest in the future. 

38
• Income on guaranty obligation – Ginnie Mae amortizes its guaranty obligation into

revenues based on the remaining UPB of the related MBS pools. 

• MBS guaranty fees – Ginnie Mae receives monthly guaranty fees for each MBS mortgage 

pool, based on a percentage of the pool’s UPB. Fees received for Ginnie Mae’s guaranty

of MBS are recognized as earned. 

• Commitment fees – Ginnie Mae receives commitment fees in exchange for providing 

review and approval services of commitment authority usage requests submitted by the

issuers. This service allows for the approved issuer to pool mortgages into MBS that are 

guaranteed by Ginnie Mae. 

Ginnie Mae uses a third-party entity, the Pool Processing Agent (PPA), to determine

whether the issuer has sufficient commitment authority to issue the pool or loan package 

and approve the issuance. Ginnie Mae recognizes commitment fee revenue based on the

gross amount collected from the issuers because Ginnie Mae directs the PPA’s services

and is ultimately responsible for fulfilling the services performed by the PPA on Ginnie 

Mae’s behalf. 

The total amount of the commitment fees is determined and paid at the time the issuer 

initially requests the commitment authority. Commitment fee revenue is recognized in 

income over time as issuers use their commitment authority, which represents the 

completion of Ginnie Mae’s performance obligation. The remaining balance of the

commitment fees is deferred until the service is used or expired, whichever occurs first. 

Fees from expired commitment authority are not returned to issuers and are recognized as 

income. 

Commitment fee revenue depends on the volume of commitment authority used, which is 

affected by changes in interest rates. 

• Multiclass fees – Ginnie Mae receives one-time upfront fees related to the issuance of

multiclass products. Multiclass products include REMICs and Platinum Certificates. The 

fees received for REMICs consist of a guaranty fee and may include a MX combination 

fee. 

The guaranty fee is paid by the REMIC sponsor and is based upon the total principal 

balance of the deal. It is deferred and amortized into income evenly over the weighted 

average contractual life of the security unless truncated by early termination. All deferred 

REMIC guaranty fee income is recognized at security termination. 

The MX combination fee allows the sponsor to combine REMIC and/or MX securities at 

the time of issuance. Ginnie Mae provides administrative services when MX combinations 

are requested by sponsors. Any permitted combinations by the sponsor are set forth in the 

combination schedule to an offering circular supplement. The MX combination fees are 

recognized immediately in income at the point in time when the administrative services are 

complete (i.e. upon the combination of REMIC and/or MX securities). Revenue earned 

39
from REMIC MX Combination fee depends on the demand for the service, which is 

affected by the interest rate environment. 

The guarantee fees received for Platinum Certificates are deferred and amortized into 

income evenly over the weighted average contractual life of the security.

• MBS program and other income – Ginnie Mae recognizes income for MBS programrelated and other fees, including transfer of issuer responsibilities, new issuer applications,

acknowledgement agreement fees, certificate handling, mortgage servicing, and civil

monetary penalty.

The transfer of issuer responsibilities fees is one-time upfront fees received by Ginnie Mae

for providing the review and approval services for issuer’s requests to transfer

responsibilities associated with their MBS. Transferors and transferees have the

prerogative to reject the transfer at any time before its completion, even after Ginnie Mae

approves it, which requires a fee refund. As such, the entire amount of consideration is

constrained until the pool transfer is complete. The transfer of issuer responsibilities fees

is recorded as a refund liability and recognized as income when Ginnie Mae’s performance

obligation is complete and the uncertainty around the constraint is resolved (i.e. when pool

transfer is complete).

New issuer applications fees, acknowledgement agreement fees, and certificate handling

fees are one-time non-refundable upfront fees received by Ginnie Mae for providing

various services related to the MBS program. These services include Ginnie Mae’s

consideration of the issuer’s application to become an authorized MBS issuer, approval of

an Acknowledgment Agreement permitting a pledge of servicing by an issuer, and

providing evidence of security ownership. The fees are recognized in income when

payment is received, as Ginnie Mae ’s performance obligation is completed at that time.

Ginnie Mae receives various other fees which are recognized in income when payment is 

received. 

Ginnie Mae’s expenses are classified into three groups: 

• Administrative expenses – The main components of the administrative expenses are

payroll expenses, travel and training expenses, benefit expenses, and other operating

expenses.

• Fixed assets depreciation and amortization – Depreciation and amortization consists of

depreciation on acquired, leased, and in-use hardware; and amortization of capitalized

software acquired, leased, and in-use, by Ginnie Mae. Fixed assets are depreciated and

amortized, on a straight-line basis, over a three to five-year period.

• MBS program and other expenses – The main components of the MBS program and other

expenses are multiclass expenses, MBS information systems and compliance expenses,

sub-servicing expenses, asset management expenses, and pool processing and central

paying agent expenses.

 

40
Amounts recognized as expenses represent actual or, when actuals are not available, estimates of 

costs incurred during the normal course of Ginnie Mae’s operations. 

Securitization and Guarantee Activities: Ginnie Mae’s primary business activity is to guarantee

the timely payment of P&I on securities backed by pools of mortgages issued by private 

institutions. Unlike substantially all of the securitization market, the issuance of Ginnie Mae 

guaranteed MBS is not completed through a trust vehicle. Rather Ginnie Mae approves issuers to

pool loans and issues Ginnie Mae guaranteed MBS. Additionally, for federal income tax purposes,

the Ginnie Mae pool is considered a grantor trust. As such, each of these “virtual trusts” are

considered individual legal entities for consolidation purposes and are considered variable interest

entities (VIEs) in accordance with ASC 810: Consolidations. 

Variable Interest Entities Model:

For entities in which Ginnie Mae has a variable interest, Ginnie Mae determines whether, if by 

design, (i) the entity has equity investors who, as a group, lack the characteristics of a controlling 

financial interest, (ii) the entity does not have sufficient equity at risk to finance its expected

activities without additional subordinated financial support from other parties or (iii) the entity is

structured with non-substantive voting rights. If an entity has at least one of these characteristics,

it is considered a VIE, and is consolidated by its primary beneficiary. The primary beneficiary is

the party that (i) has the power to direct the activities of the entity that most significantly impact 

the entity’s economic performance; and (ii) has the obligation to absorb losses or the right to 

receive benefits from the entity that could potentially be significant to the entity. Only one 

reporting entity, if any, is expected to be identified as the primary beneficiary of a VIE. Ginnie

Mae reassesses its initial evaluation of whether an entity is a VIE upon occurrence of certain 

reconsideration events. 

Ginnie Mae’s involvement with legal entities that are VIEs is limited to providing a guaranty on 

interest payments and principal returns to MBS holders of the Ginnie Mae virtual trusts. Ginnie 

Mae is not the primary beneficiary of the Ginnie Mae virtual trusts as it does not have the power 

to control the significant activities of the trusts. Other than its guaranty, Ginnie Mae does not 

provide, nor is it required to provide, any type of financial or other support to these entities. The 

guaranty fee receivable represents compensation for taking on the risk of providing the guaranty

to MBS certificate holders for the timely payment of P&I in the event of issuers’ default. Ginnie

Mae’s maximum potential exposure to loss under these guarantees is primarily comprised of the

amount of outstanding MBS and commitments and does not consider loss recoverable from the

FHA, VA, RD, and PIH. 

The following table presents assets and liabilities that relate to Ginnie Mae’s interest in VIEs 

at September 30, 2020:

41
Total $ 6,871,883 

Guaranty liability 8,041,340

Liability for loss on mortgage-backed securities program guaranty 43,439 

Total $ 8,084,779

Maximum exposure to loss:

Outstanding MBS securities MBS securities $ 2,117,699,399 

Outstanding MBS commitments 234,376,731

Total $ 2,352,076,130

Refer to Note 5: Financial Guarantees and Financial Instruments with Off-Balance Sheet 

Exposure for further details. 

42

116,000 

September 30, 2020

(Dollars in thousands)

Guaranty asset $ 6,755,883

Guaranty fee receivable
Recently Adopted Accounting Pronouncements

The following table displays information about recent accounting pronouncements that have 

recently been adopted or are yet to be adopted. 

Standard Summary of Guidance 

Effective Date 

and/or Date 

of Adoption 

Effect on the 

financial 

statements 

Disclosure 

Changes to the 

Disclosure 

ents 

for Fair Value 

(ASU 2018-13) 

he 

ASC 

the 

ts and benefits. 

from 

end of the reporting period 

n 

Topic 820: 

for 

investee’s 

Effective 

October 2019 

Adopted in 

October 2019 

The adoption of 

ASU 2018-13 did 

ave a 

significant impact 

on the Ginnie Mae 

cial 

ents. 

Disclosure  The amendment modifies the Effective The adoption of

Framework – disclosure requirements on fair October 2019 ASU 2018-13 did

Changes to the value measurements under ASC not have a

Disclosure 820 based on concepts in the

Adopted in significant impact

Requirements Concepts Statement, including the

October 2019 on the Ginnie Mae

for Fair Value consideration of costs and benefits. Financial

Measurement 

(ASU 2018-13)

 The following disclosure 

requirements were removed from

Statements.

Issued ASC 820:

August 2018 o The amount and of and reasons 

for transfers between L1 and L2 

of the fair value hierarchy 

o The policy for timing of 

transfers between levels

o The valuation process for L3

fair value measurements

o For non-public entities, the 

changes in unrealized gains and 

losses for the period included in 

earnings for recurring L3 fair 

value measurements held at the 

end of the reporting period

 The following disclosure 

requirements were modified in

Topic 820:

o In lieu of a roll forward for

Level 3 fair value 

measurement, a non-public 

entity is required to disclose

transfers into and out of Level 3 

assets and liabilities 

o For investments in certain

entities that calculate net asset 

value, an entity is required to

disclose the timing of 

liquidation of an investee’s

43
Standard Summary of Guidance 

Effective Date 

and/or Date 

of Adoption 

Effect on the 

financial 

statements 

date 

assets and the date when

restrictions from redemption 

might lapse only if the investee 

has communicated the timing

 The amendments clarify that the 

measurement uncertainty

disclosure is to communicate 

information about the uncertainty 

in measurement as of the reporting 

date

rs. 

October 2019 

ents. 

Revenue from 

Contracts with 

Customers

(ASU 2017-14) 

Issued

November 2017

 This Accounting Standards Update 

amends SEC paragraphs pursuant 

to the SEC Staff Accounting

Bulletin No. 116 and SEC Release 

No. 33-10403, which bring existing 

guidance into conformity with 

Topic 606, Revenue from 

Contracts with Customers.

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2017-14 did 

not have material 

impact on the 

Ginnie Mae 

Financial 

Statements.

October 2019 

ents. 

Other Income –

Gains and 

Losses from the 

Derecognition 

of Nonfinancial 

Assets

(ASU 2017-05) 

Issued

February 2017

 The guidance clarifies scope and 

application of ASC 610-20 on the 

sale or transfer of nonfinancial 

assets and in substance 

nonfinancial assets to 

noncustomers, including partial 

sales

 The ASU applies to nonfinancial 

assets, including real estate, ships 

and intellectual property, and 

clarifies that the derecognition of

all businesses is in the scope of 

ASC 810. It also defines an in 

substance nonfinancial asset

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2017-05 did 

not have material 

impact on the 

Ginnie Mae 

Financial 

Statements.

Topic 606, xpected 

October 2019 

ents. 

Technical 

Corrections and 

Improvements 

(ASU 2016-20) 

Issued

December 2016

Amendment to 

Topic 606,

 The amendments in this update 

clarify that guarantee fees within

the scope of Topic 460 (other than 

product or service warranties) are 

not within the scope of Topic 606 

 The amendments in this update 

clarify that when performing 

impairment testing, an entity 

should (a) consider expected

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2016-20 did 

not have material 

impact on the 

Ginnie Mae 

Financial 

Statements.

44
Standard Summary of Guidance 

Effective Date 

and/or Date 

of Adoption 

Effect on the 

financial 

statements 

 the future 

Revenue from 

Contracts with 

Customers

contract renewals and extensions

and (b) include both the amount of 

consideration it already has 

received, but has not recognized as 

revenue and the amount it expects 

to receive in the future

ent of cash flows 

October 2019 

flows. 

Statement of 

Cash Flows 

(ASU 2016-18) 

Issued

November 2016

 The guidance requires entities to

show the changes in the total of 

cash, cash equivalents, restricted 

cash and restricted cash equivalents 

in the statement of cash flows 

 As a result, entities will no longer

present transfers between cash and

cash equivalents and restricted cash 

and restricted cash equivalents in

the statement of cash flows

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2016-18 is 

presented in the 

total of cash, cash 

equivalents,

restricted cash and 

restricted cash 

equivalents in the 

statement of cash 

flows.

cash flows 

ethod investees 

October 2019 

ents. 

Statement of 

cash flows 

(ASU 2016-15) 

Issued

August 2016

 Guidance clarifies how entities

should classify certain cash receipts 

and cash payments on the statement

of cash flows 

 Guidance also clarifies how the 

predominance principle should be 

applied when cash receipts and

cash payments have aspects of

more than one class of cash flows 

 The new guidance addresses the 

classification of cash flows related

to the following transactions: 

o Debt prepayment or 

extinguishment costs

o Settlement of zero-coupon debt 

instruments

o Contingent consideration 

payments 

o Proceeds from the settlement of

insurance claims

o Proceeds from the settlement of

corporate-owned life insurance 

o Distributions received from 

equity method investees

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2016-15 was 

applied to the 

statement of cash 

flows for the

period presented. 

The adoption did 

not have a 

significant impact 

on Ginnie Mae’s 

Financial 

Statements.

45
Standard Summary of Guidance 

Effective Date 

and/or Date 

of Adoption 

Effect on the 

financial 

statements 

 Beneficial interests in

securitization transactions

October 2019 

ents. 

Revenue from 

Contracts with 

Customers 

(Topic 606), 

Identifying 

Performance

Obligations and 

Licensing

(ASU 2016-10) 

Issued

April 2016

 The amendments in this update do 

not change the core principle of the 

guidance in Topic 606 

 The amendments clarify the 

following two aspects of Topic 

606: (1) identifying performance 

obligations and (2) the licensing 

implementation guidance, while 

retaining the related principles for 

those areas

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2016-10 did 

not have material 

impact on the 

Ginnie Mae 

Financial 

Statements.

agent. 

October 2019 

ents. 

Revenue from 

Contracts with 

Customers 

(Topic 606), 

Principal versus 

Agent

Considerations 

(Reporting 

Revenue Gross 

versus Net) 

(ASU 2016-08) 

Issued

March 2016

 The amendments in this update do 

not change the core principle of the 

guidance in Topic 606 

 The amendments to the principal 

versus agent guidance in the new

revenue standard clarify how an 

entity should identify the unit of

accounting (i.e., the specified good

or service) for the principal versus 

agent evaluation and how it should 

apply the control principle to 

certain types of arrangements, such 

as service transactions, by 

explaining what a principal 

controls before the specified good 

or service is transferred to the 

customer. 

 The amendments reframe the 

indicators in the guidance to focus 

on evidence that an entity is acting

as a principal rather than as an

agent.

Effective 

October 2019 

Adopted in 

October 2019

The adoption of 

ASU 2016-08 did 

not have material 

impact on the 

Ginnie Mae 

Financial 

Statements.

Adopted in 

Financial 

Instruments – 

Recognition

and 

Measurement of

 The update will require entities to

measure equity investments that do 

not result in consolidation and are 

not accounted for under the equity 

method at fair value and recognize 

any changes in fair value in net

Effective 

October 2019 

Adopted in

Ginnie Mae’s 

current approach 

and techniques are 

consistent with 

clarified guidance.

46
Standard Summary of Guidance 

Effective Date 

and/or Date 

of Adoption 

Effect on the 

financial 

statements 

cial 

Assets and 

cial 

 

(ASU 2016-01) 

ents 

he 

securities and loans 

for public business entities. 

e 

June 2019 Accordingly, there 

t on 

Sheet 

nt of 

Revenues and 

Changes in 

the adoption. 

Financial income unless the investments June 2019 Accordingly, there

Assets and qualify for the new practicability was no impact on

Financial exception the Balance Sheet

Liabilities  The update doesn’t change the or Statement of

(ASU 2016-01) guidance for classifying and Revenues and

Issued measuring investments in debt 

securities and loans

Expenses and 

Changes in January 2016  The update eliminates the

requirement to disclose the fair 

value of financial instruments 

measured at amortized cost for

entities that are not public business

entities and the requirement to 

disclose the methods and

significant assumptions used to

estimate the fair value that is

required to be disclosed for 

financial instruments measured at 

amortized cost on the balance sheet 

for public business entities.

Investment of U.S. 

Government since 

the adoption.

 Entities will have to record changes

in instrument-specific credit risk

for financial liabilities measured 

under the fair value option in other 

comprehensive income

Revenue from 

Contracts with 

ers 

(ASU 2015-14) 

pdate 

ASU 

nonpublic 

U.S. 

GAAP by one year. 

Effective 

October 2019 

Adopted 

October 2019 

Ginnie Mae 

adopted ASU to 

2015-14 to defer 

2014-19 by one 

year.. 

Revenue from  The amendments in this Update Effective Ginnie Mae

Contracts with defer the effective date of its new October 2019 adopted ASU to

Customers revenue recognition standard, ASU 2015-14 to defer

(ASU 2015-14) 2014-09, for public and nonpublic adoption of ASU

entities reporting under U.S. Adopted 2014-19 by one Issued August

2015 GAAP by one year. October 2019 year..

47
Standard Summary of Guidance 

Effective Date 

and/or Date 

of Adoption 

Effect on the 

financial 

statements 

Revenue from 

Contracts with 

ers 

be 

control 

onsideration 

about revenue and contract costs. 

approach 

ective 

October 2019 

October 2019 

The adoption of 

ASU 2014-09 did 

aterial 

Ginnie Mae 

Financial 

ents. 

Revenue from  Requires that revenue from Effective The adoption of

Contracts with contracts with customers be October 2019 ASU 2014-09 did

Customers recognized upon transfer of control not have material

(ASU 2014-09) 

Issued May 2014

of goods or services in the amount 

reflective of the consideration Adopted in 

October 2019

impact on the 

Ginnie Mae

expected to be received Financial  Requires additional disclosures 

about revenue and contract costs.

Statements.

 May be adopted retrospectively or a

modified, cumulative effect

approach

 

48
Recent Accounting Pronouncements Not Yet Adopted

Other Accounting Standards Update (ASU) not listed below were assessed and determined to be 

either not applicable or are expected to have minimal impact on Ginnie Mae’s financial position

and/or results of operations. 

Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

Codification 

ents to 

cial 

ents 

(ASU 2020-03) 

update 

r 

The 

the 

pply 

inconsistencies 

ective 

October 2020 

Ginnie Mae’s 

current approach 

and techniques are 

ith the 

will be no impact 

lance 

adoption. 

Codification  The amendments in this update Effective Ginnie Mae’s

Improvements to represent changes to clarify or October 2020 current approach

Financial improve the Codification. The and techniques are

Instruments amendments make the consistent with the

(ASU 2020-03) Codification easier to 

understand and easier to apply

new guidance. 

Accordingly, there Issued by eliminating inconsistencies will be no impact March 2020 and providing clarifications. 

o Issue 1: Fair Value Option

on Ginnie Mae’s 

financial Balance

Disclosures - The 

amendment clarify that all 

entities are required to 

provide the fair value

option disclosures in 

paragraphs 825-10-50-24 

through 50-32. 

o

Sheet or Statement 

of Revenues and 

Expenses and 

Changes in 

Investment of U.S. 

Government, or to 

financial statement

disclosures upon 

adoption.

cial 

– 

 

326-20-S99 

osses 

FASB ASC Topic 326. 

Effective 

October 2023 

Ginnie Mae is 

tly 

evaluating the 

ents. 

Financial  Amendments to Subtopic 326- Effective Ginnie Mae is

Instruments – 20 to add Section 326-20-S99 October 2023 currently

Credit Losses - Accounting for Loan Losses evaluating the

(ASU 2020-02) 

Issued

by Registrants Engaged in 

Lending Activities Subject to 

FASB ASC Topic 326.

potential impact 

on its financial

statements.

February 2020  FASB ASC Subtopic 326-20 

addresses the measurement of 

current expected credit losses

for financial assets measured

at amortized cost basis, net

investments in leases 

recognized by lessors, 

reinsurance recoverables, and 

certain off-balance-sheet 

credit exposures. At each 

reporting date, an entity shall

49
Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

guarantees. 

 of the financial asset(s). 

record an allowance for credit 

losses on financial assets 

measured at amortized cost 

basis and net investments in 

leases recognized by lessors

and shall record a liability for

credit losses on certain offbalance-sheet exposures not 

accounted for as insurance or

derivatives, including loan 

commitments, standby letters 

of credit, and financial

guarantees.

 For financial asset(s), the 

allowance for credit losses is a

valuation account that is 

deducted from, or added to, the 

amortized cost basis of the

financial asset(s) to present the

net amount expected to be 

collected on the financial 

asset(s).

 The allowance for credit losses

is an estimate of current 

expected credit losses

considering available

information relevant to 

assessing collectability of cash 

flows over the contractual 

term of the financial asset(s).

cial 

s 

(ASU 2019-11) 

update 

olders’ 

in 

Financial 

of 

Financial 

larify, 

ective 

October 2023 

is 

tly 

evaluating the 

al 

ents 

Financial  The amendments in this update Effective Ginnie Mae is

Instruments— clarify or address stakeholders’ October 2023 currently

Credit Losses specific issues about certain evaluating the

(ASU 2019-11) aspects of the amendments in potential impact on

Issued ASU 2016-13 Financial its financial

November 2019 Instruments - Credit Losses statements

(Topic 326): Measurement of

Credit Losses on Financial

Instruments.

 The amendments in this update 

represent changes to clarify,

50
Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

he 

Codification. 

correct errors in, or improve the

Codification.

cial 

- 

Derivatives and 

Hedging, and 

Dates 

all 

defer 

yet 

the 

two). 

ployee benefit plans. 

fter 

as follows: 

December 

December 

years 

ective October 

2023 

is 

tly 

al 

ents. 

Financial  In response to implementation Effective October Ginnie Mae is

Instruments - challenges encountered by all 2023 currently

Credit Losses,

Derivatives and

entities when adopting a major 

Update and requests to defer

evaluating the

potential impact on

Hedging, and certain major Updates not yet its financial

Leases: Effective effective for all entities, the statements.

Dates 

(ASU 2019-10) 

Issued November 

2019

Board developed a philosophy 

to extend and simplify how 

effective dates are staggered

between larger public 

companies (bucket one) and all 

other entities (bucket two).

Those other entities include 

private companies, smaller

public companies, not-forprofit organizations, and 

employee benefit plans.

 Credit Losses currently is not 

effective for any entities; early

application is allowed for fiscal 

years beginning after

December 15, 2018. Its 

mandatory effective dates are

as follows:

o 1. Public business entities

that meet the definition of

an SEC filer for fiscal years 

beginning after December

15, 2019, including interim 

periods within those fiscal 

years

o 2. All other public business 

entities for fiscal years 

beginning after December

15, 2020, including interim 

periods within those fiscal 

years

51
Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

within those fiscal years. 

 3. All other entities (private 

companies, not-for-profit

organizations, and employee 

benefit plans) for fiscal years 

beginning after December 15,

2021, including interim periods 

within those fiscal years.

adoption of Topic 326. 

October 2023 

 

ents. 

Financial 

Instruments - 

Credit Losses -

Targeted 

Transition Relief

(ASU 2019-05) 

Issued May 2019

 The amendments in this Update 

provide entities that have 

certain instruments within the

scope of Subtopic 326-20, 

Financial Instruments - Credit 

Losses - Measured at 

Amortized Cost, with an option 

to irrevocably elect the fair 

value option in Subtopic 825-

10, Financial Instruments - 

Overall, applied on an 

instrument-by-instrument basis

for eligible instruments, upon 

adoption of Topic 326.

Effective 

October 2023

Ginnie Mae is 

currently 

evaluating the 

potential impact on

its financial 

statements.

topics 

October 2023 

ents. 

Financial 

Instruments - 

Credit Losses,

Derivatives and 

Hedging, and 

Financial 

Instruments 

(ASU 2019-04) 

Issued April 2019

 The amendments clarify the 

scope of the credit losses

standard and address issues 

related to accrued interest

receivable balances, recoveries,

variable interest rates, and 

prepayments, among other

topics

Effective 

October 2023

Ginnie Mae is 

currently 

evaluating the 

potential impact on

its financial 

statements.

(ASU 2018-19) 

October 2023 

ents. 

Codification 

Improvements to 

Topic 326, 

Financial 

InstrumentsCredit Losses 

(ASU 2018-19)

 The amendments in this Update 

for improvements related to

Update 2016-13, Financial 

Instruments—Credit Losses 

(Topic 326): Measurement of 

Credit Losses on Financial 

Instruments, is to increase 

stakeholders' awareness of the

Effective 

October 2023

Ginnie Mae is 

currently 

evaluating the 

potential impact on

its financial 

statements.

52
Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

Issued November 

2018

amendments to scope and 

transition and effective date 

requirements and to expedite

the improvements

ents. 

in their entirety. 

2020 

consolidation. 

Consolidation 

(ASU 2018-17) 

Issued October 

2018

 This Update amends two 

aspects of the related-party

guidance in ASC 810. Under

the new guidance: 

o 1) A private company

(reporting entity) may elect 

not to apply VIE guidance 

to legal entities under 

common control (including 

common control leasing 

arrangements) if both the 

parent and the legal entity 

being evaluated for 

consolidation are not public 

business entities. This 

accounting alternative 

should reduce diversity in 

applying VIE guidance to 

private companies under 

common control, improve 

the relevance of the 

financial reporting and 

reduce the costs and 

complexity associated with 

applying VIE guidance to 

common control 

arrangements. 

 2) When an entity determines

whether a decision-making fee 

is a variable interest, it 

considers indirect interests held

through related parties under 

common control on a

proportionate basis rather than 

in their entirety.

Effective October 

2020 

Adopted October

2020

The adoption of 

this ASU will not 

impact the 

financial 

statements nor 

change the 

disclosure 

requirements for

consolidation.

53
Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

– 

d 

Use Software 

(ASU 2018-15) 

update 

for 

service 

service contract 

ective 

October 2021; 

early adoption is 

Ginnie Mae’s 

current approach 

and techniques are 

ith the 

existing guidance. 

adoption. 

Intangibles –  The amendments in this update Effective Ginnie Mae’s

Goodwill and align the requirements for October 2021; current approach

Other – Internal- capitalizing implementation early adoption is and techniques are

Use Software costs incurred in a hosting permitted consistent with the

(ASU 2018-15) arrangement that is a service existing guidance.

Issued

August 2018

contract with the requirements 

for capitalizing implementation

costs incurred to develop or 

obtain internal –use software 

(and hosting arrangements that 

include an internal-use

software license). Accordingly, 

the amendments in this update 

require an entity in a hosting

arrangement that is service 

contract to follow the guidance

in Subtopic 350-40 to 

determine which

implementation costs to

capitalize as an asset related to

the service contract and which 

costs to expense. Costs to 

develop or obtain internal-use 

software that cannot be 

capitalized under Subtopic 350-

Accordingly, there

will be no change 

in treatment of 

implementation 

costs related to

cloud computing 

arrangements upon 

adoption.

40, such as training costs and 

certain data conversion costs, 

also cannot be capitalized for a

hosting arrangement that is a

service contract

cial 

– 

s 

(ASU 2016-13) 

e 

st 

odel 

ective 

October 2023 

is 

tly 

evaluating the 

ents. 

Financial  The guidance changes the Effective Ginnie Mae is

Instruments – impairment model for most October 2023 currently

Credit Losses financial assets and other evaluating the

(ASU 2016-13) instruments potential impact on

Issued June 2016  For trade and other receivables,

held-to-maturity debt 

securities, loans and other 

instruments, entities will be

required to use a new forwardlooking “expected loss” model

its financial 

statements.

54
Standard Description

Effective Date 

and/or Date of 

Adoption 

Effect on the 

financial 

statements 

allowances for losses 

ortized cost of the securities 

that generally results in the 

earlier recognition of 

allowances for losses

 For available-for-sale debt

securities with unrealized

losses, entities will measure 

credit losses in a manner

similar to what they do today, 

except that the losses will be

recognized as allowances 

rather than reductions in the 

amortized cost of the securities

 Entities will have to disclose

significantly more information,

including information they use

to track credit quality by year of

origination for most financing

receivables

55
Note 3: Cash and Cash Equivalents 

Cash and cash equivalents consist of cash held by the U.S. Treasury (Funds with U.S. Treasury), 

cash that is held by the MSS and the Trustee and Administrator of securities on Ginnie Mae’s

behalf but has not yet been transferred to Ginnie Mae (Depositsin transit), as well as U.S. Treasury 

short-term investments (securities issued with an original maturity date of three months or less). 

Cash receipts, disbursements, and investment activities are processed by U.S. Department of 

Treasury (U.S. Treasury). All cash not classified as restricted cash is accessible in the event of an 

issuer default, termination and extinguishment (defined as any failure or inability of the issuer to

perform its responsibilities under the Ginnie Mae MBS programs).

Cash and cash equivalents – unrestricted and restricted – include the following at September 30,

2020: 

 

September 30, 2020 

Unrestricted Restricted Total 

(Dollars in thousands)

Funds with U.S. Treasury $ 15 171 $ 1,038 1 06 (1) 1 ,975,171 ,135 $ 7,013,306

Deposit in Transit: 

Cash held by MSS 9,992 - 29,992 (2) 29,992 

Cash held by Trustee and Administrator of securities 872 - 72 (3) 5,872 5,872

U.S. Treasury short-term investments 0 92 2 (4) 8,501,090 23,492 8,524,582

Total $ 24 5 1,061 27 25 ,512,125 $ ,627 $ 2 ,573,752

(1) This amount represents Ginnie Mae’s account balance with the U.S. Treasury. It includes cash and cash equivalents that

are restricted by Congress, which Ginnie Mae cannot spend without approval from the legislative body, as well as cash

and cash equivalents that are restricted temporarily, until Ginnie Mae determines the appropriate allocation for cash

received.

(2) This amount represents cash collected by the MSS for Ginnie Mae but not yet received by Ginnie Mae. 

(3) This amount represents cash collected by the Trustee and Administrator of securities for Ginnie Mae but not yet received

by Ginnie Mae.

(4) This amount represents investments in overnight certificates. It includes the money owed to MBS certificate holders who

cannot be located by the administrator of the Ginnie Mae MBS securities and have not yet been claimed. There is no statute 

of limitations stating when the MBS certificate holder can claim this cash. See Note 4: Restricted Cash and Cash

Equivalents for details on unclaimed security holder payments.

Funds with U.S. Treasury: Ginnie Mae’s cash receipts and disbursements are processed by U.S.

Treasury. Cash held by U.S. Treasury represents the available budget spending authority of Ginnie 

Mae (obligated and unobligated balances available to finance allowable expenditures). The 

restricted balances represent amounts restricted for use for specific purposes. 

Deposits in Transit: 

• Cash held by the MSS: There may be a time lag between when the MSS receives cash

collections on behalf of Ginnie Mae such as principal, interest, and insurance proceeds, 

and when cash collections are transferred to Ginnie Mae. Ginnie Mae records cash and

56
cash equivalents for receipts collected by the MSS on Ginnie Mae’s behalf, but not yet 

transferred to Ginnie Mae at the end of the reporting period. 

• Cash held by Trustee and Administrator of securities: There may be a time lag between 

when the Trustee and Administrator of securities receives cash for commitment fees and 

multiclass fees, respectively, on behalf of Ginnie Mae, and when cash is transferred to 

Ginnie Mae. Ginnie Mae records cash and cash equivalents for receipts by the Trustee and 

Administrator of securities, but not yet transferred to Ginnie Mae at the end of the reporting 

period. 

U.S. Treasury short-term investments: U.S. Treasury securities are bought and sold at

composite prices received from the Federal Reserve Bank of New York. These securities are 

maintained in book-entry form at the Bureau of Public Debt and include U.S. Treasury overnight 

certificates, U.S. Treasury notes, and U.S. Treasury inflation-indexed securities (reflecting

inflation compensation). Ginnie Mae has approval from the OMB to establish a Capital Reserve

Fund, which can be invested in overnight U.S. Government securities. As a result of the OMB

approval, Ginnie Mae invested the full balance of the Capital Reserve Fund of approximately $8.4 

billion and the Liquidating Fund of approximately $124.2 million in overnight U.S. Government 

securities at September 30, 2020. Ginnie Mae only held overnight certificates at September 30, 

2020. The U.S. Treasury short-term investments balance includes $23.5 million of restricted cash

related to unclaimed MBS security holder payments at September 30, 2020. U.S. Treasury 

securities are carried at cost, which approximates fair value. 

Note 4: Restricted Cash and Cash Equivalents 

Cash and cash equivalents are classified as restricted when the statutes, regulations, contracts or

Ginnie Mae’s statements of intentions legally limit the use of funds. Restrictions may include 

legally restricted deposits, contracts entered into with others, or Ginnie Mae’s statements of

intention with regard to particular deposits. The balance consists of the following: 

• Unclaimed security holder payments: Money owed to MBS certificate holders who cannot

be located by the administrator of Ginnie Mae MBS securities. The money stays in U.S. 

Treasury short-term investments until the MBS certificate holders claim the money. 

• Unapplied deposits: Cash received by Ginnie Mae held in a suspense account until the

appropriate application is determined. 

• Fund balances precluded from obligation: Unobligated money within the Programs Fund 

balance that is restricted by law and cannot be utilized unless allowed by a subsequently 

enacted law.

• Liability for investor passthrough payments: Cash from unremitted P&I collections sent to

Ginnie Mae, that Ginnie Mae has an obligation to pass through to MBS holders. 

Restricted cash and cash equivalents balance has increased from prior year primarily driven by the

funds balance precluded from the discretionary collection of multiclass/commitment fees during 

fiscal year 2020. 

57
The balance of restricted cash and cash equivalents at September 30, 2020 were as follows: 

September 30, 2020

(Dollars in thousands)

Unclaimed security holder payments $ 23,492 23 492

Unapplied deposits 195 

Fund balances precluded from obligation 1,034,937

Liability for investor pay off 3,003 

Total $ 1,061, 27 $ 1,061 627

Note 5: Financial Guarantees and Financial Instruments with Off-Balance Sheet Exposure 

Ginnie Mae receives guaranty fees, which are calculated based on the UPB of outstanding MBS

in the defaulted and non-defaulted issuers’ pooled portfolio. A guaranty fee represents 

compensation for guaranteeing the timely payment of P&I to the MBS certificate holders in the

event of issuers’ default. Ginnie Mae only guarantees securities created by approved issuers and 

backed by mortgages insured by other federal agencies. The underlying source of loans for the

Ginnie Mae I MBS and Ginnie Mae II MBS comes from Ginnie Mae’s four main MBS programs

(the single family, multifamily, HMBS, and manufactured housing programs) which serve a

variety of loan financing needs and different issuer origination capabilities. Refer to Note 1: Entity

and Mission for more information on each program. 

Ginnie Mae recognizes a guaranty asset upon issuance of a guarantee for the expected present

value of the guaranty fees. The guaranty asset recognized on the Balance Sheet is $6.8 billion at

September 30, 2020. The guaranty obligation represents the non-contingent liability for Ginnie 

Mae’s obligation to stand ready to perform on its guarantee. The guaranty obligation recognized 

on the Balance Sheet is $8.0 billion at September 30, 2020. After the initial measurement, the

guaranty asset is recorded at fair value and the guaranty obligation is amortized based on the 

remaining UPB of the MBS pools. The difference in measurement for the guaranty asset and

guaranty obligation subsequent to initial recognition may cause volatility in reported earnings due 

to different measurement attributes in reporting the related financial asset (using projected 

economic exposures such as interest rates and prepayments) and the financial liability (using actual

payoffs and paydowns). Refer to Note 13: Fair Value Measurement for discussion surrounding the 

volatility reflected in the Statement of Revenues and Expenses and Changes in Investment of U.S. 

Government as a result of changes in assumptions used in estimating the fair value of the guaranty

asset.

For the guaranty asset and guaranty liability recognized on the Balance Sheet, Ginnie Mae’s 

maximum potential exposure under these guarantees is primarily comprised of the UPB of MBS 

securities and outstanding commitments and does not consider loss recoverable from other 

agencies. At September 30, 2020, the UPB of Ginnie Mae’s MBS securities amounted to $2.1 

58
trillion. It should be noted, however, that Ginnie Mae’s potential loss is considerably less due to

the financial strength of its issuers. In addition, the value of the underlying collateral and the 

insurance provided by insuring or guaranteeing agencies indemnify Ginnie Mae for most losses. 

The Ginnie Mae guaranteed security is a pass-through security whereby mortgage P&I payments

(or curtailments) are passed through to the MBS certificate holders monthly. Exposure to credit 

loss is primarily contingent on the nonperformance of Ginnie Mae issuers. Ginnie Mae does not 

anticipate nonperformance by the issuers other than those considered probable of default reflected 

in the liability for loss on mortgage backed securities guaranty program line item on the Balance

Sheet or considered reasonably possible of default as disclosed in Note 17: Reserve for Loss. 

Generally, terms of the guarantee range from 15 to 30 years for single family programs. For 

multifamily programs, the maximum guarantee term is capped at 40 years plus the applicable 

construction period. For HMBS programs, the maximum guarantee term is 50 years from the 

issuance of the security. Refer to Note 17: Reserve for Loss for discussion of contingent and noncontingent guaranty liability.

Ginnie Mae is also subject to credit risk for its outstanding commitments to guarantee MBS, which 

are not recognized on its Balance Sheet. These commitments represent Ginnie Mae’s guarantee of 

future MBS issuances. The commitment ends when the securities are issued or the commitment 

period expires, which is the last day of the month that is 12 months after the authority is approved 

for single family issuers and on the last day of the month that is 24 months after the authority is 

approved for multifamily issuers. Ginnie Mae’s risk related to outstanding commitments is 

significantly lower than the outstanding balance of MBS securities due in part to Ginnie Mae’s 

ability to limit commitment authority granted to individual MBS issuers. Outstanding MBS and 

commitments were as follows: 

September 30, 2020

(Dollars in billions)

Outstanding MBS securities $ 2,118 

Outstanding MBS commitments 234 

Total $ 2,352 

The Ginnie Mae MBS serves as collateral for multiclass products, such as REMICs, Callable 

Trusts, Platinum Certificates, and Stripped MBS (SMBS), for which Ginnie Mae also guarantees

the timely payment of P&I. These structured securities allow the private sector to combine and 

restructure cash flows from Ginnie Mae MBS into securities that meet unique MBS certificate

holder’s requirements for yield, maturity, and call-option features. 

For the year ended September 30, 2020, multiclass security program issuances totaled $159.4 

billion. The estimated outstanding balance of multiclass securities included in the outstanding 

MBS balance was $559.4 billion at September 30, 2020. These guaranteed securities do not subject 

Ginnie Mae to additional credit risk beyond that assumed under the MBS collateral.

59
Note 6: Pass-Through Assistance Program Receivables Including Accrued Interest, Net 

In response to the COVID-19 National Emergency declared by the President of the United States 

on March 13, 2020, Ginnie Mae has revised and expanded the Issuer assistance programs in 

Chapter 34 of the MBS Guide. The expansion includes the addition of a new PTAP, specifically

authorized for use in the response to the COVID-19 National Emergency. Under this program, 

Ginnie Mae may assist Issuers under the Single-Family and Multifamily programs with passthrough payments to investors, if the Issuers are facing a temporary liquidity shortfall directly

attributable to the COVID-19 National Emergency. 

As of September 30, 2020, Ginnie Mae has disbursed a total of $11.5 million from its own capital

reserves and received $8.5 million in total repayments (including interest) under PTAP. If Ginnie 

Mae’s own capital reserves are depleted in the future, Ginnie Mae has the authority to borrow from

the U.S. Treasury to meet immediate funding needs for PTAP. PTAP receivables are considered

short-term in nature as their maturity dates are within 12 months from the end of the month the 

corresponding PTAP requests were approved. 

The table below presents the carrying value of PTAP receivables including accrued interest at 

September 30, 2020:

September 30, 2020

Single Family 

Program

Multifamily 

Program

Total 

(Dollars in Thousands)

PTAP receivables UPB $ 3,103 $ - $ 3,103

PTAP accrued interest receivable23 - 23 

Recorded investment of PTAP 

receivables $ 3,126 $ - $ 3,126 

Allowance for PTAP receivables (454) (454) 

PTAP receivables including accrued 

 2,672 interest, net $ $ $ 2,672 

As of September 30, 2020, no outstanding PTAP receivables are past due or impaired. 

Credit Quality Indicators 

Ginnie Mae regularly monitors the credit quality of PTAP receivables through the internal Issuer 

Risk Grade (IRG). Ginnie Mae’s IRG methodology is similar to the methodology used by credit 

rating agencies when evaluating corporate financial strength, and the individual IRGs are

comparable to the credit ratings from rating agencies. The IRGs are updated on a monthly basis. 

60

-

-
The IRG is on a scale from 1 to 8, where an IRG of 1 indicates the strongest credit quality, and an 

IRG of 8 indicates the weakest credit quality. As of September 30, 2020, Issuers with outstanding 

PTAP receivables received an IRG of either 6 or 8: 

 IRG 6: the Issuer has minimally adequate financial strength with a high credit risk, which

is equivalent to a credit rating of B from credit rating agencies Moody’s, Standard and

Poor’s (S&P) or Fitch.

 IRG 8: the Issuer has very poor standing with a very high credit risk, which is equivalent

to a credit rating of Ca from Moody’s, or CC/C from S&P or Fitch.

The table below presents the recorded investment for PTAP receivables by IRG at September 30, 

2020: 

September 30, 2020

IRG 6 IRG 8 Other Total 

(Dollars in Thousands)

PTAP

receivables 

B 

2,170 933 $ $ 3,103 

UPB

PTAP accrued 

interest 

receivable 17 6 - 23 

Recorded 

investment of

PTAP 

receivables ,187 39 $ 2,187 $ 939 $- $ 3,126

 

Allowance for PTAP Receivables

Ginnie Mae performs a quarterly analysis of outstanding PTAP receivables to determine if 

impairment has occurred and to assess the appropriateness of allowance. The allowance for PTAP 

receivables involves significant management judgment and estimates of credit losses inherent in 

the PTAP receivables.

The allowance for PTAP receivables consists of two components: (1) an asset-specific component 

for larger-balance PTAP receivables individually evaluated and deemed impaired, and (2) a

component for PTAP receivables collectively evaluated for impairment. As of September 30, 

2020, no outstanding PTAP receivables were identified for individual impairment evaluation. The 

collective component of allowance for PTAP receivables was calculated based on estimated 

probability of default, which was derived using the following approach: 1) identifying Ginnie 

Mae’s internal IRGs for Issuers with outstanding PTAP receivables, 2) mapping each Issuer’s IRG 

to comparable agency ratings, and 3) estimating probabilities of default by leveraging the actual 

one-year default rates that credit rating agencies published by rating. The following table presents

changes in Ginnie Mae’s allowance for PTAP receivables during the year ended September 30, 

2020: 

61

$ $ -
For the year ended 

September 30, 2020

(Dollars in thousands)

Beginning balance $ - 

Recapture (provision) 

Charge offs 

Recoveries - 

(454) 

- 

Ending balance $ (454) 

Recorded investment of PTAP receivables $ 3,126 

Net investment of PTAP receivables $ 2,672 

Note 7: Mortgage Servicing Rights 

Upon Ginnie Mae’s assumption of defaulted issuers’ entire Ginnie Mae guaranteed pooled-loan 

portfolio, Ginnie Mae assumes the servicing rights and servicing obligations associated with 

servicing those portfolios. Ginnie Mae earns servicing fees as compensation for its servicing and

administrative duties. 

The fair value of Ginnie Mae’s capitalized MSRs was $398.6 thousand at September 30, 2020. 

The MSRs correspond to UPB of $147.1 million at September 30, 2020. 

The following table summarizes the changes in capitalized MSRs for the year ended September 

30, 2020: 

For the year ended 

September 30, 2020

(Dollars in thousands)

Beginning balance, October 1, 2019 $ 1,268 

Additions - 

Dispositions - 

Changes in fair value due to:

Changes in valuation inputs or assumptions used in valuation model (870) 

Other changes in fair value - 

Ending balance, September 30, 2020 $ 398 

For the year ended September 30, 2020, Ginnie Mae earned $619.7 thousand related to servicing 

fee income, which is included in MBS program and other income. 

Note 8: Reimbursable Costs, Net 

Costs incurred on both pooled and non-pooled loans expected to be reimbursed are recorded as 

reimbursable costs receivable and reported net of allowance for amounts that management believes 

will not be collected. Reimbursable costs arise when insufficient escrow funds are available to 

62
make scheduled tax and insurance payments for loans serviced by Ginnie Mae, and Ginnie Mae 

advances funds to cover the shortfall to preserve a first lien position on the underlying collateral.

In addition, Ginnie Mae advances funds to cover servicing related expenses in order to preserve 

the value of the underlying collateral. The allowance for reimbursable costs is estimated based on 

historical loss experience, where available, which includes expected collections from the 

mortgagors, proceeds from the sale of the property, and reimbursements collected from third-party

insurers or guarantors such as FHA, VA, RD, and PIH. 

The following table presents reimbursable costs and related allowance amounts, by loan insurance 

type, at September 30, 2020: 

September 30, 2020 

FHA VA RD Conventional Total 

(Dollars in Thousands)

Reimbursable costs $ 33,679 22 86 45 6,532 $ 1,922 $ 686 $ 245 $ 36,532

Allowance for reimbursable ) ) ) ) costs (2,968) (628) (217) (38) (3,851)

Reimbursable costs, net 0,711 $ 30,711 $ 1,294 69 07 2,681 $ 469 $ 207 $ 32,681

Note 9: Advances, Net 

Advances include payments made to MSS to cover any shortfalls to investors resulting from 

mortgagors defaulting on their mortgage payments. Advances are reported net of an allowance, 

which is based on management’s expectations of future collections from issuers, mortgagors, or

recoverability from insuring and guaranteeing agencies such as FHA, VA, RD, and PIH. 

During the year ended September 30, 2020, no new issuers defaulted, and therefore no issuers 

were subsequently terminated and extinguished. Ginnie Mae made advance payments for five 

previously defaulted issuers for the year ended September 30, 2020. Ginnie Mae had assumed the 

servicing rights and obligations of these defaulted issuers and advanced funds to the MSS to cover 

P&I not yet paid by mortgagors, but due to the MBS investors. 

The net carrying value of the advances balance is $784.0 thousand at September 30, 2020, as 

disclosed in the table below: 

September 30, 2020

(Dollars in thousands)

Advances $ 945 

Allowance for uncollectible advances (161) 

Advances, net $ 784 

63
Changes in the allowance for advances for the year ended September 30, 2020, are presented

below: 

For the year ended 

September 30, 2020

(Dollars in thousands)

Beginning balance, October 1, 2019 $ (82) 

Provision for uncollectible advances (79)

Charge offs 

Recoveries

- 

- 

Ending balance, September 30, 2020 $ (161)

Note 10: Mortgage Loans Held for Investment Including Accrued Interest, Net 

Ginnie Mae classifies loans as either HFS or HFI. At September 30, 2020, Ginnie Mae’s loan 

portfolio did not include any HFS loans. Ginnie Mae reports the carrying value of HFI loans at the 

recorded investment of the mortgage loan, which represents the UPB and accrued interest, net of 

cost basis adjustments, and net of allowance for loan losses including allowance for accrued 

interest receivable.

The tables below present the carrying value of HFI loans including accrued interest broken down 

by underlying insuring agencies at September 30, 2020: 

September 30, 2020 

Conventional FHA VA RD Total 

(Dollars in thousands)

Mortgage loans held for investment UPB $ 113,579 $ 2,004,110 $ 87,056 $ 37,593 $ 2,242,338

Accrued interest receivable eceivable 1,069 17,434 846 187 19,536

Recorded investment of mortgage loans 

held for investment including accrued 

interest 114,648 2,021,544 87,902 37,780 2,261,874

Allowance for loan losses (4,546) (133,039) (2,810) (2,009) (142,404)

Mortgage loans held for investment 

including accrued interest, net $ 110,102 $ 1,888,505 $ 85,092 $ 35,771 $ 2,119,470

Credit Quality Indicators 

Ginnie Mae’s HFI loans are periodically evaluated for impairment in accordance with guidance in 

ASC 450-20: Contingencies – Loss Contingencies or ASC 310-10: Receivables – Overall. Ginnie 

Mae’s credit risk exposure on its HFI mortgage loans portfolio is limited by the underlying

guarantee or insurance on loans, which may include FHA, VA, RD, and PIH.

When estimating defaults, prepayments and recoveries, Ginnie Mae considers a number of 

indicators including macro-economic factors such as interest rates, home price indices, and 

mortgage delinquency rates. In addition, Ginnie Mae considers a number of credit quality 

indicators such as loan-to-value (LTV) ratios at origination and current delinquency status as of 

64
the end of the reporting period. Other characteristics include age of loan, insuring agency, credit 

score, and spread of mortgage rate to relevant market rate. 

The following tables present the recorded investment(1) for mortgage loans by original LTV ratio

at September 30, 2020: 

September 30, 2020 

Less than 80% 80-100% Greater than 100% Total 

(Dollars in thousands)

Conventional 98 6 4 54 8 $ 7,798 $ 102,296 $ ,554 $ 114,648

FHA133,6661,852,218 35,660 2,021,544

VA 5,888 63,576 18,438 87,902

RD 1,174 26,699 9,907 37,780 

Total $ 148,526 9 8,559 6 $ 2,044,789 $ 68,559 $ 2,261,874

(1) Recorded investment represents the total UPB along with accrued interest for mortgage loans held for investment.

65
Aging Analysis

The following tables present an aging analysis of the total recorded investment in Ginnie Mae’s 

HFI mortgage loans: 

September 30, 2020 

One Month 

Delinquent

Two Months 

Delinquent

Three 

Months 

Delinquent

Four 

Months or 

more 

Delinquent

Total 

Delinquent Current(1) Total 

Loans Over 

90 Days 

Delinquent 

and 

Accruing 

Interest(2)

Recorded 

Investment 

in Nonaccrual 

loans(3)

(Dollars in Thousands)

Conventional ,790 257 326 8 1 al $ 8,790 $ 3,257 $ 1,326 $ 11,028 $ 24,401 $ 90,247 48 - 2 $ 114,648 $ - $ 21,982

FHA 151,326 7 6 42 51 3 4 65,207 37,376 301,042 554,951 1,466,593 2,021,544 301,042 - 

VA4,671 563 184 4 2 671 2,563 2,184 23,344 32,762 55,140 87,902 23,344 - 

RD3,696 310 446 809 1 1,310 1,446 6,809 13,261 24,519 37,780 8096, - 

Total $ 168,483 7 2 23 75 $ 72,337 $ 42,332 $ 342,223 $ 625,375 $ 1,636,499 4 95 2 $ 2,261,874 $ 331,195 $ 21,982

 

(1) Includes 858 loans with a recorded investment of $118.7 million subject to Interagency Statement relief. Loans subject to 

Interagency relief recognize interest income subject to Ginnie Mae’s non-accrual policy as discussed in Note 2: Summary of 

Significant Accounting Policies and Practices.

(2) Interest income on insured or guaranteed loans that are over 90 days delinquent is recognized subject to Ginnie Mae’s nonaccrual policy as discussed in Note 2: Summary of Significant Accounting Policies and Practices.

(3) Refer to Ginnie Mae’s non-accrual policy as discussed in Note 2: Summary of Significant Accounting Policies and Practices. 

Impaired Loans 

Ginnie Mae’s impaired loans include the following categories:

• TDR loans 

• PCI loans 

66
The table below presents the recorded investment, related allowance, UPB, average recorded

investment, and total interest income recognized for impaired mortgage loans at September 30, 

2020: 

September 30, 2020

Recorded 

Investment 

Related 

Allowance

Unpaid 

Principal 

Balance 

Average 

Recorded 

Investment 

Total Interest 

Income 

Recognized(1)

(Dollars in thousands)

With related allowance 

recorded:

Conventional $ 45,579 ) 5,289 25 $ (3,647) $ 45,289 $ 46,091 $ 2,125

FHA1,506,795 ) 4 4 6,035 (130,361) 1,498,174 1,550,854 66,035

VA 62,427 ) ,860 ,150 (2,810) 61,860 65,150 2,850 

RD 26,830 ) ,685 ,083 (2,009) 26,685 28,083 1,335 

Total impaired loans with 

related allowance recorded 1 ) 8 $ 1,641,631 $ (138,827) $ 1,632,008 $ 1,690,178 2,345 $ 72,345

With no related allowance 

recorded : (2):

Conventional $ 14,257 $ - 3,939 20,828 46 $ - $ 13,939 $ 0,828 $ 646

FHA 188,407 - 9 7 183,619 299,967 8,308 

VA 25,475 - 25,196 ,680 41 1,332 

RD 10,950 - 10,908 ,783 16 739 

Total impaired loans with 

no related allowance 

recorded $ 239,089 $ 2 8 1,025 $ - $ 233,662 $ 379,258 $ 11,025

Total impaired loans 0 ) 0 6 3,370 (3) $ 1,880,720 $ (138,827) $ 1,865,670 $ 2,069,436 $ 83,370

(1) Interest income on impaired loans is recognized subject to Ginnie Mae’s non-accrual policy (as applicable), as discussed in 

Note 2: Summary of Significant Accounting Policies and Practices.

(2) The amount recoverable from insurer/guarantor or fair value of the collateral value equals or exceeds the recorded investment

of the impaired loan and, as such, no valuation allowance is recorded. 

(3) The recorded investment, related allowance, and UPB for TDRs was $1,839.2 million, $137.8 million, and $1,824.6 million,

respectively, at September 30, 2020. The recorded investment, related allowance, and UPB for PCI loans was $41.5 million,

$1.0 million, and $41.1 million, respectively, at September 30, 2020. 

Troubled Debt Restructuring

A restructuring of a debt constitutes a TDR if Ginnie Mae, for economic or legal reasons related

to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise 

consider. Additionally, Ginnie Mae considers Chapter 7 Bankruptcies which result in a discharge 

to the borrower as TDRs because the borrower is undergoing financial difficulty or insolvency and 

concessions are made to the borrower. Ginnie Mae assesses loans to determine whether they meet

the criteria of TDR upon trial modification, as applicable. Ginnie Mae also offers other informal

options to troubled borrowers including repayment plans and forbearance agreements which are 

evaluated for TDR, as applicable. 

67
Section 4022 of the CARES Act provides borrowers with federally backed mortgage loans a 

foreclosure moratorium and a right to forbearance of loan payments for homeowners experiencing 

financial hardship due to COVID-19. The majority of Ginnie Mae’s non-pooled loan portfolio is 

insured/guaranteed by the FHA, VA, RD, or PIH, and therefore eligible for forbearance under 

Section 4022 of the CARES Act. As described in Note 2: Summary of Significant Accounting 

Policies and Procedures, Ginnie Mae has elected to follow the guidance issued in the Interagency 

Statement and, accordingly, loan modifications (including short term payment deferrals of six 

months or less) subject to relief under the Interagency Statement are not accounted for as TDRs 

and therefore not included within Ginnie Mae’s TDR disclosures. Any further payment deferrals 

permitted under Section 4022 beyond the six month period will be assessed for TDR accounting. 

Ginnie Mae’s loan modification programs may result in various types of concessions (including a 

combination of concessions) such as term extensions and interest rate reductions (lower than what 

the mortgagor would receive in the market at the time of the modification). Ginnie Mae considers 

these modifications a concession to mortgagors experiencing financial difficulties and therefore

classifies these loans as TDRs. The average term extension granted by Ginnie Mae was 65 months

for the year ended September 30, 2020. The average interest rate reduction was 1.02 percentage 

points for the year ended September 30, 2020. 

The following table presents the number of loans and recorded investment of loans newly 

classified(1) as a TDR during the year ended September 30, 2020: 

September 30, 2020

Number of 

Loans(3)

Recorded 

Investment

(2)

(Dollars in thousands)

Conventional 32 56 $ 3,956

FHA174 23,490

VA 15 3,048 

RD 8 778 

Total 229 1,272 $ 31,272

(1) Loans classified as a TDR in one period may be modified again in a subsequent period. In such cases, the subsequent

modification would not be reflected in the table since the loan would already have been classified as a TDR. 

(2) There is not a material difference between the recorded investment in loans pre- and post-modification based on the nature 

of Ginnie Mae’s modification programs which do not include principal and past-due interest forgiveness. As such, amounts

represent post-modification recorded investment.

(3) Includes modifications that do not meet the criteria under the Interagency Statement to take the optional relief from TDR 

accounting. As such, these modifications have been assessed under Ginnie Mae’s TDR policy and classified as new TDRs.

68
The table below presents the number of loans and total recorded investment for the loans that 

entered a TDR in the preceding twelve months and for which there was a payment default during 

the period. For purposes of this disclosure, Ginnie Mae defines TDR loans that had a payment 

default as modifications that became two months or more delinquent subsequent to modification 

during the period:

September 30, 2020

Number of 

Loans

Recorded 

Investment

(2)

(Dollars in thousands)

Conventional - $ -

FHA7 1,410 

VA 2 541 

RD 1 125 

Total 10 76 $ 2,076

Purchased Credit Impaired Loans 

Upon acquisition, if the purchased loan is delinquent and uninsured, or guaranteed or insured by 

VA, RD, or PIH, Ginnie Mae concludes that it is probable that it will not collect all contractually 

required payments receivable. Accordingly, these loans are considered PCI mortgage loans.

Historically, Ginnie Mae has not applied the PCI guidance to its loans purchased with evidence of 

credit deterioration since Ginnie Mae has determined that non-compliance with the full PCI

requirements outlined in ASC 310-30 does not, on its own, preclude the financial statements as a 

whole from being materially compliant with U.S. GAAP. Currently, upon acquisition, the PCI 

loans are recorded at UPB and accrued interest, less allowance. Ginnie Mae measures subsequent 

impairment on these loans based on the present value of expected future cash flows. Refer to 

Note 2: Summary of Significant Accounting Policies and Practices for U.S. GAAP requirements. 

Ginnie Mae does not consider delinquent FHA guaranteed or insured acquired loans as PCI due to 

the extent of coverage provided per the FHA insurance guidelines. The FHA insurance is

inseparable from the underlying loan and remains with the loan upon transfer or disposition.

For the year ended September 30, 2020, there were $3.5 million of purchases of loans classified 

as PCI. 

Foreclosures in Process

Ginnie Mae accounts for the mortgage loans as Foreclosure in Process if the foreclosure has been 

filed but not completed. Although foreclosure has been filed, the foreclosure process has not been 

completed and Ginnie Mae has not received physical possession of the underlying property, and 

accordingly, Foreclosure in Process loans are accounted for similar to mortgage loans HFI and are

reported as a part of the HFI portfolio. 

69
Physical possession of residential real estate property is achieved when either the creditor obtains 

legal title to the residential real estate property upon completion of a foreclosure or the mortgagor 

conveys all interest in the residential real estate property through completion of a deed in lieu of 

foreclosure in order to satisfy that loan. 

The recorded investment of Foreclosure in Process loans was $135.6 million as of September 30, 

2020. Although the foreclosure process has begun for these loans, Ginnie Mae believes that a 

portion of these loans will not complete the foreclosure process due to Ginnie Mae’s loss 

mitigation activities. 

Allowance for Loan Losses

Ginnie Mae maintains an allowance for probable incurred losses related to non-pooled mortgage 

loans. The allowance for loan losses involves significant management judgment and estimates of

credit losses inherent in the mortgage loan portfolio. The allowance for loan losses is intended to

reduce the carrying value of Ginnie Mae’s HFI and related accrued interest for probable credit 

losses embedded in the loan portfolio at the balance sheet date. HFI and accrued interest are 

reported net of the allowance on the Balance Sheet. 

Ginnie Mae relies on MSS for information to assess mortgagors’ ability to pay based on current

economic environment assessment, and potential insurance recoveries as determinants in the

statistical models that evaluate potential HFI recoveries. For the collective allowance,

homogeneous pools of mortgage loans are defined on common characteristics such as age,

geographic region, and insurance type, among others. 

The projections of losses are built based on actual loan performance data and performance of 

similar loans, current economic environment, and, when appropriate, management judgment. 

Ginnie Mae monitors its projections of claim recoveries regularly to validate reasonableness. 

Ginnie Mae validates and updates its models and assumptions to capture changes in Ginnie Mae’s 

servicing experience and changes in government policies and programs. In determining Ginnie

Mae’s loan loss reserves, Ginnie Mae also considers macroeconomic and other factors that may

affect the performance of the loans in Ginnie Mae’s portfolio, including house price changes, 

nominal GDP growth, unemployment rate and mortgage rate. Ginnie Mae uses probability of 

default and probability of prepayment models which employ logistic regressions to calculate 

dynamic default and prepayment probabilities based on criteria described above. 

 

70
The following table displays the total recorded investment and allowance for loan losses by

allowance methodology at September 30, 2020: 

September 30, 2020

ent: 

(Dollars in thousands)

Recorded investment:

Collectively evaluated $ 381,154

Individually evaluated 1,839,245 

Purchase credit impaired 41,475 

Total recorded investment in loans $ 2,261,874

Ending balance of the allowance for loan losses:

Collectively evaluated $ (3,577) 

Individually evaluated (137,783)

sses ) 

Purchase credit impaired (1,044)

Total allowance for loan losses $ (142,404)

Net Investment in mortgage loans HFI $ 2,119,470 

The following table presents changes in Ginnie Mae’s allowance for loan losses during the year 

ended September 30, 2020: 

For the year ended 

September 30, 2020

e ) 

(Dollars in thousands)

Beginning balance $ (144,303)

1,551 

ffs 43 

Recapture (provision) for loan losses 1,551

Charge offs 7,343

Recoveries (6,995)

Ending balance $ (142,404) 

Ginnie Mae’s charge offs may include write downs recorded when the mortgage loan receivables

are transferred between certain asset classes. 

Note 11: Claims Receivable, Net 

Claims receivable are balances owed to Ginnie Mae from insuring or guaranteeing agencies (FHA, 

VA, RD, and PIH) related to conveyed properties and short sales. Short sale claims receivable 

represents payments owed to Ginnie Mae for shortfalls covered by insuring or guaranteeing 

agencies for properties where the net proceeds from a short sale fall short of the debts secured by 

liens against the property, in accordance with the respective agency guidelines. Foreclosed 

property claims receivable represents amounts Ginnie Mae expects to receive by conveying the 

foreclosed property title to the insuring or guaranteeing agency for properties where Ginnie Mae 

has received title by completion of foreclosure, deed in lieu of foreclosure, or through a similar 

legal agreement. Ginnie Mae records an allowance that represents the expected unrecoverable 

71
amounts within the portfolio for claims receivable. The claims receivable balance, net of the 

allowance, represents the amounts that Ginnie Mae determines to be collectible. 

The following table presents Ginnie Mae’s claims receivable and related allowance, by type of 

claim, at September 30, 2020: 

September 30, 2020 

FHA VA RD Total 

(Dollars in thousands)

Foreclosed property claims receivable 8,300 53 26 1,579 (1) $ 88,300 $ 1,153 $ 2,126 $ 91,579

Short sale claims receivable 20 36 82 38 (2) 920 236 182 1,338

Allowance for claims receivable s receivable (20,278) (20,278) (609) (114) (21,001)

Claims receivable, net vable, net $ 68,942 780 2,194 71,916 $ 780 $ 2,194 $ 71,916

 

(1) Foreclosed property claims receivable represents reimbursements owed to Ginnie Mae by insuring or guaranteeing agencies 

(which may include FHA, VA, RD, and PIH) for foreclosed property. 

(2) Short sale claims receivable are amounts reimbursable to Ginnie Mae from the insuring or guaranteeing agencies (which 

may include FHA, VA, RD, and PIH) for properties sold to avoid foreclosure where the proceeds received are insufficient to 

fully satisfy the remaining balances of the mortgages. 

The foreclosed property claims and short sale claims allowance balances are estimated based on 

underlying insuring or guaranteeing agency guidelines, and historical collectability experience. 

The allowance for claims receivable includes effects of charge offs, recoveries, and amounts

deemed uncollectible from the insuring or guaranteeing agency. At initial recognition, a claims

receivable is recognized for the amount recoverable from the insurers and any excess amounts not 

recoverable are charged off against the allowance for loan losses. If the claim proceeds received

exceed the claims receivable’s carrying amount, Ginnie Mae will apply the excess to amounts 

previously charged-off (i.e., recovery) with any residual amounts recognized as a gain on the

Statement of Revenues and Expenses and Changes in Investment of U.S. Government. 

Note 12: Acquired Property, Net 

Ginnie Mae recognizes acquired property when marketable title to the underlying property is 

obtained and the property has completed the foreclosure process, or the mortgagor conveys all 

interest in the residential real estate property to Ginnie Mae to satisfy the loan through the 

completion of a foreclosure or a deed in lieu of foreclosure or other similar legal agreement. The 

acquired properties are typically either RD insured(1)

, FHA insured(2) or uninsured conventional 

loans(3). Acquired properties are assets that Ginnie Mae intends to sell and is actively marketing 

through the MSS.

72
Activity for acquired properties is presented in the table below:

For the year ended 

September 30, 2020 

(Dollars in thousands)

Beginning balance – acquired properties $ 11,337 

Additions 11,572 

Dispositions ( 17,185)

Ending balance – acquired properties $ 4 5,72

Beginning balance – valuation allowance (1,392)

Change in valuation allowance 271

Ending balance – valuation allowance $ ( 1,121)

Ending balance – acquired properties, net $ 4,603 

(1) Properties from foreclosed RD insured loans are not conveyed to the insuring agency subsequent to foreclosure per the

insurance guidelines published by RD. 

(2) Properties from foreclosed FHA insured loans that are under FHA’s Claims Without Conveyance of Title program are not

conveyed to the insuring agency subsequent to foreclosure, per the insurance guidelines published by FHA. 

(3) Properties from foreclosed VA insured loans are usually conveyed to the insuring agency subsequent to foreclosure, and are

recognized as foreclosed properties under Claims Receivable, Net on Ginnie Mae’s balance sheet upon the completion of the 

foreclosure process. 

Note 13: Fair Value Measurement 

ASC 820: Fair Value Measurement defines fair value, establishes a framework for measuring fair

value, and sets forth disclosure requirements regarding fair value measurements. This guidance

applies whenever other accounting guidance requires or permits assets or liabilities to be measured 

at fair value. Fair value measurement assumes that the transaction to sell the asset or transfer the 

liability takes place either in the principal market for the asset or liability, or, in the absence of a

principal market, in the most advantageous market for the asset or liability. 

Ginnie Mae uses fair value measurements for the initial recognition of assets and liabilities and

periodic re-measurement of certain assets and liabilities on a recurring or non-recurring basis. In 

determining fair value, Ginnie Mae uses various valuation techniques. The inputs to the valuation 

techniques are categorized into a three-level hierarchy, as described below: 

Level 1 Quoted prices in active markets for identical assets or liabilities that are accessible at

the measurement date. 

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or

liabilities, quoted prices in markets that are not active, or other inputs that are

observable or can be corroborated by observable market data for substantially the full 

term of the assets or liabilities.

73
Level 3 Unobservable inputs that are supported by little or no market activity and that are 

significant to the fair value of the assets or liabilities. 

Assets Measured at Fair Value on a Recurring Basis: The following table presents the fair value 

measurement hierarchy level for Ginnie Mae’s assets and liabilities that are measured at fair value

on a recurring basis at September 30, 2020: 

September 30, 2020 

Level 1 Level 2 Level 3 Total 

Assets: 

(Dollars in thousands)

Assets:

ty asset $ $ 3 3 

- 98 98 

$ $ 1 1 

Guaranty asset $ - $ - $ 6,755,883 $ 6,755,883

Mortgage servicing rights - - 398 398

Total Assets at Fair Value $ - $ - $ 6,756,281 $ 6,756,281

For the year ended September 30, 2020, the guaranty asset increased by $2.5 billion due to new 

MBS issuances.

Ginnie Mae had no acquisitions of MSRs for the year ended September 30, 2020. 

Ginnie Mae records transfers into or out of Level 3, if any, at the beginning of the period. There 

were no transfers into or out of Level 3 during the year ended September 30, 2020. 

Mortgage Servicing Rights – The valuation technique used by Ginnie Mae to measure the fair

value of MSRs is based on the present value of expected future cash flows from servicing the

underlying mortgage assets. An MSR asset represents the benefits of servicing which are expected 

to be more than adequate compensation to Ginnie Mae for performing the servicing related to these 

loans. A servicing liability is recorded when the benefits of servicing are not expected to 

adequately compensate Ginnie Mae for performing the servicing. The determination of adequate 

compensation is a market notion and it is made independent to Ginnie Mae’s cost of servicing.

Accordingly, Ginnie Mae’s determination of adequate compensation is based on compensation 

demanded in the marketplace. The significant unobservable inputs used in estimating the fair value

of Ginnie Mae’s Level 3 MSR assets and liabilities include management’s best estimates of certain

key assumptions, which include prepayment experience, forward yield curves, adequate

compensation, delinquency rates, and discount rates commensurate with the risks involved. 

Changes in anticipated prepayment experience, in particular, result in fluctuations in the estimated 

fair values of the servicing rights. If actual prepayment experience differs from the anticipated 

rates used in the model, this may result in a material change in the fair value. Note 2: Summary of 

Significant Accounting Policies and Practices contains additional details with regards to specific

fair value assumptions of MSRs. 

Ginnie Mae reviews the various inputs used to determine the fair value of the MSRs and performs

procedures to validate their reasonableness. In reviewing the estimated fair values of the Level 3

MSRs, Ginnie Mae uses internal models and key assumptions on the loans underlying the MSRs. 

74
The table below presents the range and weighted average of significant unobservable inputs and 

impact of key economic assumptions used in determining the fair value of Ginnie Mae’s MSR 

assets valued on a recurring basis: 

September 30, 2020

(Dollars in thousands)

Valuation at period end:

Fair value $ 398 

Weighted- average life (years) 3.18

Prepayment rates assumptions: 

Weighted average rate assumption 26.05%

Weighted average minimum 15.33%

Weighted average maximum 29.90%

Impact on fair value of a 10% adverse change (20) 

Impact on fair value of a 20% adverse change (39) 

Discount rate assumptions:

Weighted average rate assumption 10.82%

Weighted average minimum 10.00%

Weighted average maximum 12.48%

Impact on fair value of a 10% adverse change (4) 

Impact on fair value of a 20% adverse change (8) 

These sensitivities are hypothetical and should be considered with caution. Changes in fair value 

based on a 10% or 20% variation in assumptions generally cannot be extrapolated because the

relationship of the change in assumptions to the change in fair value may not be linear. Also, the

effect of a variation in a particular assumption on the fair value is calculated without changing any

other assumption. In reality, changes in one factor may result in changes in another (i.e., increased

market interest rates may result in lower prepayments and increased credit losses) that could 

magnify or counteract the sensitivities. 

Guaranty asset – The fair value option provides Ginnie Mae an option to elect fair value as an 

alternative measurement for selected financial assets and financial liabilities not otherwise reported

at fair value. Ginnie Mae has elected the fair value option for the guaranty asset. The valuation 

technique used by Ginnie Mae to measure the fair value of its guaranty asset is based on the present 

value of expected future cash flows from the guaranty fees based on the UPB of the outstanding 

MBS in the defaulted and non-defaulted issuers’ pooled portfolio, based on new issuances of MBS, 

scheduled run-offs of MBS, anticipated prepayments, and anticipated defaults. 

Ginnie Mae provides the guarantee of P&I payments to MBS holders in the event of issuer default

and, in exchange, receives monthly guaranty fees from the issuers based on the UPB of the

outstanding MBS in the defaulted and non-defaulted issuers’ pooled portfolio. 

Ginnie Mae recorded a loss of $2.8 billion for the year ended September 30, 2020 from changes 

in the fair value of the guaranty asset reflected in the Gain (loss) on guaranty asset line item in the

Statement of Revenues and Expenses and Changes in Investment of U.S. Government. 

75
The table below presents the range and weighted average of significant unobservable inputs used 

in determining the fair value of Ginnie Mae’s guaranty asset: 

September 30, 2020

(Dollars in millions)

Valuation at period end:

Fair value $ 6, 56 6 756

Prepayment rates assumptions: 

Weighted average rate assumption 56.42%

Weighted average minimum 0.12%

Weighted average maximum 99.37%

Default rate assumptions: 

Weighted average rate assumption 15.61%

Weighted average minimum 0.01%

Weighted average maximum 98.34%

Discount rate assumptions:

Weighted average rate assumption 0.32%

Weighted average minimum 0.11%

Weighted average maximum

1.09%

These significant unobservable inputs change according to macroeconomic market conditions. 

Significant increases (decreases) in the discount rate, cumulative prepayment rate, or cumulative

default rate in isolation would result in a lower (higher) fair value measurement. The cumulative

prepayment rate represents the percentage of the mortgage pool’s UPB assumed to be paid off

prematurely on a voluntary basis over the remaining life of the pool and it is based on historical 

prepayment rates and future market expectations. The cumulative default rate represents the 

percentage of the pool’s UPB that would be eliminated prematurely due to mortgage default over 

the remaining life of the pool. The discount rate used for the guaranty asset valuation represents 

an estimate of the cost of financing for Ginnie Mae and it is determined considering Ginnie Mae’s

overall estimated cost of financing. 

Assets Measured at Fair Value on a Nonrecurring Basis: 

Ginnie Mae holds certain assets (acquired properties and conventional MHI loans at or greater

than 180 DPD) that are measured at fair value on a nonrecurring basis. These assets are not

measured at fair value on an ongoing basis but are subject to fair value adjustments in certain 

circumstances (e.g., the impairment on the asset). 

Acquired Properties: Acquired properties are long-lived assets classified as held for sale by Ginnie 

Mae that qualify for fair value measurement on a nonrecurring basis. Ginnie Mae initially measures

acquired properties at their fair value, net of estimated costs to sell. Ginnie Mae subsequently 

measures acquired properties at the lower of their carrying values or fair values less estimated 

costs to sell. Subsequent valuation measurements are periodically performed up until the sale of 

the property. The dates of the fair value measurements vary from property to property and are not 

always at the reporting period end date. Ginnie Mae’s accounting policy allows the use of fair 

76
value measurements from a variety of sources that are within six months of the reporting period 

end date. 

Mortgage Loans Held for Investment: Ginnie Mae reports the carrying value of HFI loans on the 

Balance Sheet at the UPB along with accrued interest, net of cost basis adjustments, and net of

allowance for loan losses including accrued interest, as required by U.S. GAAP. Ginnie Mae 

periodically evaluates its MHI portfolio for uninsured loans that are at or greater than 180 DPD in

order to write down the recorded investment to the fair market value of the underlying collateral 

less estimated costs to sell. 

The following table presents the fair value measurement hierarchy level for Ginnie Mae’s assets 

and liabilities that are measured at fair value on a nonrecurring basis at September 30, 2020:

September 30, 2020 

Level 1 Level 2 Level 3 Total 

$ $ 03 03 

(Dollars in thousands)

Acquired property, net $ - $ - $ 4,603 $ 4,603

 - ,252 4,252 

$ $ 

Mortgage Loans Held for Investment, net - - 14,252 14,252

Total Nonrecurring Assets at Fair Value $ - $ - $ 18,855 $ 18,855

For both acquired properties and conventional MHI loans at or greater than 180 DPD Ginnie Mae 

applies a valuation waterfall methodology in estimating the fair value of those properties. The most

commonly used techniques by valuation sources used in the waterfall include discounted cash flow 

analysis and listing and sales price analysis of similar properties. Inputs to the valuation 

methodologies include discount rates, recent historical data of the value of similar properties by a 

certified or licensed appraiser, recent pending sales information of similar properties, current 

listing of similar properties, estate brokers’ specific market research of similar properties, and 

historical data of the value of similar properties. Ginnie Mae also leverages historical information

to calculate the flat estimated costs to sell percentage for its acquired properties when applying the

estimated costs to sell to the fair value. The related ranges and weighted averages for these inputs 

are not meaningful when aggregated as they vary significantly from property to property. 

77
Note 14: Fixed Assets, Net 

Fixed assets are carried at cost, less accumulated depreciation and amortization. 

The table below presents the total balance of hardware and software as of September 30, 2020, net

of the accumulated depreciation and amortization: 

For the year ended 

September 30, 2020 

Hardware Software Total 

Cost (Dollars in thousands)

Beginning balance $2,013 $ 239,814 $ 241,827

Additions 61 10,100 10,162

Disposals

Impairments - (1,743) (1,743)

Ending balance $ 2,074 1 5 $ 248,171 $ 250,245

 

Accumulated depreciation and amortization

Beginning balance – accumulated depreciation and amortization $ ) ) ) (1,190) $ (159,650) $ (160,840)

Depreciation and amortization (258) (22,385) (22,643)

Disposals - - - 

Transfers - - - 

Ending balance – accumulated depreciation and amortization$ (1,448) ) ) $ (182,035) $ (183,483)

Ending balance – fixed assets, net $ 626 $ 66,136 $ 66,762 

There were no assets under capital lease as of September 30, 2020. 

Ginnie Mae recorded total depreciation and amortization expense of $22.6 million for the year

ended September 30, 2020. Based on the current amount of hardware and software subject to 

depreciation and amortization, the estimated depreciation and amortization expense over the next

five years is as follows: 2021 – $20.7 million; 2022 – $14.1 million; 2023 – $10.7 million; 2024 – 

$6.0 million; and 2025 - $2.2 million.

There were no intangible assets with indefinite lives as of September 30, 2020. The original 

weighted average life of intangible assets (i.e., software) subject to amortization was 4.8 years. The 

remaining weighted average life of intangible assets subject to amortization was 1.5 years 

Ginnie Mae recorded impairments of $1.7 million for the year ended September 30, 2020. During 

the year, Ginnie Mae stopped the development of two software assets due to changes in Ginnie 

Mae’s architecture. As the developed technology has no reuse or recoverable value, Ginnie Mae 

wrote the assets down to a fair value of $0. The $1.7 million impairment is included in the Gain

(loss) other line item in the Statement of Revenues and Expenses and Changes in Investment of 

U.S. Government. 

78
Note 15: Short-Term Liabilities and Deferred Revenue 

Short-term liabilities include accounts payable and accrued liabilities, which consisted of the 

following at September 30, 2020: 

September 30, 2020 

(Dollars in thousands)

Accounts payable $ ,94545

Unclaimed securities holder payments 23,492 

Accrued unfunded leave 2,478 

Salaries and benefits payable 1,528 

Total $ ,44373

Accounts payable and accrued liabilities balance is carried at cost, which approximates its fair 

value at the respective balance sheet dates.

Deferred revenue(1) included the following at September 30, 2020: 

September 30, 2020 

(Dollars in thousands)

Deferred revenue – multiclass fees $ 480,321 

Deferred revenue – commitment fees(2) 46,953 

Deferred revenue – other 103 

Total $ 527,377 

 

(1) Deferred revenue balance was $456.2 million for multiclass fees, $23.2 million for the commitment fees, and $61 thousand

for other as of September 30, 2019. 

(2) Represents payments received in advance of completion of Ginnie Mae’s performance obligation. Refer to Note 2:

Summary of Significant Accounting Policies and Practices for further details.

Note 16: Revenue from contracts with customers 

Revenue from contracts with customers includes commitment fees, MX combination fees, and

other fees included in Mortgage-backed securities program and other income on the Statement of 

Revenue and Expenses and Changes in Investment of U.S. Government. Refer to Note 2: Summary 

of Significant Accounting Policies and Practices for further information. 

79
The following table presents revenue related to contracts with customers for the year ended 

September 30, 2020, disaggregated by type of revenue. 

September 30, 2020 

(Dollars in thousands)

Revenues:

 

 Comm fees Co itment fees $ 152,062 

 Multiclass fees: lticlass fees:

 Multiclass fees not in scope of ASC 606 7,378 (1) 27,378

 M X combination fees 4,536 

 Total multiclass fees 31,914 

 Mortgage-backed securities (MBS) program and other income: 

 Tra nsfer of issuer responsibilities responsibilities 3,996 

 Other MBS program fees in scope of ASC 606 15 (2) 115

 Other MBS program fees not in scope of ASC 606 02 (3) 902

 Total mortgage-backed securities program and other income 5,013 

 Total ues Tota Revenues $ 188,989 

(1) Includes REMIC and Platinum Certificates guarantee fees. 

(2) Includes new issuer applications fees, certificate handling fees, and acknowledgement agreement fees. 

(3) Primarily includes mortgage servicing fees and civil monetary penalty fees. 

Note 17: Reserve for Loss 

As Ginnie Mae guarantees the MBS certificate holders timely payment of P&I on MBS backed by 

federally insured or guaranteed loans (mainly loans insured by FHA or guaranteed by VA, RD, 

and PIH), Ginnie Mae is susceptible to credit losses. Due to the various U.S. GAAP requirements

related to accounting for credit losses, Ginnie Mae’s financial statements recognize credit losses

in multiple financial statement line items, as further outlined below: 

• Non-defaulted issuer and guaranty liability: The issuance of a guaranty under the MBS 

program obligates Ginnie Mae to stand ready to perform under the terms of the guaranty.

As a result, a non-contingent and/or contingent liability may be recognized as discussed 

below: 

• Non-contingent liability 

Upon issuance of a guaranty, Ginnie Mae determines a non-contingent liability based

on the present value of guaranty fees expected to be collected under the guaranty, 

within the financial statement line item “Guaranty liability” on the Balance Sheet (see 

Note 5: Financial Guarantees and Financial Instruments with Off-Balance Sheet 

Exposure). Upon issuance of a guaranty, the greater of the non-contingent guarantee

liability under ASC 460 or contingent liability under ASC 450 is recognized. Typically, 

80
the non-contingent liability amount exceeds contingent liability and, thus, is recorded 

at inception of a guaranty. 

• Contingent liability

As noted in Note 5: Financial Guarantees and Financial Instruments with Off-Balance

Sheet Exposure, Ginnie Mae receives compensation in exchange for its guaranty of

timely P&I payments to the MBS certificate holders in the event of an issuer default.

Ginnie Mae records a contingent liability when it is probable that a loss event will occur

and the amount of the loss or a range of loss can be reasonably estimated. The

contingent liability is measured initially and in subsequent periods under ASC 450.

Once it is determined that a loss event is probable to occur, Ginnie Mae estimates the

probable losses in the underlying loan portfolio to calculate the loss contingency, which

is recorded on the Balance Sheet as “Liability for loss on MBS program guaranty”.

Where it is only reasonably possible that a loss event may occur, a contingent liability

is not recorded, but is disclosed.

• Determining a contingent liability requires considerable management judgment

including the evaluation of the likelihood that future events will confirm the loss. When

assessing whether it is probable that a loss event will occur, management takes into

consideration various factors including the issuer’s financial and operational

vulnerability, a qualitative and quantitative corporate credit analysis, other evidence of

potential default (e.g., known regulatory investigations or actions), interest rates, and

general economic conditions.

• The loss event for estimating a contingent liability depends on the type of underlying

loans in the issuer’s portfolio. A contingent liability for Single Family and HECM loans

is triggered when the issuer is probable of defaulting. A contingent liability for

multifamily loans may be triggered when either the issuer is probable of defaulting or

the borrower is probable of defaulting.

• At September 30, 2020, no Ginnie Mae issuer was considered probable of defaulting.

In addition, Ginnie Mae estimated potential losses up to $285.5 million, related

to reasonably possible losses on pooled Single Family and HECM loans in the event 

of issuer defaults.

• At September 30, 2020, the contingent liability related to pooled Multifamily loans

probable of defaulting was $43.4 million. Ginnie Mae cannot determine an estimate for

reasonably possible contingent liability for multifamily loan defaults as of September

30, 2020, because there is not a specific loan performance indicator that can be used to

accurately reflect the reasonably default likelihood for those loans that are not

considered probable of default.

• Defaulted issuer, pooled loans, and allowance for P&I advances: In the event an issuer

cannot fulfill its responsibilities under the applicable MBS program, pass-through

81
payments made by Ginnie Mae to satisfy its guaranty of timely P&I payments to MBS 

certificate holders are presented in “Advances, net” on the Balance Sheet and Note 9: 

Advances, Net. Advances are reported net of an allowance, which is based on 

management’s expectations of future collections of advanced funds from the mortgagors, 

proceeds from the sale of the property, or recoveries from third-party insurers or guarantors 

such as FHA, VA, RD, and PIH. Additionally, under the PTAP program, Ginnie Mae may

advance P&I payments to issuers facing temporary liquidity shortfalls directly attributable

to the COVID-19 National Emergency (see “Pass-Through Assistance Program

Receivables Including Accrued Interest, Net” financial statement line item on the Balance

Sheet and Note 6: Pass-Through Assistance Program Receivables Including Accrued

Interest, Net). Costs incurred on advances related to PTAP are expected to be reimbursed

and are reported net of an allowance for amounts that management believes will not be 

collected.

• Defaulted issuer, pooled loans, and mortgage servicing rights: When a Ginnie Mae issuer 

is declared in default, terminated and extinguished, Ginnie Mae steps into the role of issuer

and assumes all rights and obligations of the terminated and extinguished issuer’s entire 

Ginnie Mae guaranteed pooled-loan portfolio. Ginnie Mae records a servicing asset (or 

liability) each time it takes over a terminated and extinguished issuer’s Ginnie Mae 

guaranteed portfolio (see “Mortgage servicing rights” financial statement line item on the

Balance Sheet and Note 7: Mortgage Servicing Rights). Ginnie Mae’s servicing asset (or 

liability) is recorded at fair value based on the present value of the expected future net cash

flows from servicing, which are expected to be greater (or less) than adequate

compensation for performing the servicing related to these loans. The determination of 

adequate compensation is a market notion and is made independent of Ginnie Mae’s cost 

of servicing. Accordingly, Ginnie Mae’s determination of adequate compensation is based 

on compensation demanded in the marketplace. Ginnie Mae’s cash flow model

incorporates a number of factors (see Mortgage Servicing Rights section in Note 2: 

Summary of Significant Accounting Policies and Practices, for further information)

including delinquencies and expectation of credit losses that management believes are 

consistent with the assumptions other similar market participants use in valuing the MSR. 

Thus, estimated credit losses for terminated and extinguished issuers’ pooled loans are

incorporated within the servicing asset (or liability). 

• Defaulted issuer, non-pooled mortgage loans, and allowance for loan loss: As Ginnie Mae 

purchases forward mortgage loans out of a pool, it recognizes the loans on its Balance 

Sheet along with the corresponding estimated incurred loss (i.e., allowance for loan losses) 

within the Balance Sheet as “Mortgage loans held for investment including accrued 

interest, net”. Costs incurred on non-pooled loans expected to be reimbursed are recorded 

as Reimbursable costs receivable and reported net of allowance within the Balance Sheet

as “Reimbursable costs receivable, net” for amounts that management believes will not be

collected.

82
• Liability for representations and warranties: Ginnie Mae performs an assessment of all 

existing representations and warranties and indemnification clauses associated with 

Purchase and Sale Agreements (PSAs) that are enforceable and legally binding. These

clauses may require Ginnie Mae to repurchase loans previously sold to a third party or

indemnify the purchaser for losses per the contractual terms of the PSA. On September 30, 

2020, Ginnie Mae recorded $67.7 thousand as a contingent liability for representations and 

warranties under an existing PSA that requires Ginnie Mae to repurchase mortgage loans

that are not insured by the FHA or guaranteed by the VA, RD, or PIH as identified by the 

purchaser as of or after the sale date. This amount is presented in “Liability for

representations and warranties” on the Balance Sheet. 

Note 18: Concentration of Credit Risk 

Issuer concentration

Credit risk is the risk of loss arising from the failure or inability of issuers to meet their obligations. 

Concentrations of credit risk exist when a significant number of issuers are susceptible to similar 

changes in economic conditions that could affect their ability to meet contractual obligations. 

Generally, Ginnie Mae’s MBS pools are diversified among issuers. All Issuers operate within the

U.S. and its territories; however, there are no significant geographic concentrations. To a limited

extent, securities are concentrated among issuers. 

The table below summarize concentrations of credit risk by active issuers and loan type at 

September 30, 2020:

September 30, 2020

Single Family Multifamily

Manufactured 

Housing

Home Equity Conversion 

(HECM/HMBS) 

Number 

of Issuers 

Unpaid 

Principal 

Balance 

Number 

of 

Issuers 

Unpaid 

Principal 

Balance 

Number 

of Issuers 

Unpaid 

Principal 

Balance 

Number 

of Issuers 

Unpaid 

Principal 

Balance 

(Dollars in billions)

Largest performing 

Issuers 27 $ 1,548.1 6 $ 61.4 - $ - 1 $ 11.6 

Other performing 

Issuers 280 $ 390.2 47 $ 66.6 3 $ 0.2 13 $ 43.7

Largest performing issuers are defined based on the total portfolio size and, for single family 

issuers, includes issuers with greater than 75,000 total loans in the portfolio. For multifamily 

issuers, largest performing issuers are defined as issuers with a total UPB of $5 billion or more. 

Other performing issuers include manufactured housing and HMBS issuers whose portfolios are

outside the defined thresholds for single family and multifamily issuers. 

Issuers are only permitted to pool insured or guaranteed loans (from FHA, VA, RD, or PIH). The

insuring or guaranteeing agencies have strict underwriting standards and criteria for quality of 

collateral. Mortgage loans insured by the FHA receive full recovery of the UPB, including all 

delinquent interest accrued at the HUD debenture rate since default with the exception of the first 

83
two months. RD, VA, and PIH guaranteed loans are not fully recoverable. The loan balance and

related allowance for loan loss balance broken down by portfolio segment and underlying insuring 

or guaranteeing agencies at September 30, 2020 are presented in Note 10: Mortgage Loans Held 

for Investment Including Accrued Interest, Net. 

In the event of an issuer default, termination and extinguishment, Ginnie Mae assumes the rights 

and obligations of that issuer and becomes the owner of the MSR liability or asset, which typically

is salable. Ginnie Mae has the option or requirement to purchase loans out of the pool if certain 

criteria are satisfied. Upon purchase of the loan out of the pool, Ginnie Mae acquires all lender

rights, privileges, and responsibilities. This includes certain collateral rights and ability to claim

FHA, VA, RD, or PIH insured or guaranteed loan loss recoveries.

Ginnie Mae’s portfolio of issuers include both traditional banks (depositories) and independent 

mortgage institutions (non-depositories, or non-banks). As of September 30, 2020, the distribution 

of Ginnie Mae’s business volumes among these two categories was as follows: 

September 30, 2020

   Total Number 

of Issuers 

Total Issuances(1) As Percentage of 

Total Issuance 

Unpaid Principal 

Balance 

As Percentage of 

Unpaid Principal 

Balance 

(Dollars in millions) (Dollars in millions) 

Depositories 99$ 100,534 13.35% $ 531,106 25.03%

Total 377 $ 752,820 $ 2,121,876 

Non-depositories 278 652,286 86.65% 1,590,770 74.97%

Total 377 $ 75 100.00% $ 2,12 100.00%

(1) These amounts represent the total issuances within the past 12 months from October 1, 2019 to September 30, 2020. 

As more non-banks issue Ginnie Mae’s securities, the cost and complexity of monitoring increases 

as the majority of these institutions involve more third parties in their transactions, making 

oversight more complicated. In contrast to traditional bank issuers, non-banks rely more on credit 

lines, securitization transactions and other types of external financing, and sales of MSR to provide 

liquidity. Regardless, Ginnie Mae’s issuer composition greatly reduces the risk of exposure to the 

failure of any one institution. 

In March 2020, The President of the United States proclaimed that the COVID-19 outbreak in the 

United States constitutes a national emergency. Liquidity challenges arose as market conditions

changed and borrowers affected by COVID-19 were offered widespread forbearance, including 

forbearance on loans purchased and securitized by Ginnie Mae. As Ginnie Mae issuers must 

continue to advance mortgage principal and interest payments for Ginnie Mae loans during the 

forbearance period, liquidity pressures on certain of our counterparties could increase. In response 

to these potential liquidity concerns, we have heightened our monitoring and review of the 

financial stability of our institutional counterparties. Refer to Note 6: Pass-Through Assistance 

Program Including Accrued Interest, Net for more information on Ginnie Mae’s PTAP program. 

In August and September 2020, natural disasters, including hurricanes and wildfires, impacted 

certain Ginnie Mae and other issuers’ properties in locales identified as disaster areas by Federal

84
Emergency Management Agency (FEMA). Loans impacted by the disasters presented below 

represent the potential maximum exposure to Ginnie Mae, which is not representative of specific 

FEMA disaster declared zones within the states and territories. Ginnie Mae is gathering specific

impact information within disaster declared zones for actual exposure. 

The tables below disclose Ginnie Mae’s exposure to natural disasters as of September 30, 2020, 

not the actual damage.

September 30, 2020 

Total Number 

of Pooled 

Loans 

% of Total Pooled 

Loans 

UPB 

% of Total UPB (in millions)

Hurricane Laura Hurricane Laura 56,667 56,66 0.50% $ 8,076 $ 0.38%

Hurricane Sally 

 

 

Hurricane Isaias 498 

Iowa Storms 

ns $ 70,167 

Hurricane Sally 107,843 0.94% 18,720 0.89%

CA Wildfire 20 58,766 0.52% 20,684 0.98%

OR Wildfire 20 70,566 0.61% 15,969 0.75%

Hurricane Isaias 5,523 0.05% 498 0.02%

Iowa Storms 43,978 0.39% 6,220 0.29%

Total Exposure of Affected Loans 343,343 3.01% $ 7 3.31%

 

al Outstanding 

Unaffected Loans 11,060,099 96.99% 2,051,709 96.69%

Ginnie Mae Total Outstanding 11,403,442 100.00% $ 2,121,876 100.00%

September 30, 2020 

Total Number 

of Non-Pooled 

Loans 

% of Total NonPooled Loans 

UPB 

% of Total UPB (in millions)

Hurricane Laura Hurricane Laura 167 0.90% $ 15 $ 0.67%

Hurricane Sally 190 19 

25 6 

82 13 

- - - - 

Iowa Storms 35 3 

 499 $ 56 

Hurricane Sally 190 1.02% 19 0.85%

CA Wildfire 20 25 0.13% 6 0.27%

OR Wildfire 20 82 0.44% 13 0.58%

Hurricane Isaias - - - -

Iowa Storms 35 0.19% 3 0.13%

Total Exposure of Affected Loans 499 2.68% $ 2.50%

 

 242 

Unaffected Loans 18,116 97.32% 2,186 97.50%

Ginnie Mae Total Outstanding 18,615 100.00% $ 2,242 100.00%

As of date of issuing these financial statements, actual and estimated potential losses to Ginnie

Mae resulting from the natural disasters are still being assessed. 

Counterparty credit risk

Counterparty credit risk is the risk that issuers will be unable to fulfill their contractual passthrough

obligations to investors. As Ginnie Mae guarantees investors the timely payment of P&I on MBS

85
backed by federally insured or guaranteed residential loans, the entity’s primary risk is that issuers 

will fail to perform their obligations under the guaranty agreement (i.e., make payment to investors 

on time), either due to a lack of financial resources or operational inability. Ginnie Mae manages 

its exposure to counterparty credit risk through financial monitoring, risk modeling at issuer level, 

credit reviews, and operational monitoring. Financial monitoring includes exposure limit analysis 

and analysis of projected losses against core capital reserves. Risk modeling at entity level is

performed through Ginnie Mae’s focus on the riskiest segment of issuer base and regular 

monitoring of issuers on a watch list. Credit reviews are performed and considered in determining, 

for example, respective issuer’s commitment authority limits, whether issuers can transfer pools 

to other approved issuers without impacting issuers credit profiles of issuers involved, etc. 

Operational monitoring encompasses compliance reviews, assessments of delinquency levels and 

trending, due diligence reviews before, during, or after transfer of servicing. 

Mortgage loan servicing 

Ginnie Mae relies on two MSS (i.e., service organizations) to provide servicing functions that are 

critical to its business. The size of Ginnie Mae’s pooled and non-pooled portfolio is almost evenly 

split between both organizations. Significant reliance is placed on the servicing data and

accounting reports provided by the service organizations. Ginnie Mae could be adversely impacted

if the MSS’ lack appropriate controls, experience a failure in their controls, or experience a

disruption in service including legal or regulatory action. Ginnie Mae manages this risk by 

establishing contractual requirements, ongoing reviews of the service organizations, and requiring 

the service organizations to provide attestation reports over internal controls. 

Note 19: Commitments and Contingencies 

Lease, purchase, and other commitments 

Ginnie Mae may lease facilities, hardware, and software under agreements that could require the 

agency to pay rental fees, insurance, maintenance, and other costs. As of September 30, 2020, 

Ginnie Mae did not have any active and open lease contracts related to rental expense or hardware 

and software. 

As of September 30, 2020, Ginnie Mae had approved and committed to make $2.1 billion in 

payments under contracts with its various vendors for fiscal year 2020 and beyond. Some contract 

terms with its vendors are in excess of one year. 

Ginnie Mae has commitments to guarantee MBS, which are off-balance sheet financial

instruments. Additional information is provided in Note 5: Financial Guarantees and Financial 

Instruments with Off-Balance Sheet Exposure. 

86
Legal

From time to time, Ginnie Mae can be a party to pending or threatened legal actions and 

proceedings which arise in the ordinary course of business. Ginnie Mae reviews relevant 

information about all pending legal actions and proceedings for the purpose of evaluating and

revising contingencies, accruals, and disclosures. 

Legal actions and proceedings resolution are subject to many uncertainties and cannot be predicted 

with absolute accuracy. Ginnie Mae establishes accruals for matters when a loss is probable and 

the amount of the loss can be reasonably estimated. For legal actions or proceedings where it is

not reasonably possible that a loss may be incurred, or where Ginnie Mae is not currently able to

estimate the reasonably possible loss or range of loss, Ginnie Mae does not establish an accrual. 

Pending or threatened litigation deemed reasonably possible that a loss may have been incurred

are disclosed in the notes to the financial statements. 

The table below shows the approximate number of plaintiffs and claimants who had claims 

pending against Ginnie Mae at the beginning of the fiscal year, the number of claims disposed of

during the period, the period’s filings and the claims pending at the end of the year ending 

September 30, 2020 (eliminating duplicate filings). 

September 30, 

2020 

Pending at beginning of year 1 

Case Count

Pending at beginning of year 1

) 

0 

 2020 0 

Disposed (1)

Filed 0

Pending at September 30, 2020 0

The status of cases against Ginnie Mae as of September 30, 2020, are described below. 

Claim for wrongful dismissal from Ginnie Mae program (First Mortgage Corp. versus

Government National Mortgage Association, Civil Action No. 5:2017-cv-01225 JGB) (C.D. Cal.):

First Mortgage Corp., a former Ginnie Mae issuer, filed a claim against Ginnie Mae alleging

wrongful dismissal from the Ginnie Mae’s programs afforded to issuers. Prior to the termination 

of the issuer by Ginnie Mae, Ginnie Mae asserted that all standard procedures, including violation 

notification to the former issuer, were appropriately followed. The case against Ginnie Mae was 

dismissed on January 4, 2018. First Mortgage Corp., however, refiled the case in a new court, 

Court of Federal Claims, on 7/16/2018. (First Mortgage Corp. versus Government National 

Mortgage Association, Fed. Cl. No. 18-288C). The complainant sought $148.0 million from 

Ginnie Mae. The refiled case was dismissed on February 22, 2019. On June 24, 2019, First 

Mortgage filed its Opening Brief in support of its appeal and the government responded. (First 

Mortgage v. United States, 2019-1798, Fed. Cir. 2019). On June 12, 2020, the Court of Appeals 

for the Federal Circuit issued a decision and judgment affirming the trial court’s dismissal of the

lawsuit against Ginnie Mae. 

87
No other asserted or unasserted claims or assessments in which Ginnie Mae’s exposure is $5

million or greater, individually or in the aggregate, for similar matters have been identified.

Additionally, Ginnie Mae’s General Counsel has determined that there are no pending or 

threatened actions or unasserted claims or assessments in which Ginnie Mae’s potential loss

exceeds $11 million in the aggregate for cases not listed individually or as part of similar cases 

that could be material to the financial statements.

Ginnie Mae’s management recognizes the uncertainties that could occur in regard to potential

terminated and extinguished issuers and other indirect guarantees, such as large issuer portfolio

default, terminated and extinguished, lack of proper insurance coverage of terminated and 

extinguished loans, etc. Additional information is discussed in Note 17: Reserve for Loss. 

Contingencies

In December 2019, a novel strain of coronavirus was reported in Wuhan, China. The World Health 

Organization has declared the outbreak to constitute a “Public Health Emergency of International 

Concern.” The President of the United States proclaimed that the COVID-19 outbreak in the 

United States constitutes a national emergency as of March 1, 2020. In order to address the impact 

to the financial well-being of American individuals, families, and businesses caused by COVID19, on March 18, HUD Secretary Ben Carson, in consultation with the Trump Administration and 

the Coronavirus Task Force, authorized the FHA to implement an immediate foreclosure and 

eviction moratorium for single family homeowners with FHA-insured mortgages, including

HECM loans, for the subsequent 60 days. The moratorium has since been extended to at least 

December 31, 2020. 

While the disruption caused by COVID-19 is currently expected to be temporary, there is 

considerable uncertainty around the impact to issuer stability, and potential mitigating actions

contemplated by the U.S. government, including HUD and Ginnie Mae. Therefore, Ginnie Mae

expects this matter to negatively impact its operating results. However, the related financial impact 

and duration cannot be reasonably estimated at this time. 

Note 20: Related Parties 

Ginnie Mae, a wholly owned U.S. Government corporation within HUD, is subject to controls

established by government corporation control laws (31 U.S.C. Chapter 91) and management

controls by the Secretary of HUD and the Director of the OMB. These controls could affect Ginnie 

Mae’s financial position or operating results in a manner that differs from those that might have 

been obtained if Ginnie Mae were autonomous. Accordingly, the accompanying financial 

statements may not necessarily be indicative of the conditions that would have existed if Ginnie 

Mae had been operating as an independent organization. 

Ginnie Mae was authorized to use $45.7 million during the year ended September 30, 2020 for

personnel (payroll) and non-personnel (travel, training, and other administration) costs only. For

the year ended September 30, 2020, Ginnie Mae incurred $30.5 million for these costs, which are 

88
included in administrative expenses on the Statement of Revenue and Expenses and Changes in 

Investment of U.S. Government. Ginnie Mae has authority to borrow from Treasury to finance 

operations in lieu of appropriations, if necessary. Ginnie Mae did not borrow funds for the year

ended September 30, 2020. 

Additionally, Ginnie Mae has relationships with FHA, VA and RD. All transactions between

Ginnie Mae and FHA, VA and RD have occurred in the normal course of business. Of the total 

mortgage loans HFI, approximately $2.0 billion, $87.1 million and $37.6 million of loans were 

insured by FHA, VA and RD at September 30, 2020, respectively. In addition, Ginnie Mae submits 

and receives claim proceeds for FHA, VA and RD-insured loans that have completed the 

foreclosure and short sale process. 

After the Short Sale and Foreclosed Property Claims Receivable are established, on an ongoing 

basis, the recoverability of the receivables is assessed under GAAP guidance. The allowance for 

claims receivable is calculated using statistical models based on expected recovery per underlying 

insuring agency guidelines and Ginnie Mae’s most recent historical recovery experience. 

The breakdown of FHA, VA and RD claims pending payment or pre-submission to FHA, VA and

RD is below: 

September 30, 2020 

FHA VA RD Total 

(Dollars in thousands)

Foreclosed property claims receivable 88,300 1,153 2,126 $ 88,300 $ 1,153 $ 2,126 $ 91,579 

Short sale claims receivable 920 236 182 1,338

Allowance for claims receivable s receivable (20,278) (20,278) (609) (114) (21,001)

Claims receivable, net vable, net $ 68,942 780 2,194 71,916 $ 780 $ 2,194 $ 71,916

Pension Benefits and Savings Plan: Eligible Ginnie Mae employees are covered by the federal

government retirement plans, either the Civil Service Retirement System (CSRS) or the Federal

Employees Retirement System (FERS). Although Ginnie Mae contributes a portion of pension 

benefits for eligible employees, it does not account for the assets of either retirement system. 

Ginnie Mae also does not have actuarial data for accumulated plan benefits or the unfunded

liability relative to eligible employees. These amounts are reported by the Office of Personnel

Management (OPM) and are allocated to HUD.

Under the Federal Thrift Savings Plan (TSP), Ginnie Mae provides FERS employees with an

automatic contribution of 1% of pay and an additional matching contribution up to 4% of pay. 

CSRS employees also can contribute to the TSP, but they do not receive matching contributions. 

For the year ended September 30, 2020, Ginnie Mae contributed $3.9 million in pension and

savings benefits for eligible employees. 

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Post-Retirement Benefits Other Than Pensions: Ginnie Mae has no postretirement health

insurance liability since all eligible employees are covered by the Federal Employees Health

Benefits (FEHB) program. The FEHB is administered and accounted for by the OPM. In addition, 

OPM pays the employer share of the retiree’s health insurance premium. 

Note 21: Credit Reform 

The Federal Credit Reform Act of 1990, which became effective on October 1, 1991, was enacted 

to more accurately account and budget for the cost of federal credit programs, and to place the cost

of these credit programs on a basis equivalent with other federal spending. Credit reform focuses

on credit programs that operate at a loss by providing for appropriated funding, within budgetary 

limitations, to subsidize the loss element of the credit program. At September 30, 2020, the 

Investment of U.S. Government account has a balance of $26.1 billion. Federal statute allows 

Ginnie Mae to accumulate and retain revenues in excess of expenses to build sound reserves. In 

the opinion of management and HUD’s general counsel, Ginnie Mae is not subject to the Federal

Credit Reform Act. 

Note 22: Subsequent Events 

Ginnie Mae has evaluated subsequent events through the filing of this annual financial statements 

as of November 16, 2020 and determined that there have been no events that have occurred that 

would require adjustments to our disclosures. 

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