What term describes the government agency that backs pools of FHA and VA loans?

The correct answer is Ginnie Mae, which stands for the Government National Mortgage Association (GNMA). This agency plays a critical role in the housing finance system by guaranteeing mortgage-backed securities that are made up of pools of loans insured by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA). This backing helps to ensure that investors receive timely payments and contributes to the stability of the housing market.

By securing these loans, Ginnie Mae enhances the liquidity of the mortgage market and makes affordable housing more accessible to borrowers, particularly those who may not qualify for conventional loans. This role is essential in fostering trust in the mortgage-backed securities, which, in turn, helps support homeownership and construction within the U.S. economy.