62. Which government agency provides secondary market support by purchasing FHA and VA loans?
Answer: C
C: Ginnie Mae
Ginnie Mae provides secondary market support by purchasing FHA and VA loans, thereby ensuring liquidity in the housing finance market. This role helps to stabilize and promote affordable housing by facilitating the flow of capital to lenders.
A) Federal Reserve
The Federal Reserve primarily focuses on monetary policy and regulating the banking system rather than directly purchasing FHA and VA loans. Its main functions involve controlling inflation, managing employment levels, and stabilizing financial markets, making it an incorrect choice for this question.
B) Fannie Mae
While Fannie Mae plays a crucial role in the secondary mortgage market by purchasing conventional loans, it does not specifically support FHA and VA loans. Its operations are distinct from Ginnie Mae, which is dedicated to government-backed loans, thus making this option incorrect.
C) Ginnie Mae
Ginnie Mae is indeed the correct answer as it specifically provides secondary market support by purchasing FHA and VA loans. This agency guarantees the timely payment of principal and interest on these loans, thereby enhancing the ability of lenders to provide financing for homebuyers.
D) Farmer's Home Administration
The Farmer's Home Administration, now part of the USDA Rural Development, primarily focuses on providing loans and grants to farmers and rural residents rather than participating in the secondary market for FHA and VA loans. Thus, it does not fulfill the role described in the question.
Conclusion
Ginnie Mae is the definitive correct answer as it uniquely supports the secondary market for FHA and VA loans, ensuring liquidity and stability in the housing finance system. In contrast, the other options either do not engage in this specific market or focus on different areas of financial support, making them incorrect in this context.