Doge Cuts Threaten The Mortgage Market (Again)
Cuts to staff at Ginnie Mae, the tiny agency that helps lower mortgage loan rates by allowing banks to bundle mortgages into government-guaranteed bonds, is at risk due to Trump-Doge cuts.
Ginnie Mae was small in size, with only 270 employees, but it makes billions of dollars in profit every year from lender fees, meaning it does not rely on regular federal tax dollars to run. It carries huge responsibility for America’s mortgage market. Now, Ginnie Mae is struggling to operate without a president. And last weekend it lost 27% of its workforce.
- Senior risk and security roles are vacant
- Lenders say cuts endanger the mortgage market
- Underlying loan delinquencies are rising
The reduction triggered alarm in mortgage markets, and concern is growing about Ginnie’s ability to continue to manage its 2.7 trillion in mortgage-backed securities.
About Ginnie Mae
Ginnie Mae is a fully government-backed agency that primarily focuses on guaranteeing FHA and VA loans. The U.S. government explicitly guarantees its securities, in contrast to Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) which are privately-owned companies (in government conservatorship) with implicit government backing. Fannie and Freddie guarantee conventional, privately insured mortgage loans.
Ginnie Mae is part of the Department of Housing and Urban Development (HUD), which itself suffered huge cuts to budget and now staff by HUD Secretary Scott Turner, Trump and DOGE. The administration plans to cut HUD’s 9,600 workforce by around 50%, with some divisions targeted for even larger layoffs of 75% or more, NPR reports.
HUD, put simply, helps people who can’t afford the rising cost of housing. Some of its key functions:
- Provides rental assistance to low-income households
- Builds and preserve affordable rental housing
- Addresses and prevent homelessness
- Operates and maintains housing for millions of seniors, people with disabilities, and families with young children
- Reforms restrictive zoning and land use regulations that increase housing costs
- Investigates and enforce fair housing and civil rights laws
- Rebuild housing and infrastructure after major disasters.
As a result, homeless shelters will close their doors, construction will stop on new projects for housing and community centers, households receiving rental assistance will face immediate rent increases and evictions, and communities, families, and small businesses impacted by disasters will be unable to rebuild.
HUD was intended to help stabilize the overall market by influencing housing supply and supporting homeownership for a broad range of income levels.
