Alabama Real Estate Practice Exam

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Prepare for your Alabama Real Estate Exam with a comprehensive quiz comprised of flashcards and multiple choice questions, complete with hints and explanations.

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What is true about Ginnie Mae?

  1. Buys and sells mortgages

  2. Guarantees mortgage-backed securities

  3. Offers loans to individuals

  4. Operates exclusively in the primary market

The correct answer is: Guarantees mortgage-backed securities

Ginnie Mae, also known as the Government National Mortgage Association, guarantees payment of principal and interest on mortgage-backed securities issued by approved lenders. This means that if the borrower defaults on their mortgage, Ginnie Mae will cover the remaining balance to the investor. Option A is incorrect because Ginnie Mae does not buy or sell mortgages, it only guarantees them. Option C is incorrect because Ginnie Mae does not offer loans directly to individuals, it only guarantees the mortgage-backed securities that are issued by approved lenders. Option D is incorrect because Ginnie Mae operates in both the primary and secondary mortgage markets.

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