SAM AND HIS FAMILY ment securities named Maes and Macs ca me goety and relativel
ID: 2590512 • Letter: S
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SAM AND HIS FAMILY ment securities named Maes and Macs ca me goety and relatively high yields Mae-Government National Mortgage ,. Ginnieation (GNMA). Introduced the first mort (whose principal has been partially paid off) require an investment of as little as $10,000 AsOacked securities in 1970 and still dominates agke. The residential mortgage-backed 4. Sallie Mae-Student Loan Marketing Association, (SLM Corporation) Created to provide a national government-guaranteed student loans. Issues bonds, each backed by Sallie Mae as a whole rather than as specific pools of loans. Sallie Mae bonds are considered as safe as uries. Brokers sell bonds having minimum denom- inations of $10,000. You can also buy shares of by Congress in 1972 ties are packaged in pools and then resold as certificates ($25,000) or as shares total funds. Regular payments to investors investors e guar nnie Maes are backed by the full faith and anteed by the GNMA, an agency of the edit of the federal government. The average 2 n (FHLMC). Created by Congress in 1970 epartment of Housing and Urban Development Sallie Mae chartered but publicly owned, and its shares are traded on the New York Stock Exchange stock; the corporation is government life of mortgages is 12 years. Mac-Federal Home Loan Mortgage Cor- 5. Sonny Mae (SONYMA)-State of New York Mort agency issues mortgage-backed securities sim- to Ginnie Maes. The pools of fixed-rate home gage Agency. Issues bonds backed by fixed-rate single-family home mortgages and uses proceeds the to subsidize bel first-time home buyers. As with ordinary bonds, interest on Sonny Maes is paid only until the bonds mature. Sonny Maes are exempt from fed mortgages are made up of conventional hom loans rather than mortgages insured by the FHA or the VA. The timely payment of interest and the ultimate payment of principal are guaranteed 3. Fannie Mae-Federal National Mortgage Associa- tion (FNMA). Created in 1938, the agency issues mortgage-backed securities similar to Ginnie Ma and Freddie Macs. The pools of fixed-rate home mortgages are similar to Freddie Macs but not to Ginnie Maes. Like Ginnie Maes, Fannie Maes guar antee a fair share of interest and principal every month. Like Ginnie Maes and Freddie Macs, newly issued Fannie Mae certificates require a minimum eral income tax, and New York State residents do not pay state income tax on them 6. Nellie Mae-New England Education Loan Mar eting Corporation. A nonprofit corporation created by the Commonwealth of Massachusetts. Provides a secondary market for federally guar anteed student loans issued in Massachusetts and New Hampshire. It has been a wholly owned subsdiary of Sallie Mae since 1999. The AAA-rated Nellie Mae bonds mature in three years and are sold in minimum denominations of $5,000 investment of $25,000; the older certificatesExplanation / Answer
GNMA - Government National Mortgage Association - Mortgage backed security
This association offers a first mortgage backed securities in 1970.This is a collective security in pools and resold to investors as certificates or shares to investors by mutual funds.The average life time of mortgage backed security is 12 years.
Advantages
1. Regular payment are given to investors
2. Guarantee is given on regular payments by GNMA or agency and fully backed by Ginne Maes.
Therefore, Uncle sam and his family can select this type security as a investment avenue for getting regular payments.
Freddie Mac - Federal Homeloan Mortgage - Mortgage Backed Security
This is similar to the Mortgage Backed security issued by Ginne Maes.This is charted by congress to support homeownership and rental housing for middle income group of people.This is a collective investment of fixed rate home loans rather than the mortgage insured by ederal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA).The payment of interest at regular intervals and principal amount at the maturity period are guaranteed.
Therefore Uncle sam and his family can use this security for regular interest income with the guaranteed principal payment.
3. Federal Housing Administration (FHA) Federal National Mortgage Association
This security was issued in 1938. This security is similar to Ginne maes and Freddie Macs. This security is also collective investment where the pools have been collected similar to Freddie macs rather than Ginne Maes.The goals of this loan is to improve housing conditions by financing throught insurance mortgage loans. A fair sum of interest and principal amount are guarantteed by the association for the investment. Uncle sam and His family can make use of the investment and reap the benefits of the scheme.
4.Sally Mae: Students Loan Marketing Association
It is a Government guaranteed student loans which is backed by SLM corporation. It issues bond as a whole rather than the pools of loans.These bonds are considered as safe as treasury bills because of guarantee given by the government.The minimum investment that investors expect to invest in bond is 10000 dollars. Uncle sam can buy the shares from the company which government chartered and listed in New York Stock Exchange.
Uncle sam and his family can diversify the risk of investment by investing in bond from the publicly owned company that gives guarantee for interest payment and prinicipal amount.
5. Sony Mae (SONYMA) State of NewYork Mortgage agency
Sony Mae issues bond which is fully backed with home loan mortgages with the subsidised market rate for the first time home loan buyers. This is similar to redeemable bond where interest amount will be paid till the maturity period.
Advantages
The main advantage of investing in this bond is completely exempted from federal income tax and New York residents are not needed to pay state income tax as well.
Uncle Sam and His family can make use of this investment avenue for reaping the benefit of tax exemption.
6. Nelly mae: New England Education Loan Marketing Corporation
Commonwealth of massachusetts issues AAA rated bond which matures within three years with the minimum denomination of 5000 dollars. This bond is fully backed with the guranteed student loans in massachusetts and New hampshire. The Nelly mae is the wholly owned subsidiary of Sally Mae since 1999.
Before investing in bond, it is important to see the rating given by the rating agency. Since the rate of Nelly mae bond is highly rated as AAA, this is the safest investment option for Uncle sam and his family.
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