HUD signs agreement with South Korean housing finance agency to spur MBS investment

The U.S. Department of Housing and Urban Development (HUD) and Ginnie Mae on Friday signed a memorandum of understanding (MOU) with a South Korean housing finance authority, with the goal of increasing investment in U.S. agency mortgage-backed securities.

The agreement, signed with the Korea Housing Finance Corp. (KHFC), “underscores a shared commitment to expanding access to affordable housing, cultivating innovation, and supporting residential development,” according to HUD.

It establishes a framework for “identifying and removing barriers to public and private capital flows into housing finance systems, with an emphasis on long-term, stable investment.”

The MOU comes amid tariffs that President Donald Trump recently imposed on South Korean goods, including 25% on vehicles and 25% on steel and aluminum imports. South Korea is negotiating with the U.S. to seek exemptions or lower tariffs. 

“This partnership reflects HUD’s unwavering commitment to expanding strong, affordable housing opportunities for the American people,” HUD Secretary Scott Turner said in prepared remarks. 

“Working strategically with our South Korean allies, we are expanding the global understanding of American housing finance, while increasing capital flows in the United States, strengthening our domestic capital markets, and unlocking strategies to benefit American borrowers. This agreement signals that, under President Trump’s leadership, our allies are ready and willing to do business in America again.”

According to Ginnie Mae‘s May 2025 Global Markets Analysis Report, South Korea held about $35.46 billion in U.S. agency mortgage-backed securities (MBS) as of March 1, down slightly from the prior three quarters.

South Korea also owns roughly $122 billion in U.S. Treasury securities. It ranks eighth among all countries for holdings of agency bonds and 17th for Treasury securities.

This is the first time KHFC — which is owned by the Bank of Korea and the government — has signed this type of agreement with HUD, which administration officials call a signal that America is “again open for business.”

Joe Gormley — who is leading Ginnie Mae in the absence of a full-time, Senate-confirmed president — said last month that there remains a robust global market for Ginnie Mae securities. He said he has not seen any pullback from global investors despite the trade wars.

According to the company’s analysis, Japan, China and Taiwan owned roughly 48% of all foreign-owned agency debt as of December 2024.

But China in particular has been selling its agency holdings since 2023. China sold $51.5 billion in agency MBS between December 2023 and December 2024, and another $11.8 billion in the first quarter of 2025.

Canada and Ireland also shed about $10 billion in agency MBS in the first quarter, although Japan, Taiwan, Luxembourg and the British Virgin Islands helped make up for these losses.

Ginnie Mae is focused on looking at ways to introduce more private capital into its ecosystem. Importantly, the company is looking at moving from a monthly liquidation file to a daily file, Gormley said last month.