Here’s another vampire squid worthy of public ire.
The Government National Mortgage Association (Ginnie Mae) has rapidly grown into a mortgage giant with some questionable mortgage lending partners.
While CEO pay and free markets receive all the heat for the housing crisis, a new report describes in detail how Ginnie Mae was, and is, at leading edge of housing crisis.
What Ginnie has become.
Washington Post: “Mortgage lenders often want to bundle the loans they’ve made into securities and sell them to investors. Ginnie Mae guarantees those securities….
In the past year, nearly one in five new mortgages — both good loans and bad — were put into securities guaranteed by Ginnie Mae.”
How rapidly its grown.
“Only a few years ago, Ginnie Mae was a bit player in the mortgage market, backing just 4 per cent of new mortgages. Then the housing market melted down, and many of the banks and other lenders that had made risky but highly popular loans got out of the business….
In the past two years, the total value of Ginnie Mae’s guarantees for principal and interest on home loans jumped 43 per cent, to $826 billion.”
Why it’s work is questionable.
“Lenders with spotty histories and poor financial health have sold nearly $100 billion in loans packaged into Ginnie Mae-guaranteed securities in the past two years, according to calculations based on data provided by Inside Mortgage Finance, a trade publication.”
How 60 people control so much power.
“Joe Murin, who recently left as head of Ginnie Mae to return to the private sector, acknowledged that the enormous growth of Ginnie Mae’s portfolio has increased the risk for the agency. He said the main problem is that the agency doesn’t have the staff needed to track the growing number of issuers. Despite the huge increase in issuance, Ginnie Mae’s staffing has hovered at just over 60 employees.”
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