Ginnie Mae Ignored Warnings and Threw Away Taxpayer Money

Saturday, December 12, 2009

More than three dozen mortgage companies with shady histories of lending were given the stamp of approval by Ginnie Mae (aka the Government National Mortgage Association), which played a significant role in the housing crisis by helping banks package risky home loans into securities. Those investments eventually devolved into billion-dollar toxic assets that helped bring Wall Street to its knees and forced the federal government to bail out teetering institutions.

 
An investigation by the Center for Public Integrity found Ginnie Mae did business with 37 lenders that had gotten into trouble with either federal or state regulators or been sued over reckless business practices. Lend America was one such example. Ginnie Mae backed the firm even after a top executive was convicted of mortgage fraud, its loans defaulted at an extremely high rate, and federal prosecutors took Lend America to court for falsifying loan documents and committing fraud.
 
Currently there are eight lenders whose default ratio is so high that Ginnie Mae has already or should consider suspending them. Leading the list is Pine State Mortgage Corporation of Atlanta.
-Noel Brinkerhoff
 
Ginnie Mae’s Troubling Endorsements (Center for Public Integrity)
Ginnie Mae's Troubled Issuers (Center for Public Integrity)

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