The association, known as Ginnie Mae, insures mortgages bundled into securities. Ginnie Mae provides cash that lenders put into more loans, in a sense working "like an accelerant to a fire," George Mason University professor Anthony Sanders told The Washington Post.
As the financial meltdown shut down some competitors, Ginnie Mae went from guaranteeing about 4 percent of all bundled loans to nearly 20 percent, jumping its liability by 43 percent.
It has also OK'ed 68 new firms and rejected 90 as approved lenders since 2007.
The Post, collaborating with the Center for Public Integrity, reported Thursday that 36 companies have less than pristine lending records, including Lend America, where an executive convicted of mortgage fraud continued to work at the company.
"We will leave no stone unturned to protect the integrity of our programs," Ginnie Mae Executive Vice President Mary Kinney said.
"Let me be clear that we will continue strengthening our controls until we can be satisfied that we're airtight."
Copyright 2009 by United Press International.
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