On February 10, GAO released a report highlighting that nonbank mortgage companies have become increasingly dominant in the origination and servicing of loans packaged into federally backed mortgage securities and now account for 66 percent of serviced loans by dollar volume in 2024, up from 27 percent in 2014. The agency warned that nonbanks’ reliance on short-term funding leaves them vulnerable to failure during economic downturns, which could disrupt mortgage lending and increase federal fiscal exposure. GAO noted that Ginnie Mae and the FHFA monitor nonbanks’ financial conditions but found the agencies do not fully assess their funding risks.

The report recommended that the FHFA develop procedures to assess the reliability of nonbank financial data used for monitoring and improve its evaluation of risks associated with short-term credit lines. It also urged Ginnie Mae to enhance its manual credit review process and expand its stress testing framework to consider a broader range of adverse economic scenarios. According to the report, both Ginnie Mae and the FHFA agreed with the recommendations and indicated that implementation efforts are underway.