Who's Financing Bad Mortgages Now: Uncle Sam

When Fannie Mae, Freddie Mac and the Wall Street mortgage-backed securities machine all went the way of King Kong and Godzilla last year, that left just one home finance giant standing: the Government National Mortgage Association, or Ginnie Mae. Ginnie Mae bundles together mortgages into securities, and backs their sale to investors.

Ginnie Mae survived by sheer luck. It only guarantees mortgages insured by the Federal Housing Administration, and during the subprime craze FHA became irrelevant, backing barely 3 percent of all mortgages. But with subprime's demise, FHA lending has surged, insuring more than one-third of all new home loans. And suddenly Ginnie, an understaffed bureaucracy, has become an essential source of financing for home loans.

A new investigation from The Center for Public Integrity and Washington Post reveals the sorry result: Ginnie has funneled an estimated $100 billion to dozens of mortgage lenders with records of reckless and sometimes illegal business practices.