GNMA backed loan. That's a boon for the lenders

The Government National Mortgage Association (GNMA) is a government-owned agency (part of HUD) that

participates in the securitization of FHA and VA mortgages. Because the mortgage payments to investors are the

only ones guaranteed by the full faith and credit of the U.S. Government, they return slightly less interest than

other mortgage-backed securities (due to less risk). In addition to FHA & VA loans, Ginnie Mae provides

guarantees on MBS's backed by loans from the Rural Housing Service and Office of Public and Indian Housing. 

Under the "Is this a surprise?" category, the counsel to the director of the Office of Thrift Supervision announced

that, "Misstatements about employment and income are being made every day," and that "the brokers are just

putting down on paper what the underwriters would require. There are borrowers providing false information as

well." Loans that require little or no documentation of income soared to $276 billion, or 46 percent, of all

subprime mortgages last year from $30 billion in 2001, according to estimates from Credit Suisse. Homebuyers

with those loans defaulted at a 12.6% rate in February, compared with 1.5% of fully documented prime

mortgages.