GAO yesterday released a report worrying that non-bank servicers pose growing risk because of their patchwork of consumer and prudential regulatory requirements. GAO thus details an array of risks if fears from non-bank servicers but concludes that none would prove systemic not only because the servicers lack overall market clout, but also because Ginnie and the GSEs would bail them out. We do not expect near-term action by Congress to give FHFA the added authority GAO recommends, but we do think it will light still more of a fire under Ginnie Mae as it tries to construct a safety net under all the non-bank originators and servicers of FHA and VA loans.

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