Recent Market Trends Pose Growing Risks To US Housing Finance System - Report

WASHINGTON (UrduPoint News / Sputnik - 19th January, 2019) Fannie Mae and Freddie Mac, the federally backed mortgage housing giants whose failure helped nearly destroy the US financial system in 2008, are increasingly at risk again, the Government Accountability Office (GAO) warned in a report on Friday.

"Recent market trends pose risks to these entities and the housing finance system," the report stated. "For example, mortgage lending standards have loosened slightly in recent years, which could increase the risk of borrower default - especially in a recession or downturn in the housing market."

Fannie Mae, the Federal National Mortgage Association and Freddie Mac, the Federal Home Loan Mortgage Corporation, are two US government-sponsored enterprises that guaranteed about 46 percent of mortgage originations in 2017, the GAO noted.

The share of non-bank originations of Federal Housing Administration (FHA)-insured mortgages increased from 56 percent in fiscal year 2010 to 86 percent in 2017, the GAO noted.

The share of non-bank servicers of mortgages in enterprise mortgage-backed securities (MBS) also grew from 25 percent in 2014 to 38 percent as of the third quarter of 2018, the report said.