Audit of the Government National Mortgage Association’s Financial Statements for Fiscal Year 2019

This report presents the results of our audit of Ginnie Mae’s fiscal year 2019 financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws, regulations, and contracts applicable to Ginnie Mae.In fiscal year 2019, we were unable to obtain sufficient, appropriate evidence to express an opinion on the fairness of Ginnie Mae’s financial statements. Specifically, our work noted significant modeling concerns affecting Ginnie Mae’s guaranty asset, guaranty liability, and allowance for loan losses, which prevented us from completing our audit work due to time constraints imposed by the statutory reporting deadlines. These issues concerned the appropriateness and reasonableness of the model methodologies, specifications, and model assumptions, which raised questions about the reliability of the significant accounting estimates produced by these models. Additionally, we were unable to audit the nonpooled loan assets due to (1) documentation challenges to support balances for claims receivable and reimbursable costs and (2) insufficient time to complete necessary audit procedures for mortgage loans held for investment and acquired properties. Given the significance of all of these limitations combined, it is our professional opinion that there may be risks that undetected misstatements that could be material may exist in these statements. Therefore, we deemed our audit scope to be insufficient to express an opinion on Ginnie Mae’s fiscal year 2019 financial statements as a whole. We have 18 new audit recommendations in this year’s report. Based on the results of our work, we identified two material weaknesses, one significant deficiency, and one reportable noncompliance with selected provisions of laws, regulations and contracts.