Joseph J. Murin took the reins of the Government National Mortgage Association, better known as Ginnie Mae, at a critical point in the industry crisis.

For years the federal agency was an also-ran, dwarfed in volume and importance by Fannie Mae and Freddie Mac. But the subprime market's collapse has resulted in a government lending resurgence that has boosted Ginnie's profile. Issuance of mortgage-backed securities with Ginnie's stamp has nearly tripled in the year that ended in September, and the bonds now account for 30% of new offerings.

The renewed prominence has been accompanied by a return of old problems.

Ginnie guarantees the timely payment of principal and interest on $427.6 billion of outstanding securities. Since the underlying loans are already insured by other agencies, predominantly the Federal Housing Administration, investors do not have to worry about losing principal. But Ginnie has to make sure that when a borrower falls behind on payments, the servicer (typically the same company that issued the security) advances payments to bondholders until the loan is resolved.

The liquidity crisis has increased the risk that servicers will fail to do so, making the job of monitoring them a lot tougher for Ginnie, which has only 68 employees. Nearly a dozen of its large servicers have defaulted in the past two years. Meanwhile, the volume surge at the FHA — like Ginnie, it is taking on more business than it has in years — has fueled concern that more dodgy loans will be approved. Mortgage experts say lax underwriting would lead to more FHA borrower delinquencies, and hence the greater need for Ginnie servicers to make advances.

Mr. Murin said in an interview last month that he has been single-minded in his focus since becoming Ginnie's president July 1.

"Our biggest area of risk is issuer risk," he said. "We've put a number of checks and balances in place. We look at every venue for risk. This is part of the re-engineering of the risk environment here."

Servicer Defaults

This year four servicers have defaulted on $1 billion of Ginnie loan pools, including Fidelity Home Mortgage Corp., a Baltimore lender that stopped making advances. Ginnie seized its $26.7 million portfolio and began servicing the loans itself.

The agency pulled servicing rights from the three others, which defaulted on covenants: Lehman Brothers, which filed for bankruptcy protection in September; the investment bank's Littleton, Colo., servicing unit, Aurora Loan Services Inc.; and the mortgage unit of R&G Financial Corp., a San Juan, Puerto Rico, banking company that has been plagued by accounting problems. The rights were transferred to Ginnie's master subservicer, Countrywide Financial Corp., now part of Bank of America Corp.

One of the largest recent Ginnie servicer defaults was American Home Mortgage Investment Corp., the Melville, N.Y., real estate investment trust that filed for bankruptcy protection in August of last year. Even though the bankruptcy trustee continued to make advances to Ginnie investors, the agency worked through the U.S. Bankruptcy Court for Delaware in Wilmington to transfer $450 million of servicing rights from American Home to the $14.2 billion-asset MidFirst Bank in Oklahoma City.

IndyMac Bank, which failed this year, was a small issuer of Ginnie securities and is continuing to service loans now that the Federal Deposit Insurance Corp. is operating the thrift, Ginnie said.

The primary reason for servicer defaults is a lack of cash to pay investors, Mr. Murin said.

"We look at cash flow because with everybody struggling, balance sheet" and profit and loss statements "are not good indicators," he said. "Cash flow is a better indicator, and it gives us some insight, a sort of early warning."

One problem in the current market is that many of the Wall Street firms that provided warehouse lines and advance funding for servicers are no longer around, Mr. Murin said.

Servicers "are having trouble with advances," he said. "They're all suffering from the backlog, the bubble." At Ginnie, "we're constantly developing analytics to monitor issuers."

Deloitte & Touche LLP is the main contractor for Ginnie's analytical work on its mortgage-backed securities. Lockheed Martin Information Technology, the subcontractor, performs data collection and processing, software development, and risk analysis. It also provides loan servicing on the agency's defaulted manufactured housing portfolio, including billing, delinquency management, asset disposition, and financial accounting.

For more than 20 years Ginnie has contracted back-office functions. Bank of New York Mellon Corp. handles all pool processing, the creation and transfer of securities, and investor accounting, reporting, and reconciliation.

"Using third-party outsourcing venues gives us the flexibility we need, so if the volume scales back, we don't have fixed costs to absorb," Mr. Murin said. "You don't downsize the federal government, which is why you don't want to upsize."