OIG Recaps 6 Months of Success For Fannie and Freddie

The Office of Inspector Generalrn(OIG) of the Federal Housing Finance Agency (FHFA) hasrnreleased its sixth Semiannual Report to the Congress.  The report covers OIG’s activities from Aprilrn1 to September 20, 2013.  OIG summarized itsrnaudits which numbered 16 during the six month period, evaluations and otherrnreports relating to the nation’s housing finance system.  These included an evaluation the security ofrnof Freddie Mac and Fannie Mae’s (the GSE’s) technology systems, an assessmentrnof the Home Affordable Refinance Program, and FHFA’s efforts to graduallyrnincrease the GSEs’ guarantee fees.  OIGrnalso reported on investigations which resulted in the indictment of 75rnindividuals during the period, conviction of 55, and the recovery of more thanrn$104 million in criminal fines and restitution orders.</p

OIG also provided anrnoverview of FHFA and its relationship with the GSEs; a brief discussion of thernGSE’s business models, and a section titled “Lessons for Housing FinancernReform: Five Years after the Federal Government’s Takeover of Fannie Mae andrnFreddie Mac.”  This section includes a discussion of three factors thatrnare important to a safe, stable, and liquid mortgage market, regardless of thernform that market takes.  OIG said it wasrndrawing on its experience to speak about soundness, oversight, and balance andrnwas not seeking to take sides in the current discussions about GSE reform orrnthat of the larger finance market. </p

OIG devotes a sectionrnof the report to the GSEs’ recent financial performance.  During the period ended June 30, 2013 bothrnGSEs reported record profits which have been rising since 2012 and arernbeginning to offset the losses that started in 2007.  The second quarter 2013 results for FanniernMae were $68.8 billion and for Freddie Mac $9.5 billion.</p

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OIG said there werernseveral reasons for the recent financial successes:</p<ul class="unIndentedList"