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OIG Recaps October-April Oversight of FHFA
In its third semi-annual report to Congress the Federal Housing Finance Agency’s (FHFA) Office of the Inspector General (OIG) recapped its activities during the six month period ending April 30. OIG is charged with promoting transparency in FHFA’s program administration and oversight of the operations of the two government sponsored enterprises (GSEs) which are in government conservatorship Fannie Mae and Freddie Mac as well as the third GSE, the Federal Home Loan Banking System (FHLBanks). OIG is also charged with preventing and detecting fraud, waste and abuse in the operation of the GSEs as well as FHFA itself. </p
In addition to enumerating the various reports it had issued on both FHFA and GSE activities and the recommendations resulting from them, Thursday’s report contained a special section on the GSEs entitled “Fannie Mae and Freddie Mac – Where the Taxpayer’s Money Went.” As the title suggests, the section details the levels at which various areas of GSE operation contributed to their huge losses leading up to and following conservatorship. This section will be summarized in a separate article in MND later today.</p
During the reporting period OIG issued six reports addressing a variety of GSE issues. MND covered most of these reports as they were released including one giving an overall assessment of the FHFA’s conservatorship of the GSEs on its third anniversary. There were reports on FHFA’s oversight of two major functions of the GSEs, their supervision of mortgage servicing contractors working for both GSEs and their management of Fannie Mae’s single-family underwriting standards . </p
Three reports dealt with the expenses of the GSEs, resulting in a number of recommendations for dealing with GSE legal expenses on behalf of its executives, travel and entertainment expenses growing out of questionable expenditures related to a large conference, and the operation of the GSE’s considerable charitable activities. The sixth report evaluated FHFA’s oversight of the FHLBanks, finding that the agency did not have or failed to implement formal written enforcement standards for holding the Banks and their officers sufficiently accountable for failing to correct identified risks.</p
OIG also engaged in investigative and outreach efforts which, among other things, resulted in a seventh conviction in the Taylor, Bean & Whitaker case, a $2.9 billion fraud that against Freddie Mac; indictments of three attorneys associated with the Flahive Law Corporation and five indictments against Horizon Property Holdings in cases involving defrauding homeowners with false promises of assistance with mortgage modifications. </p
The semi-annual report includes over 40 separate recommendations the OIG has made over the past months to improve the operations of the FHFA and the GSEs and the status of each. Fifteen of the recommendations are considered by OIG to be closed with final action taken by FHFA. The remainder have all been agreed to or partially agreed to by FHFA with implementation of the recommendations pending. Among those recommendations for which implementation is still pending are the following.</p<ul
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