The government agency created to prevent another home mortgage crisis
instead handed oversight over to the very financial institutions it
bailed out was suppose to keep watch on, a federal watchdog says.
The Federal Housing Finance Agency, or FHFA, was created in 2008 to oversee home mortgages handled by Fannie Mae and Freddie Mac after the government bailed out the two mortgage giants with $187.5 billion in taxpayer money.
But only three months after it was tasked with regulating the financial giants, FHFA largely washed its hands of oversight, failing to evaluate 700,000 loans over the last few years worth more than $130 billion, the agency's inspector general reported Thursday. And that leaves taxpayers at risk again, the watchdog warns.
""FHFA’s role as conservator of Fannie Mae and Freddie Mac is critical to mitigating instability in the nation’s housing finance markets and ensuring that the enterprises operate safely and soundly," the inspector general concluded, adding that "strengthening control over the agency’s conservatorship approval process will ... protect taxpayers from having to provide further financial support."
FHFA, however, remains unapologetic and doesn't think it needs to make any changes. "We believe that the approach we are taking to govern conservatorship decision-making is effective, and this approach remains appropriate given the size, complexity, and length of the conservatorship," FHFA said in a letter responding to the inspector general.
Read more: http://www.washingtonguardian.com/defaulting-mortgage-oversight
The Federal Housing Finance Agency, or FHFA, was created in 2008 to oversee home mortgages handled by Fannie Mae and Freddie Mac after the government bailed out the two mortgage giants with $187.5 billion in taxpayer money.
But only three months after it was tasked with regulating the financial giants, FHFA largely washed its hands of oversight, failing to evaluate 700,000 loans over the last few years worth more than $130 billion, the agency's inspector general reported Thursday. And that leaves taxpayers at risk again, the watchdog warns.
""FHFA’s role as conservator of Fannie Mae and Freddie Mac is critical to mitigating instability in the nation’s housing finance markets and ensuring that the enterprises operate safely and soundly," the inspector general concluded, adding that "strengthening control over the agency’s conservatorship approval process will ... protect taxpayers from having to provide further financial support."
FHFA, however, remains unapologetic and doesn't think it needs to make any changes. "We believe that the approach we are taking to govern conservatorship decision-making is effective, and this approach remains appropriate given the size, complexity, and length of the conservatorship," FHFA said in a letter responding to the inspector general.
Read more: http://www.washingtonguardian.com/defaulting-mortgage-oversight
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