Housingwire reports on a study by The Office of the Inspector General that reveals that the Federal Housing Finance Agency (FHFA) lacks the staff to properly monitor the mortgage giants in conservatorship. The study also indicates the FHFA failed to provide adequate oversight over default services legal issues. The Inspector General’s office wrote that it “identified shortfalls in the agency’s (FHFA) examination coverage, particularly in the areas of real estate owned and default-related legal services,” which they blame on the staffing shortages. “Fannie Mae’s lack of an acceptable and effective operational risk management program may have resulted in missed opportunities to strengthen the oversight of law firms it contracts with to process foreclosures,” according to the auditor’s report. “Given Fannie Mae’s history of noncompliance, (the Office of the Inspector General) believes that the agency must exercise maximum diligence and take forceful action to ensure that Fannie Mae meets the agency’s expectations in this regard. Otherwise, FHFA’s safety and soundness examination program, as well as its delegated approach to conservatorship management, may be adversely affected.” Edward DeMarco, acting director of the FHFA, said the agency is having trouble hiring experienced examiners. Potential applicants don’t want to move to Washington when there is the perception that the government-sponsored enterprises (GSEs) will eventually go away. The FHFA has 120 examiners and plans to hire another 26 more, but “has expressed concern that its current hiring initiative will neither enable it to overcome its examination capacity shortfalls nor ensure the effectiveness of its 2011 reorganization,” according to the inspector general’s report.
(Graphic credit: FHFA logo)