Fannie Mae, Freddie Mac regulators at fault, report says

Recent reports from the inspector general of the Federal Housing Finance Agency found Fannie Mae and Freddie Mac do not have enough examiners to develop risk controls for the government-sponsored entities. One report indicated that better risk controls at Fannie Mae could have prevented foreclosure abuses that were exposed in 2010 and forced many banks to slow down their processing and restructure their mortgage units.

The inspector general came to this conclusion after Fannie Mae did not implement a risk-management program by the deadline set by the FHFA, which prevented the problems cited in a review from 2006 to be addressed.

The Wall Street Journal reported that Fannie Mae's internal review found no evidence that homeowners had been illegally foreclosed upon, but the mortgage lender did find Fannie Mae attorneys in Florida made false statements in court regarding the foreclosure process. The inspector general, however, found no evidence that Fannie Mae made any improvements to its oversight of the law firms involved.

According to the Huffington Post, Fannie Mae reported it was developing a computer system to monitor attorneys and improve communications. The FHFA, which disagreed with many parts of the inspector general's report, was created in 2008 to oversee Fannie Mae and Freddie Mac. FHFA has the authority to fire and replace employees of the mortgage lenders, issue cease and desist orders, and impose fines on improper activity. The inspector's report found FHFA has not taken any of these actions to date, the news source reported.

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