Government lacks staff to oversee mortgage companies, according to report

New York /
Sep.September 23, 2011 11:18 AM

The government does not have enough staff to to properly oversee
Fannie Mae and Freddie Mac,
and the investigations of the two mortgage companies are therefore not
as extensive as they should be, Bloomberg News reported. The Federal
Housing Finance Agency has not met its hiring targets, and even once
it does, it still will not have enough staff to do its tasks,
according to a report by FHFA’s Office of Inspector General.

Even though foreclosures have increased significantly, leading to
large growth in Fannie Mae’s inventory, “FHFA has yet to conduct a
targeted examination” of how the companies manage repossessed homes,
known as real estate owned properties, or REOs, the report says. The
report also criticizes the agency for failing to scrutinize the
companies’ outside law firms until late last year, after evidence of
false legal documents led most mortgage companies to suspend
foreclosures.

FHFA this year intended to hire 26 people to join its team of
about 120 examiners. But even when those hires are completed, agency
executives said they will have only about half the examiners they
need.

Stephen Cross, deputy director of FHFA , said the agency has
hired 18 examiners since January. He added that there is no evidence
that FHFA has not fulfilled its obligations, and noted that the
report relied on interviews with unnamed FHFA staff. In a separate
report released today, the inspector general also blamed FHFA for
not forcing Fannie Mae to quickly adopt internal risk controls. Better
controls could have alerted the company to the robo-signing
foreclosure scandal sooner
, the report found.
[Bloomberg]


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