The Federal Housing Finance Agency (FHFA) needs to tighten control of Fannie Mae and Freddie Mac's individual business decisions, according to a report issued by the regulator's Office of the Inspector General (OIG).
‘As conservator, FHFA has a responsibility to ensure that the government-sponsored enterprises' underwriting standards appropriately balance credit risk and return,’ says the OIG. ‘FHFA can further fulfill its conservator responsibility by ensuring sound oversight of underwriting standards through more active involvement and detailed guidance governing its review process.’
The OIG report cited the FHFA policy of not reviewing or approving Fannie Mae's single-family underwriting standards or its High Touch Servicing Program. The report also urged the regulator to ensure that business decisions made by Fannie Mae and Freddie Mac executives receive the conservator's analysis and final approval before they are implemented.
The full report is available online.