James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight (OFHEO), has released OFHEO's 2008 Report to Congress, detailing the agency's annual examination conclusions and regulatory oversight of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, for the year 2007.
The report concludes that both GSEs made very good progress in remediating their operational areas and providing stability and liquidity to the mortgage markets, but they remain ‘a significant supervisory concern’ because of increased mortgage market and credit risk.
‘Fannie Mae and Freddie Mac should be commended for the timely filing of their 2007 annual statements,’ says Lockhart. ‘While they have made progress in fixing many of their systems, internal controls and risk management problems, they still have much work to do, especially with the continuing challenges of today's mortgage market.’
‘These challenges and the pressures on Fannie Mae and Freddie Mac to do even more to support the mortgage market require a stronger regulator,’ he continues. ‘As I noted in my transmittal letter, last month both GSEs agreed that a 'world-class regulatory structure' is needed, and they 'renewed a shared commitment to work for comprehensive GSE reform legislation. The time to act on the legislation is now.'’