FHFA OIG | FHFA’s Conservator Approval Process for Fannie Mae and Freddie Mac Business Decisions

Why FHFA-OIG Did This Audit

The Federal National Mortgage Association (Fannie Mae) and
the Federal Home Loan Mortgage Corporation (Freddie Mac)
lost billions of dollars when the housing market collapsed in
2007 and 2008. In response, Congress enacted the Housing
and Economic Recovery Act of 2008 (HERA), which created
the Federal Housing Finance Agency (FHFA or the Agency) to
regulate Fannie Mae and Freddie Mac (collectively, the
Enterprises) in order to ensure their safety and soundness and
facilitate a stable and liquid mortgage market.
On September 6, 2008, the Enterprises entered into
conservatorships supervised by FHFA. As conservator, FHFA
has extensive authority over the Enterprises’ operations.

However, in November 2008, the Agency broadly delegated
most of its conservatorship authority back to the Enterprises. As
part of the delegation, the Agency required the Enterprises to
obtain Agency approval for selected business decisions, such as
those involving legal settlements over $50 million and risk limit
increases. FHFA’s Office of Inspector General (FHFA-OIG)
audited FHFA’s process for approving these non-delegated
Enterprise business decisions.

Full report below…

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FHFA’s Conservator Approval Process for Fannie Mae and Freddie Mac Business Decisions

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