WASHINGTON — A government watchdog said Fannie Mae and Freddie Mac improperly foreclosed on homeowners and cost the government billions of dollars by not holding major banks to strict underwriting requirements.
The report released Tuesday also said the Federal Housing Finance Agency gave “undue deference” to Fannie and Freddie officials and didn’t scrutinize more than $35 million in bonuses and compensation to Fannie and Freddie executives.
FHFA’s inspector general had previously released each of the findings on an individual basis. But the semi-annual report to Congress sketched a portrait of abuse at the two mortgage giants that the government failed to stop.
The AP Article then goes on to say…
The inspector general report found that Fannie and Freddie did not force banks to repurchase mortgages when they failed to meet strict underwriting requirements. That decision cost the government billions of dollars.
When a senior examiner at FHFA raised “serious concerns” about Freddie’ process for reviewing Bank of America’s mortgages, senior Freddie managers disagreed, according to the report. The managers also said they feared losing business from Bank of America if the government became more aggressive in getting money back for bad mortgages, the report said.
The report also found:
— Fannie knew about allegations of improper foreclosure practices by law firms as far back as 2003 but did not act to stop them.
— Fannie failed to establish an “acceptable and effective” way to monitor foreclosure proceedings between 2006 and early 2011.
— FHFA failed to oversee the government’s signature foreclosure-prevention program, the Home Affordable Modification Program. As a result, it cost the government extra time and resources to fix it.