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Figure 8. Estimated Enterprise Aggregated Annual Single-Family Guarantee Fee Pricing 2008 Through March 31, 2013 Basis Points 60 55 50 45 40 35 30 25 20 15 10 2008 2009 2010 2011 2012 1Q 2013 guarantee fees and assess the feasibility of establishing a formal working arrangement with FHA. FHFA did not agree with our recommendations. We will continue to monitor these issues. FHFA’s Oversight of the Federal Home Loan Banks’ Affordable Housing Programs (EVL-2013- 04, April 30, 2013) Funded by the FHLBanks, the Affordable Housing Program (AHP) is the largest private source of grant funds for affordable housing in the United States. As the regulator of the FHLBank System, FHFA is Since 1990, the FHLBanks have awarded over well positioned to provide cross-cutting feedback $4 billion to subsidize low-income rental or owneroccupied Figure housing. 8. Estimated Enterprise Aggregated Annual of their Single-Family programs, but Guarantee it typically has Fee not Pricing published and analyses to the FHLBanks to improve oversight 2008 Through March 31, 2013 Although AHP projects must meet specific regulatory requirements and eligibility criteria, the FHLBanks have some leeway in how they weigh scoring criteria. FHFA is responsible for ensuring that the FHLBank System fulfills its affordable housing objectives. We initiated this evaluation to examine FHFA’s oversight of the FHLBanks’ administration and management of their AHPs. We found that FHFA conducts annual examinations and collects data regarding each FHLBank’s AHP, but it generally relies on the FHLBanks, their member institutions, and various private and public entities to monitor projects. The FHLBanks’ oversight of AHP projects is also primarily paper based. Further, the FHLBanks have varying practices regarding whether and when they conduct site visits of projects. For example, although some FHLBanks visit projects during construction, others only visit projects that receive a certain level of funding or are placed on watch lists. such data. In addition, agency officials noted that they had limited resources and staffing levels. Though the FHLBanks work together to share best practices, unbiased analyses from FHFA could better inform policy and administrative decisions regarding these programs. We recommended that FHFA: (1) develop a policy for FHLBank site visits of AHP projects that includes guidance on their frequency, scope, and administration; (2) conduct and report cross-cutting analyses of common issues and themes across the Semiannual Report to the Congress • April 1, 2013–September 30, 2013 17
FHLBanks, using analytically rigorous methods; and (3) analyze staffing levels needed to perform additional cross-cutting analyses and oversee housing project site visits by the FHLBanks, and take appropriate actions to meet those staffing targets. FHFA agreed with our recommendations and noted specific steps it will undertake to address them. Recommendations A complete list of OIG’s audit and evaluation recommendations is provided in Appendix B. Other Reports In addition to its audits and evaluations, OIG issued two management alerts. Management Alert: Delay Implementing Advisory Bulletin No. 2012-02 (August 5, 2013) In a memo to the FHFA Acting Director, OIG raised concerns about the delay, authorized by FHFA, in the enterprises’ compliance with Advisory Bulletin No. 2012-02. The bulletin directed the enterprises to change their current practices and classify any singlefamily loan that is delinquent for 180 or more days as a loss. The bulletin initially called for compliance in April 2012, although FHFA agreed to extensions until January 1, 2015. Given this lengthy delay and because the advisory bulletin involves matters central to sound risk management and accounting practices at the enterprises, OIG recommended that FHFA require the enterprises to report the estimated impact on their financial statements as if the bulletin were in effect. The agency agreed with the recommendation. Public Company Accounting Oversight Board Criticisms of Public Accounting Firms that Do Business with the GSEs (May 3, 2013) The Public Company Accounting Oversight Board inspects selected audit work of public accounting firms to assess compliance with requirements established by the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission (SEC), and professional standards. The board found that two firms, which conduct annual financial statement audits for the GSEs, had failed to satisfy concerns it had identified in previous inspections. While those concerns were unrelated to the firms’ work for the GSEs, we recommended that FHFA request that the GSEs confirm that their audit committees and management provide elevated attention to the work conducted by the two firms. Civil Fraud Initiative OA launched its Civil Fraud Initiative in June 2013. OA, with support from OI and the Office of Counsel (OC), conducts civil fraud reviews (also known as nonaudit services) to identify fraud and make referrals for civil actions and administrative sanctions against entities and individuals who commit fraud against FHFA, Fannie Mae, Freddie Mac, or the FHLBanks. Currently, OA is working with various assistant U.S. Attorneys on reviews of lenders’ loan origination practices to determine their compliance with enterprise requirements. Lenders are considered for review through the use of data-mining techniques and requests from government agencies. Audit and Evaluation Plan OIG maintains an Audit and Evaluation Plan that focuses strategically on the areas of FHFA’s 18 Federal Housing Finance Agency Office of Inspector General
Page 2 and 3: Federal Housing Finance Agency Offi
Page 4 and 5: Section 3: Lessons for Housing Fina
Page 6 and 7: OIG’s Accomplishments from 2010 t
Page 8 and 9: A Message from the Acting Inspector
Page 10 and 11: insures mortgages against credit lo
Page 12 and 13: Semiannual Report to the Congress
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Page 32 and 33: This was a joint investigation with
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Page 36 and 37: Short Sale Schemes A short sale occ
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Page 46 and 47: Figure 10. Overview of the Enterpri
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Page 52 and 53: educe the principal balance of Trea
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positive NPV, then the servicer is
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Siloed Practices: Harmonizing Busin
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Semiannual Report to the Congress
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overseen by FHFA. As conservator, F
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Interest Rate Swap: An interest rat
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References Federal Deposit Insuranc
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Department of the Treasury Financia
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Acronyms and Abbreviations Agency A
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Figure 29. Summary of OIG Recommend
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No. Recommendation Report Status AU
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No. Recommendation Report Status EV
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Audit and Evaluation Reports with R
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Appendix D: OIG Reports See www.fhf
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Appendix F: Description of OIG Offi
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Strategic Goal 2—Operating with I
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Figure 17. Federal Home Loan Banks
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15 Federal Housing Finance Agency,
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33 Fannie Mae, “Multifamily Busin
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Federal Home Loan Banks Office of F
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to FHFA Scorecard Directive, at 48,
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it is preferable to limit our discu
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Position in the Housing Finance Sys
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144 Fannie Mae, “Comparison of Mu
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157 Id., “Mortgage Servicing,”
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184 Federal Housing Finance Agency,
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Transparency and Certainty for Lend
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