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indemnification payments that OIG previously commented on. See 78 Fed. Reg. 28,452 (May 14, 2013). OIG made two comments concerning the rule. OIG’s first comment critiqued the efficiency of FHFA’s proposed two-stage approval process. FHFA plans initially to review and approve any golden parachute agreement into which a GSE seeks to enter and then to review and approve the actual payments made pursuant to such an agreement if the GSE is subject to a specified “triggering event.” Such events include a GSE being insolvent, subject to control by a conservator or receiver, in a troubled condition, or suffering from a poor composite rating. OIG contended that this two-stage approval requirement will render the first approval meaningless and, thus, will create a perverse disincentive for FHFA staff to scrupulously analyze golden parachute agreements because oversight mistakes theoretically can be fixed at the payment stage, assuming a triggering event occurs. OIG also noted that the two-stage process could hinder the GSEs’ ability to recruit and retain well-qualified employees, who may not work for them if compensation agreements are subject to later revision (i.e., years later at the payment stage). OIG’s second comment pertained to the procedures applicable to FHFA’s payment approval process (i.e., the “second approval”). The draft rule provided that when deciding whether to approve payments, FHFA might consider negative factors, such as any fraudulent act or omission; breach of fiduciary duty; violation of law, rule, regulation, order, or written agreement; and the level of willful misconduct and malfeasance on the part of the party who would benefit from the payments. Further, the draft rule stated that such factors may create a presumption against approval, but it did not specify how FHFA will evaluate such factors or what showing would rebut the presumption. OIG recommended that FHFA should articulate the criteria that it will apply when weighing negative factors and define the showing required to rebut the presumption against approval. These revisions would avoid future claims alleging arbitrary and capricious action by FHFA and would facilitate development of an accurate, transparent audit trail, allowing OIG and other interested parties to review FHFA’s decision making. FHFA did not revise the proposed rule to address OIG’s comments. Communications and Outreach A key component of OIG’s mission is to communicate clearly with the GSEs, industry groups, other federal agencies, Congress, and the public. OIG facilitates clear communications through its targeted outreach efforts, hotline, coordination with other oversight organizations, and congressional statements and testimony. Outreach During the reporting period, OIG staff made over 50 presentations to law enforcement officials, real estate and banking industry professionals, and homeowners. The presentations to law enforcement officials were made to multiple mortgage fraud working groups across the country and individual federal agencies responsible for investigating mortgage fraud, such as the FBI, HUD-OIG, and the Secret Service. In addition, OI developed its partnership with the National Association of District Attorneys to train local and state law enforcement officials and prosecutors throughout the country, putting on 11 presentations in 11 cities: Ft. Myers, Florida; Boston, Massachusetts; Princeton, New Jersey; Portland, Semiannual Report to the Congress • April 1, 2013–September 30, 2013 35
Oregon; Atlanta, Georgia; San Juan, Puerto Rico; New York, New York; Chicago, Illinois; Las Vegas, Nevada; Seattle, Washington; and Denver, Colorado. expertise. During the semiannual period ended September 30, 2013, we participated in the following cooperative activities: With respect to presentations to housing professionals, OIG staff made presentations to professional organizations, such as the Mortgage Bankers Association and the Association of Appraisal Regulatory Officials. The presentations focused on fraud trends in the mortgage industry. Hotline OI operates a hotline that allows concerned parties to report directly and in confidence information regarding possible fraud, waste, or abuse related to FHFA or the GSEs. We honor all applicable whistleblower protections. As part of our effort to raise awareness of fraud and how to combat it, OIG promotes the hotline through our website, posters, emails targeted to FHFA and GSE employees, and our semiannual reports. During the reporting period, the hotline received over 250 tips. Coordinating with Other Oversight Organizations OIG shares oversight of federal housing program administration with several other federal agencies, including HUD, the Department of Veterans Affairs, the Department of Agriculture, and Treasury’s Office of Financial Stability (which manages the Troubled Asset Relief Program); their inspectors general; and other law enforcement organizations. To further the oversight mission, we coordinate with these entities to exchange best practices, case information, and professional Report fraud, waste, or abuse related to FHFA’s programs and operations by visiting www. fhfaoig.gov/ ReportFraud or calling (800) 793-7724. • RMBS Working Group. OIG continued to actively participate in the RMBS Working Group, as discussed in “Civil Cases” (see page 32). • Joint Report on Federally Owned or Overseen Real Estate Owned Properties. We partnered with HUD-OIG to report on our efforts to shrink the inventory of REO properties held by the GSEs and HUD. 5 As of September 30, 2012, the GSEs held 158,138 REO properties, while HUD held 37,445. In addition, the GSE and HUD “shadow inventory”— residential loans at least 90 days delinquent but not yet owned by the GSEs or HUD—totaled 1,708,033 properties. Even a fraction of the shadow inventory falling into foreclosure could considerably swell HUD and GSE REO inventories and result in profoundly negative consequences for communities, financial markets, and taxpayers. The report discusses areas that our offices have examined or plan to evaluate to help ensure that our respective agencies address REO issues effectively and efficiently. • Council of Inspectors General on Financial Oversight. The Council of Inspectors General on Financial Oversight (CIGFO) was created by Dodd-Frank to oversee the Financial Stability Oversight Council (FSOC), which is charged with strengthening the nation’s financial system. OIG is a permanent member of CIGFO, along with the inspectors general of Treasury, FDIC, 36 Federal Housing Finance Agency Office of Inspector General
Page 2 and 3: Federal Housing Finance Agency Offi
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Page 8 and 9: A Message from the Acting Inspector
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Page 52 and 53: educe the principal balance of Trea
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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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Semiannual Report to the Congress
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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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