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Figure 10. Overview of the Enterprises and FHFA’s Role Primary Mortgage Market Market in which financial institutions provide mortgage loans to homebuyers LENDER Applies for Mortgage Provides Loan BORROWER Sells Loans that Meet Underwriting and Product Standards Secondary Mortgage Market Market in which existing mortgages and MBS are traded FANNIE MAE and FREDDIE MAC Buys Mortgages Conservator Credit Guarantee Business Portfolio Investment Business Ensures Financial Safety and Soundness Issues MBS Issues Debt INVESTORS Sells MBS & Debt Buys MBS Buys Debt • Individual • Institutional • Foreign Buys MBS & Debt WALL STREET Enterprises’ Market Share of the Secondary Market As Figure 11 (see page 40) illustrates, after losing market share to nonagency competitors during the housing boom from 2004 through 2007, the enterprises regained dominant positions in the residential housing finance market (with the federal government’s financial support) as the financial crisis continued and private-sector financing for the secondary market nearly disappeared. 14 Figure 10. Overview of the Enterprises and FHFA’s Role Semiannual Report to the Congress • April 1, 2013–September 30, 2013 39
Figure 11. Primary Sources of MBS Issuances from 2000 to 2012 ($ trillions) $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Ginnie Mae MBS Enterprise MBS Nonagency MBS Since entering conservatorships in September 2008, the enterprises have bought and guaranteed approximately three out of every four mortgages originated in the United States. 15 By providing a majority of the liquidity to the housing finance market, the enterprises (and, therefore, the taxpayers) own a majority of the mortgage credit risk. 16 Since entering conservatorships in September 2008, Enterprises’ Financial Performance Figure 12. Primary Sources of MBS Issuances from 2000 to 2012 ($ trillions) the enterprises have bought and guaranteed approximately three out of every four mortgages originated in the United States. For the six months ended June 30, 2013, the enterprises reported record profits. These profits have risen since 2012 and are beginning to offset the losses that started in 2007 (see Figure 12, page 41). 17 As shown in Figure 13 (see page 41), Fannie Mae reported net income of $68.8 billion for the six months ended June 30, 2013, compared with net 40 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
Page 14 and 15: in a number of criminal and civil i
Page 16 and 17: Figure 3. Scoring of Investor Quali
Page 18 and 19: and provide for financial consequen
Page 20 and 21: Figure 5. Agreements Between Fannie
Page 22 and 23: 2010 to 2012, but the attrition rat
Page 24 and 25: Figure 8. Estimated Enterprise Aggr
Page 26 and 27: operations that pose the greatest r
Page 28 and 29: poor financial condition, Appalachi
Page 30 and 31: fraud and wire fraud involving a fi
Page 32 and 33: This was a joint investigation with
Page 34 and 35: y falsified, forged, and altered do
Page 36 and 37: Short Sale Schemes A short sale occ
Page 38 and 39: This was a joint investigation with
Page 40 and 41: at Appalachian concealed past due l
Page 42 and 43: indemnification payments that OIG p
Page 44 and 45: the SEC, and others. In July 2013,
Page 48 and 49: Figure 12. Enterprises’ Annual Ne
Page 50 and 51: Figure 14. Home Price Index 2011 Th
Page 52 and 53: educe the principal balance of Trea
Page 54 and 55: Figure 17. FHLBanks’ Net Income f
Page 56 and 57: multifamily housing lending busines
Page 58 and 59: The bill would replace the enterpri
Page 60 and 61: mortgage credit. For its part, the
Page 62 and 63: Figure 20. Reform Models and Reform
Page 64 and 65: Multifamily We have also found indi
Page 66 and 67: Based on recent history, a reformed
Page 68 and 69: Figure 26. The Mortgage Servicing P
Page 70 and 71: Even though the FHFA senior examine
Page 72 and 73: assistance to homeowners and to use
Page 74 and 75: positive NPV, then the servicer is
Page 76 and 77: Siloed Practices: Harmonizing Busin
Page 80 and 81: overseen by FHFA. As conservator, F
Page 82 and 83: Interest Rate Swap: An interest rat
Page 84 and 85: References Federal Deposit Insuranc
Page 86 and 87: Department of the Treasury Financia
Page 88 and 89: Acronyms and Abbreviations Agency A
Page 92 and 93: Figure 29. Summary of OIG Recommend
Page 94 and 95: No. Recommendation Report Status AU
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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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