Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

Watchdog: Housing regulator should be more active

Send a link to a friend

[March 29, 2012]  WASHINGTON (AP) -- A government watchdog says the top U.S. housing regulator should take a more active role in overseeing mortgage giants Fannie Mae and Freddie Mac, which have received huge infusions of taxpayer cash.

HardwareThe Federal Housing Finance Agency is deferring too much decision-making to Fannie and Freddie, the agency's inspector general said, and it's failing to adequately evaluate the two companies' actions.

For example, the report said that the agency did not sufficiently scrutinize a decision by the companies to award their top six executives more than $35 million in bonuses in 2009 and 2010.

The FHFA is also understaffed and doesn't have enough examiners to oversee Fannie and Freddie, the report said.

The agency was set up in 2008 during the financial crisis and soon took over both mortgage giants. Soaring foreclosures caused huge losses for Fannie and Freddie, which later received $150 billion in taxpayer support.

"With dim prospects for a quick recovery of the housing finance system, and ultimate resolution of (Fannie and Freddie) uncertain, FHFA faces significant challenges continuing to manage" the companies effectively, the report said.

The two mortgage companies buy home loans from banks and other lenders. They package them into bonds with a guarantee against default and then sell them to investors around the world.

McLean-Va.-based Freddie and Washington-based Fannie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.

[to top of second column]

Investments

Fannie and Freddie's rescue was the most expensive bailout of the 2008 financial crisis. It could cost nearly $200 billion more to support the companies through 2014 after subtracting dividend payments, according to FHFA.

Pressure has mounted to eliminate Fannie and Freddie and reduce taxpayers' exposure to further risk. The Treasury Department put forward a plan a year ago to slowly dissolve Fannie and Freddie, although that process could take up to seven years. Abolishing Fannie and Freddie would transform how homes are bought and redefine who can afford them.

[Associated Press; By CHRISTOPHER S. RUGABER]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

< Recent articles

Back to top


 

News | Sports | Business | Rural Review | Teaching & Learning | Home and Family | Tourism | Obituaries

Community | Perspectives | Law & Courts | Leisure Time | Spiritual Life | Health & Fitness | Teen Scene
Calendar | Letters to the Editor