The Office of Federal Housing Enterprise Oversight, regulator of Fannie Mae and Freddie Mac, has plans to strengthen oversight of the two mortgage corporations with more in-depth examinations and coordination among federal agencies to enhance the nation’s housing finance system.
Also included in the federal regulator’s plan for fiscal years 2006-2011 released on Friday were a review of capital standards for the government-sponsored enterprises, or GSEs, and the establishment of a new regulatory regime through legislative change.
OFHEO, Fannie Mae and Freddie Mac have been the subject of multiple congressional hearings for more than two years in the wake of accounting scandals at both companies that caused each to restate several years of earnings results. Congress has not successfully passed legislation that would increase OFHEO’s authority or resources.
Fannie Mae and Freddie Mac “are at a critical point and OFHEO is focused on ensuring that they fix their major accounting, internal controls, systems, and management problems. Progress is being made but it will take several more years and a much stronger regulatory framework to ensure future success,” OFHEO Director James B. Lockhart said in a statement.
OFHEO’s plan adopts three strategic goals: 1) Enhance supervision to ensure the Enterprises operate in a safe and sound manner, are adequately capitalized and comply with legal requirements; 2) Provide support for statutory reforms to strengthen OFHEO’s regulatory powers; and 3) Continue to support the national policy of an efficient secondary mortgage market that promotes home ownership and affordable housing.
The second goal is a new one and reflects OFHEO’s assessment that it does not have the powers that it needs to fulfill its regulatory responsibilities. All three goals are designed to fulfill OFHEO’s mission: To promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac.
“I believe the nation’s housing finance system will be strengthened with enhanced supervision and a stronger regulatory regime, as proposed by Congress and supported by OFHEO,” said Lockhart.
Public comments on the plan were accepted through Sept. 13. OFHEO considered the comments in its final revision. OFHEO’s Strategic Plan for FY 2006-2011 and the public comments are available at www.ofheo.gov.