The Federal Housing Finance Agency's (FHFA) Office of Inspector General released an audit Wednesday, revealing that Fannie Mae and Freddie Mac have been collecting insignificant fractions of outstanding loan default obligations. The report strongly encourages the government-run organizations to increase their efforts to recoup losses.
In 2008, the U.S. Treasury put up more than $187 billion on behalf of Fannie and Freddie to help cover the massive losses they had accrued from mortgage defaults in the midst of the housing crisis. Fannie and Freddie are expected to continue to pursue payments from borrowers who may be able to repay portions of outstanding loans. However, the audit found that out of $2.1 billion in deficiencies pursued, only $4.7 million -- or 0.2% -- was recovered in 2011.
The report notes that Fannie and Freddie don't use the same methods in determining which deficiencies to pursue, that they have different policies on foreclosure collections, and that their procedures are so disparate that "Fannie Mae has its vendors pursue deficiencies in more than twice as many states as Freddie Mac does."
Based on the bleak results, the report ultimately suggests that the two mortgage organizations need to be aided by FHFA in future collection efforts.
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