FHFA Needs to Exercise More Oversight of Mortgage Servicers: Watchdog

February 14, 2014
American Banker 
mortgage lending news
The inspector general of the Federal Housing Finance Agency (FHFA) says the agency needs more checks in place to ensure that servicers of Fannie Mae and Freddie Mac mortgages are helping troubled borrowers as directed. While FHFA launched a Servicing Alignment Initiative (SAI) in April 2011 spelling out protocols and deadlines for responding to borrower requests for help and for conducting loan workouts and foreclosures, it has not compared servicer performance against those goals; nor does it have a plan for evaluating the effectiveness and success of SAI.

Internal reviews conducted by Fannie and Freddie have turned up numerous areas where servicers are falling short. FHFA's Office of the Inspector General wants the regulator to proactively address these shortcomings and to develop and implement a process for reviewing servicer performance. FHFA counters, however, that Congress did not empower it to police servicers.

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