OFHEO: Fannie Mae, Freddie Mac Have Improved, But Still Need Work

Washington, D.C.–Fannie Mae and Freddie Mac’s regulator said that the agencies are still a “significant supervisory concern,” The Wall Street Journal reported Wednesday.The Office of Federal Housing Enterprise Oversight said in its annual report to Congress that although both mortgage-finance agencies helped offer liquidity and stability to the U.S. mortgage market in 2007, “matters requiring attention”–including Freddie’s internal controls and corporate governance–still existed.Fannie Mae’s “somewhat aggressive” strategy for managing interest-rate risk was also labeled as a potential problem.”While they have made progress in fixing many of their systems…they still have much work to do, especially with the continuing challenges of today’s mortgage market,” OFHEO Director James Lockhart said.Freddie Mac spokesman Douglas Duvall said that it “will continue to work closely with OFHEO on recommendations and new controls.Fannie Mae will adopt the “prudent steps necessary to provide liquidity, stability and affordability to the markets,” according to a spokesman.Both agencies have made progress working out the accounting issues that caused them financial problems; but OFHEO is still looking for more alterations and called Fannie Mae’s interest-rate risk program in the “low range of satisfactory.”