Agency left possible fraud unchecked

New York Times / June 22, 2011

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NEW YORK — The federal agency overseeing Fannie Mae and Freddie Mac, the taxpayer-owned mortgage finance giants, failed to refer to investigators almost 100 complaints about possible foreclosure abuse and mortgage fraud over a recent two-year period, according to a report by the inspector general of the Federal Housing Finance Agency.

The report did not determine if the complaints had merit but said the agency’s unresponsiveness was problematic.

The report is the third to assess the agency that acts as conservator for Fannie and Freddie, which have cost the taxpayer roughly $154 billion since they nearly collapsed in 2008. It covers a period from July 30, 2008, when the finance agency was created, through Oct. 31, 2010.

“Millions of Americans have been touched by the housing crisis,’’ Steve A. Linick, the inspector general, said in a statement. “Increasingly, they have filed complaints about fraud, waste or abuse, including allegations of improper foreclosures and possible criminal activity. Those complaints deserve timely and responsible action by FHFA.’’

Meg Burns, senior associate director in the office of Congressional Affairs and Communications, said the agency agreed with the recommendations and would follow them.

Linick found that the agency assigned only two employees to process consumer complaints about Fannie and Freddie — something Representative Spencer Bachus, Republican of Alabama, called stunning.