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From Banking and Finance Law Daily, April 18, 2013

GOVERNMENT SPONSORED ENTERPRISES—FHFA IG Sees Uncertainty as Biggest Challenge Facing Fannie, Freddie

By Sarah Borchersen-Keto, Washington News Bureau

The biggest challenge facing Fannie Mae and Freddie Mac at the present time is continued uncertainty about their future, Federal Housing Finance Agency Inspector General Steve Linick told the Senate Banking Committee at an April 18, 2013, hearing.

"There’s no doubt that uncertainty is the single most important challenge," Linick said, noting that it impacts, among other things, the recruitment and retaining of staff and the development of long-term resource allocations. "We don’t know the fate of the enterprises and that makes it very difficult," he stressed.>

Other challenges "as we continue to linger," Linick said, include shortfalls in oversight. He warned that "taxpayers at the end of the day could suffer if things just go on the way they are."

The Committee also heard from FHFA Acting Director Edward DeMarco, who agreed that the U.S. housing finance system "cannot really get going again until we remove this cloud of uncertainty, and it will take legislation to do it."

DeMarco also told the hearing that a goal for 2013 is to move forward with risk-sharing transactions, with the goal of meeting a target of $30 billion of unpaid principal balance in credit risk-sharing transactions in the single-family credit guarantee business. "What we learn in 2013 will set the stage for the targets for 2014," DeMarco said.

Companies: Fannie Mae; Freddie Mac

LegislativeActivity: GovernmentSponsoredEnterprises Mortgages

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