Government-Sponsored Enterprises

GAO is required to audit the operations of the Office of Federal Housing Enterprise Oversight, which was established in 1992 as an independent financial regulator of the nation's two largest government-sponsored enterprises--the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. As of December 1994, the enterprises held combined assets and mortgage-backed securities of more than $1.3 trillion. This report examines the Office's development, focusing on the progress made in designing and instituting key management systems. These include the Office's administrative infrastructure systems--the human resources and accounting and financial management systems--and the major mission-related systems--examinations and capital adequacy. The report also provides an overview of the Office's compliance with other operational and reporting requirements.

GAO found that: (1) OFHEO has made considerable progress toward setting up its key management systems; (2) as of February 1995, OFHEO had most of its administrative structure in place with 53 of its 65 authorized staff, and had prepared for the implementation of its human resource management system; (3) although OFHEO has defined its financial and accounting system requirements and has worked with the Department of Housing and Development (HUD) to meet its immediate accounting and administrative needs, it is having difficulties using HUD systems; (4) OFHEO has not decided whether to continue to use HUD systems, create and maintain its own systems, or contract out its accounting and administrative functions to another federal agency; (5) OFHEO has begun its mission-related programs, established the fundamentals of its examination function, adopted an overall examination framework, and set a 2-year workplan; (6) OFHEO has completed its first on-site examination of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation and the design, purchase, and installation of computer software to support its financial research; (7) OFHEO has not met its legislative deadline to complete final regulations establishing the enterprises' risk-based capital stress test, but it has adopted intermediate milestones and expects to publish the regulations in 1996; and (8) although OFHEO staff is having difficulties meeting its 2-year workplan, OFHEO has generally met its legislative reporting requirements.