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Watchdog Finds FHFA’s HFE Commission Program Is Not Meeting Its Objective

investigation [1]The Office of Inspector General for the FHFA [2] found in a compliance review that the Agency's program to commission Housing Finance Examiners (HFEs) was not on track to meet its main objective, which was to produce conditioned examiners who were qualified to lead major risk sections of GSE examinations.

The OIG and the FHFA [3] agreed in 2011 that a sufficient corps of commissioned examiners would strengthen the efficiency and effectiveness of the FHFA's oversight of the GSEs. The Agency launched its HSE commission program two years later, in 2013, with the objective of producing such a corps of commissioned examiners. FHFA employees who enrolled in the program were required to complete 16 on-the-job training (OJT) assignments and 16 courses on financial risk and housing finance, and are also required to pass a final examination, in order to receive their HFE commissions. The Agency said at the time the program was launched that it would take approximately four years to complete the program, although that time could be shortened for participants who had prior work experience and classroom training.

In its compliance review of the FHFA's HFE commission program focusing on a 19-month period from August 2013 (the start of the program) to March 2015, evidence found by the OIG that indicated the program was not on track to meet its objective included only one of 66 enrolled examiners who had submitted completion of any one of the 16 required OJT assignments during 2014 and early 2015. The OIG also said their interviews with Agency examination officials did not indicate that examiners enrolled in the program were progressing toward fulfilling their OJT requirements.

The OIG also found that according to FHFA's records, less than 20 percent of the examiners enrolled in the program had completed one or none of the required 16 courses. OIG concluded that with so few of the enrolled examiners progressing toward meeting the program's requirements during the program's first 19 months, they would be unlikely to earn HFE commissions within that four-year time frame announced by the FHFA.

"OIG recommends that the Agency determine the causes of the shortfalls identified in this report and implement a strategy to ensure that the HFE program fulfills its central objective," wrote Richard Parker, Deputy Inspector General, Compliance & Special Projects, in the compliance review.

The OIG reported that the FHFA agreed with the recommendation. In the Agency's response to the OIG's findings, the Agency listed several courses of action to take in order to help the HFE commission program meet its central objectives. Those courses of actions include:

Click here [4] to read the FHFA OIG's complete compliance review.