Reference no: EM132273835

Question: Topic: Overhauling Federal Housing Oversight:

The Office of Federal Housing Enterprise Oversight (OFHEO) was an agency within the Department of Housing and Urban Development. It was charged with ensuring the capital adequacy and financial safety and soundness of two government sponsored enterprises -- the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). It was established by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

On July 30, 2008, the Housing and Economic Recovery Act of 2008 combined OFHEO and the Federal Housing Finance Board (FHFB) to form the new Federal Housing Finance Agency (FHFA). OHFEO director James B. Lockhart III was the first top administrator to oversee the new agency. [OFHEO also published the house price index] (Source: wikipedia.org)

Since 2008 FHFA Directors have made efforts to restrain the effects of home foreclosures; and have implemented programs such as the Obama administration's Making Homes Affordable Program (HARP) to restore accountability to the FHFA:

Since 2008, programs were implemented to stabilize the US economy; such as The Troubled Asset Relief Program (TARP) which was created to address the subprime mortgage crisis.

Then in 2009 the Home Affordable Modification Program, (HAMP) was created; which is part of the Making Home Affordable Program which was created by the Financial Stability Act of 2009.

The (HAMP) program was implemented to help 7 to 8 million eligible homeowners at risk of foreclosure by working with their lenders to lower monthly mortgage payments [This program was put into place to address the ongoing subprime mortgage crisis in the debt markets, continuing from 2008.]

1. Discuss if you think that the Office of Federal Housing Enterprise Oversight (OFHEO) should have an oversight plan for banks and mortgage loan companies to be more stringent or more relax on how they approve housing loans? Why?