A federal watchdog said Freddie Mac may have given up opportunities to recover billions of dollars in claims over defaulted mortgages and suggested that a January settlement with Bank of America Corp. to resolve $1.3 billion in bad-loan claims was inadequate.
The report is to be released Tuesday by the inspector general for the Federal Housing Finance Agency, which regulates Freddie Mac and its larger cousin, Fannie Mae.
A senior FHFA examiner warned in September 2010, months before the Bank of America settlement, that Freddie "could be passively absorbing billions of dollars in losses" by not more aggressively reviewing defaulted loans that could be sold back to lenders, the report said. January's settlement resolved many of those "buyback" demands with Bank of America, which saw its shares rally after striking deals with Freddie and Fannie. The FHFA approved the settlement with Bank of America last year.
In its report, the inspector general suggested that Freddie hasn't been aggressive enough in reviewing loans and implied that the company was lax because it wanted to preserve its business relationships with top customers like Bank of America.
The issue underscores the pressures facing the FHFA, which is responsible for conserving the assets of Fannie and Freddie.
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