Office of Federal Housing Enterprise OversightOffice of Federal Housing Enterprise OversightOFHEO_873d297f-0ae2-4f1b-a07c-5f88f2e5372fTo promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac_7e2b9f01-e354-4c76-99ac-d73b36700cdcIntegrityWe adhere to the highest ethical and professional standards.We treat the Enterprises, the public, policy makers and otherstakeholders with impartiality and respect.IndependenceWe are an arms-length regulator of the Enterprises andmaintain our objectivity. Our evaluations of the Enterprises areunbiased and remain free from external influence.ProfessionalismWe maintain a highly skilled, dedicated and diverse workforcethat reinforces our ability to manage change in a dynamicenvironment. We strive for excellence in our actions and workproducts in order to achieve results.AccountabilityWe are accountable for our actions and results, both asindividuals and as an organization. We strive to use agencyresources and authorities efficiently and effectively to achieve ourmission and goals. As public servants, we are accountable to theAmerican people.SupervisionEnhance supervision to ensure the Enterprises operate in a safe and sound manner, are adequately capitalized and comply with legal requirements._f164c1b1-ae5b-4785-8a89-fedcd67b64f41OFHEO’s primary duty as a regulator is to ensure that the Enterprises havethe financial strength and operational capacity to fulfill their important rolein the nation’s housing finance system. Providing a comprehensive andeffective oversight program requires attention to the Enterprises’ operationsand management, the risks inherent in their activities and the dynamicenvironment in which they operate. OFHEO will enhance and strengthen itsoversight by applying meaningful risk-based standards, assessing theEnterprises’ changing risk profiles, targeting resources to diagnose emergingissues, monitoring adherence to law and regulation, verifying that requiredimprovements are made, taking remedial action, and following through onlitigation that can result from enforcement actions.Safety and Soundness Standards ComplianceThe Enterprises comply with safety and soundness standards._03cfa3b2-2d96-4455-ac0b-6e41b334d92b1.1Means and Strategies: ▲ Complete annual, risk-based examinations of the Enterprises to ensure that they comply with safety and soundness standards, are addressing issues identified and are making recommended improvements.▲ Perform targeted examinations that explore areas of concern in amore in-depth and focused way, pursuing higher risk issues arising from ongoing examinations.▲ Enhance focus on operational and model risks of the Enterprises by developing ways to measure and assess these risks and applying those measures consistently to both Enterprises.▲ Enhance validation of information received from the Enterprises.CapitalizationThe Enterprises are adequately capitalized._b05f65a3-30c6-46a2-a048-4d0ea06a16a61.2Means and Strategies:▲ Strengthen the capital regime that ensures the Enterprises’ capital adequacy by reviewing the risk-based capital standard and developing additional measures of capital adequacy, some of which may require legislation. Explore issues related to market risk; credit risk including counterparty risk and concentration risk; operational risk including reputational risk; fair value accounting; and economic capital.▲ Ensure the Enterprises hold a sufficient amount of capital to meet OFHEO’s capital requirements by monitoring the Enterprises’ capital plans and assessing capital levels against regulatory standards.ComplianceThe Enterprises comply with applicable laws, regulations, directives and agreements, including executive compensation, corporate responsibility and disclosure._2fd17ecb-e314-424b-be5a-b460457162101.3Means and Strategies:▲ Monitor the Enterprises’ compliance with applicable laws, regulations, directives and agreements, including executive compensation, corporate responsibility and disclosure, and take enforcement action if necessary.▲ Follow through on necessary enforcement actions and ensuing litigation that result from OFHEO’s supervisory activities, including special examinations of the Enterprises.▲ Closely monitor compliance with consent and other agreements between the Enterprises and OFHEO to ensure that changes are made on schedule and verified. Take enforcement actions when necessary to ensure that the Enterprises are making operational improvements.Regulatory InfrastructureStrengthen regulatory infrastructure to enhance the supervision of the Enterprises._99733650-b451-46ec-8f2d-0fee8ee04c611.4Means and Strategies:▲ Proactively provide additional guidance, including necessaryregulations, policy statements and directives, to the Enterprises toprevent problems from arising or worsening, facilitate quickresolutions, improve the transparency of supervision processes, applyuniform standards to both Enterprises, and clarify OFHEO’sexpectations of them.▲ Establish a quality assurance function to maintain consistentapplication of the supervisory standards and examination practicesacross Enterprises and ensure that appropriate policies are followed.▲ Work with other regulators to identify risk areas and supervisoryissues of common interest. Coordinate and share information,findings and views with other regulators to ensure consistent policyand standards that recognize the interactions among financialinstitutions.▲ Implement OFHEO’s automated supervisory tools to improve andintegrate supervisory functions and processes and to manageinformation effectively.▲ Conduct applied research and in-depth analysis on a wide range ofsafety and soundness and capital adequacy issues that will increaseOFHEO’s understanding of the Enterprises, the markets in which theEnterprises are engaged, and the risks that affect OFHEO’s ability tocarry out its responsibilities.Statutory ReformsProvide support for statutory reforms to strengthen our regulatory powers._a04eb712-ed14-47e3-9767-f584921b66a02OFHEO’s ability to ensure the financial safety and soundness of the Enterprises faces certain limitations within current law. As OFHEO has identified problems through its special examinations of both Enterprises, the agency has had to rely on consent agreements with each Enterprise to affect change. Going forward, OFHEO needs the full set of regulatory powers, similar to the tools available to the bank regulators, so it may act quickly to address problems. OFHEO will continue to work with both the Administration and the Congress to identify and support appropriate changes to its statutory authorities that strengthen OFHEO’s ability to carry out its mission.AuthoritiesSupport efforts to strengthen OFHEO’s authorities._c4d2cbd0-4c36-4d7b-a384-1db4a16d512b2.1Means and Strategies:▲ Support statutory changes to strengthen OFHEO’s regulatory toolsthrough research and analysis related to the risks of the Enterprisesand risks in the secondary mortgage market, including potentialsystemic risk associated with the Enterprises. Conduct historical,financial and comparative analyses to clarify the need for and scopeof statutory changes.▲ Identify risks, issues and emerging trends that are internal or externalto the Enterprises and affect OFHEO’s ability to carry out itsresponsibilities. Make recommendations to Congress on any neededstatutory changes to OFHEO’s authorities to ensure the Enterprises’safety and soundness. Examples include broader flexibility in settingcapital standards that better measure risk, including economiccapital, and limiting growth of the Enterprises’ portfolios.▲ Analyze legislative proposals and the effects of possible changes.▲ Respond to requests from other Federal agencies and Congress onalternative approaches to implement OFHEO-recommended statutorychanges and to explain the need for change.▲ Conduct outreach to the housing and mortgage finance industry andother stakeholders to explain the need for statutory changes andpossible effects of those changes, and to gather their input.Secondary Mortgage MarketContinue to support the national policy of an efficient secondary mortgage market which promotes homeownership and affordable housing._65f5c525-6d35-4d46-b207-22f1a6ab09073Fostering an efficient secondary mortgage market is the best way to ensure that there is a steady stream of funds for homeownership and affordable housing. The market has become increasingly dynamic and complex, and the Enterprises comprise a large share of that market. The Enterprises contribute to the smooth operation of the markets by providing liquidity and stability and by meeting affordable housing goals. For any market to work efficiently, its participants must have access to reliable information to make decisions. OFHEO will work with other Federal agencies to coordinate efforts that could affect the secondary mortgage market, and will provide information and analysis to the public for informed decision-making to encourage market efficiency.TransparencyPromote an efficient secondary mortgage market by increasing transparency of mortgage market developments and Enterprise risks and activities._7e6bf088-1309-4a46-9058-dc6abba648f93.1Means and Strategies:▲ Expand the quarterly House Price Index (HPI) and related productsby, for example, producing a median HPI, expanding thegeographical areas covered and providing analysis of specificmarkets.▲ Increase transparency of mortgage market and Enterprise-related developments by publishing conclusions and findings of OFHEO’s annual examination through the Annual Report to Congress.▲ Address emerging issues and external events affecting the Enterprises and the housing finance markets through timely policy analysis.▲ Produce research and analysis focused on key policy issues, such as the implications of loan limit changes, concentration within the mortgage markets and Enterprise market share. ▲ Improve transparency of the Enterprises’ conditions and risks through consistent reporting and disclosure by developing a uniform Enterprise call report and comparative financial analysis of the Enterprises.▲ Make consistent and transparent disclosures of the Enterprises’ conditions and OFHEO’s operations through OFHEO publications and information posted on the agency’s web site.CommunicationCommunicate effectively with all stakeholders on Enterprise risks and activities, mortgage markets, the nation’s housing finance system and regulatory issues._ee3c3666-275b-48a3-af71-70559a8e4f823.2Means and Strategies: ▲ Reach out to groups within the industry, Wall Street and other investment communities, and mortgage markets through educational efforts such as speeches, conferences and forums to share information and discuss issues of common interest. ▲ Provide timely and accessible information to the public on the OFHEO web site. ▲ Respond quickly and thoroughly to public inquiries and to requests for information from other Federal agencies.CooperationCooperate with other Federal agencies on mortgage markets, the nation’s housing finance system and regulatory issues._877d7ef0-e981-42df-80e9-a8b22946c5173.3Means and Strategies: ▲ Work closely with HUD on issues related to the regulation of the Enterprises, including Enterprise products and activities, charter issues and affordable housing goals. ▲ Cooperate with other Federal agencies on issues of common interest affecting the regulation of the Enterprises, the mortgage markets and the nation’s housing finance system.Resource ManagementManage effectively OFHEO’s human capital and other resources to support our mission._6d296997-bb1d-4d60-ba5c-6471c9ecc5bc4OFHEO’s success in achieving its strategic goals depends on the effective management of resources and seamless financial, administrative and information technology support functions. The size of the budget in relation to the mission requires OFHEO to use limited resources efficiently and ensures that resources are tied directly to the achievement of the mission. As a small but growing agency, OFHEO relies on staff and management to accomplish its goals through cross-organizational teams that are results-oriented. OFHEO managers use timely information for decision-making that links strategic planning, program performance, budget, and operational strategies. OFHEO uses appropriate competitive sourcing to provide efficient and costeffective services. OFHEO’s management philosophy reflects the governmentwide management goals outlined in the President’s Management Agenda.Workforce DiversityMaintain a diverse workforce that is skilled, flexible and performance-oriented to fulfill the goals of the agency._bf2fa1b1-4f1e-41cc-a111-a8cc1bc0c26f4.1Means and Strategies: ▲ Continue to implement Human Capital Management initiatives to broaden workforce planning efforts, address talent management, and continue support for staff growth and skill development. ▲ Reinforce strategic alignment and accountability by strengthening the linkage between the agency’s strategic goals and individual job performance goals. ▲ Implement the Federal human capital survey to assess needs and make improvements to OFHEO’s operations and positively affect recruitment and retention of key staff. ▲ Maintain hiring practices consistent with merit system and veterans’ preference principles and conduct an independent annual review of OFHEO’s delegated examining processes. ▲ Maintain equal employment opportunity through outreach efforts.IRMProvide effective information resource management services to OFHEO managers and staff to support the goals of the agency._302558ca-ac06-434c-8edd-32d3333cf4914.2Means and Strategies: ▲ Manage information resources effectively to ensure a secure, well functionings ystem and continue to implement the Investment Review Board process to make cost-effective information technology investment decisions. ▲ Continue to implement E-Gov initiatives to integrate information systems and automate agency-wide financial functions, improve communications with stakeholders and automate human capital management with OPM’s Electronic Official Personnel Folder (E-OPF) system. Continue using government-wide web-based systems for recruiting staff and requesting contract proposals.Internal Controls and Risk ManagementMaintain a strong internal control and risk management program._34b09fa1-4697-402a-849b-85f828ff4f3a4.3Means and Strategies: ▲ Maintain strong internal controls, publish financial statements timely, engage an independent external auditor annually, and continue to receive clean audit opinions. ▲ Complete an external review of OFHEO’s information security each year and continue to receive opinions with no material weaknesses.Continuity of OperationsEnsure the continuity of OFHEO’s business functions._54bd1685-3be9-495c-b096-78c3c4788c4e4.4Means and Strategies: ▲ Ensure that OFHEO’s Continuity of Operations Plan is up-to-date and fully tested on a regular basis, and that staff are familiar with the functions they may have to perform in an emergency.2005-10-012011-09-302010-02-08http://www.ofheo.gov/media/pdf/OFHEOstratplan92906.pdfArthurColman (www.drybridge.com)colman@drybridge.com