Fannie Mae and Freddie Mac -- which are regulated by the FHFA -- spent $91.2 million from 2011 to 2012 on pre-foreclosure property inspections, despite the lack of any assurance that the inspections were up to par.
Shortcomings by the inspectors, who are contract workers, include missing photos, no inspector signature, manipulated data and unnecessary inspections resulting in little useful information being collected. Inspectors often failed to complete and pass criminal background checks.
In one instance, an inspector "copied old inspection report information onto each subsequent month’s inspection form," the IG found.
A lack of controls over the inspectors "diminishes an inspection report’s integrity and casts doubt on whether performing pre-foreclosure property inspections adds value," the report said.
The IG found that Fannie and Freddie — which are also known as GSEs, or government-sponsored enterprises — as well as the FHFA were at fault for the inspection issues.
“There has been little attention provided to pre-foreclosure property inspections by both FHFA and the enterprises,” the report said.