The Federal Housing Finance Agency has fallen behind in its examinations of Fannie Mae and Freddie Mac because it simply does not have enough examiners to properly monitor the government-sponsored enterprises, according to new report from the agency's watchdog.

The report from the FHFA's Office of the Inspector General, released Thursday, criticized the agency for not developing a systematic process to determine the appropriate size of examiner teams. Instead, the FHFA set the size of the teams "based largely upon its executives' judgment and budgetary considerations."

"Without a systematic process by which to set the size of its core teams, FHFA cannot be assured that they are adequately staffed to conduct planned examination activities on a timely and thorough basis," the report stated.

The IG report did not say what the fallout would be if exams are not done in a timely manner, so it's unclear if an increase in examiners would uncover additional risks to taxpayers. In the past two years, the GSEs have become highly profitable, returning a combined $176.6 billion to the Treasury Department in the form of dividends.

The current IG report is a follow-up to a 2011 report that previously found the agency lacked sufficient examiners to ensure the safety and soundness of the GSEs.

On-site safety and soundness exams are the primary tool that the FHFA employs to assess the financial condition and performance of Fannie and Freddie. Because of staffing shortfalls, the FHFA had not examined higher risk areas such as the management of real estate-owned properties.

Since the last report, the FHFA has increased staff levels by 9%, to 143, and many of the new examiners have prior experience at other federal regulatory agencies. Both Fannie and Freddie now have 35 examiners each. Still, examiners told the IG that limited resources and staff turnover may have adversely affected examiners' operations this year.

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