published Sunday, March 11th, 2012

Fannie Mae, Freddie Mac play role in rapid foreclosures

"Greed" is Washington politicians' all-purpose accusation when a financial institution takes any adverse action -- especially when it comes to foreclosures that hit millions of homeowners the past few years.

Too often ignored is the federal government's direct role in the foreclosure crisis. Among other things, the government pressured lenders to make loans to risky borrowers.

But government-controlled mortgage giants Fannie Mae and Freddie Mac are also a big part of the reason why borrowers with relatively small loans are being foreclosed on far faster than borrowers with big loans.

"[B]anks tend to keep larger mortgages on their books, while smaller mortgages are more likely to be bundled into securities and later resold to investors with backing from Fannie Mae and Freddie Mac," The Wall Street Journal reported. "Fannie and Freddie ... set strict foreclosure timelines and will fine mortgage servicers that are found to be needlessly delaying the foreclosure process."

What's the result of Fannie and Freddie's push for rapid foreclosures? Well, it takes on average 611 days for foreclosed homes to be repossessed if their loan balances are below $250,000. But it takes 792 days before a home on which more than $1 million is owed is repossessed.

So a person with a smaller mortgage will likely get to stay in his house six months fewer than a person with a large mortgage -- and Fannie and Freddie are largely to blame for that disparity.

Yet politicians continue to blame the housing mess almost entirely on the private sector, not government.

That's grossly misleading, at best.

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Sorry, but both FMs are beholden to the financial industry. It's the lack of independence for them that is the problem.

Maybe if we started prosecuting the executives responsible for fraudulent documents being submitted in order to get foreclosures?

March 11, 2012 at 1:27 a.m.
conservative said...

I can remember when lying brought shame and a stigma on the person. Now those lying in politics and the media don't care and are shameless. They are just looking for a winning majority on any issue and don't mind that as many as 50% know they are lying.

The Demoncrats and Bill Clinton, under the Community Reinvestment Act threatened Banks with Congressional hearings and discrimination charges if they did not loosen their lending satandards. People with no credit, bad credit, no income, or welfare income were qualified for loans. Banks would never lend to such people knowing the high risk of default but were pressured to do so and just passed the loans off to Fannie and Freddie. Who wouldn't?

Demoncrats, Socialists and Lieberals all one and the same, control the majority of the mess media and just keep lying about the governments role in creating the housing collapse.

March 11, 2012 at 8:37 a.m.

Yes, conservative, you are demonstrating that you have no shame about lying.

The percent (and number!) of foreclosures of homes covered under the CRA, even under institutions covered by the act, was far lower than those of homes NOT covered at all. The real number of foreclosures was for homes that were outside the CRA authority, and mostly to people who would never qualify for any kind of assistance.

This means the basis of your claim is inapplicable. The CRA isn't the problem you want it to be. I know you're desperate to prove it, but it's the conservative-beloved deregulation that came under Gramm-Brilby-Leachy Act that lead to the banks being able to take desperate gambles with finances and encouraged them to play Roulette instead of actually building value.

They weren't forced to behave like mad speculators, they chose to do it. And they wrote the law allowing them to do it, and bought off the regulators.

Maybe that should be punished?

Or are you going to keep lying to us about who was responsible for the robomortgage fraud?

March 11, 2012 at 11 a.m.
rick1 said...

conservative, here is an article you may find very interesting. What do you think Obama is trying to cover up? Could it be the government is more involved in the housing crisis (as we know they were) and are covering this up.

Hey Bulbs what ever happened to Obama having the most transparent administraion ever. Why is he afraid to allow these documents to be released?

March 11, 2012 at 4:01 p.m.

rick, it turns out the competition wasn't that great. It's like promising to be drier than the ocean, not so great a deal.

If Obama really wanted to impress me, he'd have the Attorney General put them all before a grand jury. Sadly, the politicians responsible are probably unprosecutable.

March 11, 2012 at 4:27 p.m.
rick1 said...

Bulbs, I agree that politicians are reposible for the housing crisis and The Obama Administration is covering up it up. Read this link about how Franklin Raines is getting a pass and how he cooked the books.

http://news.investors.com/article/598522/201201201917/franklin-raines-not-in-fannie-mae-lawsuit.htm

Just another lie from Obama on transparency. Why wasn't Raines part of the investigation?

Is that Hope and Change still working?

March 11, 2012 at 5:03 p.m.

A lie? No, I consider it a failure and a demonstration that Obama isn't the ultra-liberal that this side of the paper wants him to be. If he wasn't a centrist moderate politician, he'd do something. But he is, so we get what isn't at all that different.

But don't pretend McCain would have done anything different. He sold out in 2004.

March 11, 2012 at 6:22 p.m.
conservative said...

It was called a subprime mortgage crisis for a reason. A subprime mortgage is a loan given to people with poor credit histories. The feds pressured lenders to give these loans but allowed them to pass them on to Fannie and Freddie. Bankers would not have given people with no credit, bad credit, or little or no income a loan without a way out.

The people who defaulted signed a contract, they declined to make payments through no fault of lenders. It works the same for everyone, make your payments, don't walk away from your obligations and you will have a home. It is the deadbeats fault and solely his fault.

March 11, 2012 at 6:58 p.m.

You've got it backwards conservative. Banks pressured the feds to let them make the loans. They did certainly expect a way out, but no, people who were foreclosed upon by the banks did not necessarily do wrong. Many of them had no actual loans, but the bank went to court and swore otherwise to get possession of the house.

Then there are the ones who were mislead by the banks about the terms of their loans. Who forced banks to deceive customers? Who forced them to hand out mortgages with zero-down? Nobody, they got the deregulation they wanted . And who made the banks lie to the credit ratings agencies?

March 11, 2012 at 7:34 p.m.
conservative said...

RICK...... Thanks for that website, here is one for you and a tease :

" At President Clinton's direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties. "The threat was codified in a 20-page 'Policy Statement on Discrimination in Lending' and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining."

http://www.rushlimbaugh.com/daily/2011/10/31/smoking_gun_the_government_caused_the_subprime_mortgage_crisis

March 11, 2012 at 7:40 p.m.

And yet Clinton wasn't in office then. Maybe you should read some sources other than the guy confused about how birth control works?

March 11, 2012 at 7:43 p.m.
conservative said...

PLATO :

Perhaps you have not listened to Harry Reid, Maxine Waters, Barbara Boxer, Debbie Wasserman Shultz, Obamination, the OWS crowd to name a few and the kooks that comment both here and the cartoon page. The fiction is in their minds, not mine.

I want to test you on your willingness to discuss things. Tell me who the rich are, how much more in taxes they should pay and what is their "fair share" or even define "fair share". Remember, you are on record in favour of a $7,500 dollar tax cut for those making $170,000 per the article.

March 11, 2012 at 8:33 p.m.
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