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Subscribe to RSSOutrage ensued when people learned that big banks sold bundles of shaky mortgages to unwitting investors, then turned around and placed bets that those securities would tank. Now there's an even bigger bombshell in the offing: An investigation conducted by ProPublica and NPR found that government-owned Freddie Mac has invested in financial instruments that profit when homeowners are stuck in high-interest mortgages.
Freddie Mac is supposed to be dedicated to backstopping mortgages and making it easier for people to get housing loans, but instead of dumping riskier investments as it was ordered to under terms of its government bailout in 2010, it doubled down on securities that pay off when homeowners lose. Freddie Mac says its investment department is separate from the rule-making arm that dictates when and under what circumstances homeowners can borrow, although the company began making bets on high-interest mortgages starting in 2010, around the same time the entity issued new rules that made it harder for many people stuck in such mortgages to refinance.
At the same time Freddie Mac tightened the terms under which it would extend credit to homeowners and raised fees associated with refinancing. The Federal Reserve has even noticed how detrimental this was to Freddie Mac's supposed mission and blasted Freddie as well as sister mortgage entity Fannie Mae, calling their fees "difficult to justify."
"We remain committed to reducing our retained portfolio and appropriately managing its risks," spokesman Michael Cosgrove said in a statement via email. He added that Freddie Mac's investment portfolio is $60 billion smaller than it is required to be. Cosgrove also confirmed, though, that Freddie Mac still owns the troubling securities outlined in the ProPublica story.
Homeowners lose out when they can't refinance to a lower mortgage rate, and the economy suffers, too. If borrowers are struggling financially, a lower rate might keep them out of foreclosure, and everyone who refinances frees up more of their income — money that could be funneled back into the anemic economy.
"In three years we refinanced more than 4.3 million mortgages totaling about $930 billion," Cosgrove said in the statement. According to research company CoreLogic, nearly 11 million homes were underwater late last year. Homeowners going through the frustration of trying unsuccessfully to refinance may wonder how many more people could have benefited from a more extensive refinancing program.
But there is one person who has benefited: Peter Federico, head of the trading division at Freddie Mac, was paid $2.5 million in 2010 and was eligible to make even more in 2011, according to the story posted on ProPublica's website.
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give the struggling people in this man made calamity a break.
Yes, and first get the government out of the housing market.
These GSE's are NOT in the business of helping people as they claim, they are only after profit and they don't care if they destroy lives. Fany and Fredy should be shut down ASAP.
Get government out of everything! They should be responsible for infrastructure and national security ONLY! They have failed at both. Not only have they failed at both, they have actually created more problems. The only people who are dividing the people are the politicians, the media, and the fake "grass roots" folks like the B.S. 53% that seem to think that they represent everyone who actually pay taxes.
This is a massive conflict of interest. Further investigation is needed to find out who knew about these investments and when to determine if there was a criminal conspiracy to defraud borrowers by manipulating refinance rules in order to benefit Freddie Mac.
An organization that controls the rules for people to be able to refinance out of high interest mortgages makes financial bets that pay off when people are stuck in those mortgages. So all they did was make it harder for people to refinance out of the high interest loans that were financially crippling them, which goes completely against the mission Freddie Mac have been given by the administration, so that they could then make money on their investments. If this isn't criminal then what is!!! They manipulated the mortgage market for their own financial gain. Those involved in making these investments and anyone who knew about it should be immediately fired. If there is any evidence what-so-ever that the persons responsible for the changes that were made to refinancing policies knew about these investments, then those people should be arrested along with those in the investment division for criminal fraud and conspiracy to defraud borrowers. I do not see any way that these changes in the rules and the investments that benefited from them were just a coincidence.
Why can't home owners get the same zero percent refinance deal that the banks got?
Another example of the Brave New World in America, today.
Freddie, Fannie, and FHA were sold to the American people as federal assistance programs to make housing affordable to millions of otherwise ineligible Americans. In reality, the three programs encouraged house-flipping and escalated housing prices, benefiting mainly the speculators, the mortgage lenders and real estate developers.
Another Double-Speak from Brave New World: The Federal Reserve, a private central bank, was created in 1913 to stabilize the financial market and implement independent monetary policies. Instead, the WallSt FatCats within the Federal Reserve, created Boom-and-Bust cycles that benefit only the WallSt FatCats speculators.
Big Government is a charade played by the FatCats who fool the people with names of dignified sounding organizations purporting to 'help' the American people.
I would venture a guess and say that, probably, there wasn't one mention of fixing any of this nefarious crap in those 2000 plus pages of banking reform legislation just put forth. This is exactly what you get when you have little to no regulation of these thieves. I would also bet that, MIRACULOUSLY, there will be no one charged with anything because there are no rules or laws against reaming the piss out home owners and no one will go to jail....damn bastards! FIRE every God damn one of these thieves who initiated this directive and clean it up or shut it down. Some people in government just don't get IT yet!
When Dodd and Frank mandated banks make housing loans to people who could not afford them it was a no brainer that the market was going to tank. Anybody who had some money to invest could have made a killing betting against these loans. The banks knew this was going to happen but was powerless to stop it so they hedged their bets.
Banks and financial institutions got a favorable next to zero interest. These crooks turning around and charging us more. If it is not enough, they bankers got hundred of million in bonus every year.
Nobody go to jail. Nothing has been done. Simply outrageous.
You have to work hard for the rest of your adult lives to pay for their greeds. No more mortgage slavery.
Romney is betting a lot of money on these folks failing and losing their homes.
Both Newt and Romney had a ton of money on the first collapse of Freddie and Fannie, and they both made a lot of money off of American People losing their homes (some might call that "insider trading" on Newt's part because Newt was Freddie MAC's "adviser" when it all fell down).
I wouldn't trust either one of these guys as far as I could throw them.
Obama / Biden 2012
Nah, let Obama have his way with another ten billion borrowed dollars to help out those homeowners while sticking it to the taxpayers...again. Guess the 16 plus trillions in debt aren't a concern? Think China is going to lend more money? Where do you think the money is coming from, taxing the rich? Apparently you aren't aware of who or what Freddie Mac and Fannie Mae are. Hint: they aren't about free markets.
Isn't this the same "company" that pays million of bucks to the "Big Fig" Newton GingRich to not "lobby" for them, but provide historical consulting?....(????????)(WTF is that anyway)?
What a mess!
American Girl
Barny and gang (including Obama) made a ton of money off of Fannie and Freddy.
Obama stop the looting and start the prosecuting.
OBama isn't going to stop nothing. Neither will fannie or freddie. They honestly believe to themselves that selling mortgages to investors is a good idea. They should be writing mortgages and holding them in house with caps on income to borrowing....... This other stuff is pure speculation. They are a bunch of crooks trying to spin it. As long as the risk is transferred to big investment houses that can't fail, its too big to fail and people will get burned with housing in another bubble. There will be bailouts and they will continue. This practice needs to end completely-- until then we may have 20-40 years more of pump and dump. -Look at my crap I am selling..... its backed by the government and is investment quadruple AAAAAA by whoever we can bribe...... We-cheatim-and-how attorney at law guarantees that all risk have been disclosed. Pure garbage.
Our government will never prosecute these thieves because they are too busy sucking their cocks
The government and the thieves are one and the same.
TO: alan_static who wrote:
Is that supposed to be funny? You and everybody else in this world know all too darn well that the Republicans and the Bush Administration robbed this entire country and the American People blind years ago and burried us as deep in debt as they possibly could.
Republican lie and demagoguery machines are well oiled and running 24-7.
You are drugs, lady. ALL the politicians mucked this up, I guess you watch MSNBC or are just a partisan. No one knows "darn well" - YOU believe it but that does not make it the truth.
Your govt. hard at work for you and always looking out for the little people.
Feddie Mae and Newtie Mac two examples of the scam and looting that are becoming what we used to have as Federal Government. Our government is like this growing mafia finding new ways to rip its citizens off. I don't understand how or why we as a country let these two entities continue to exist.
Newtie Mac...That is hilarious...thanks for the LOL
They wouldn't exist at all, if people didn't support their election campaigns, and those who do the voting, paid attention to those like NEWT (is that short, for FIG NEWTON?) who are ripping us off, via FMackFMae, and then they want to support him, as the Republican Candidate for the highest office in the Country?
Oh....I get it, we don't have ENOUGH crooks in there yet, lets add another one or two, right? What difference would that make? We should write in, our candidate, and he should be Warren Buffet as Pres. and Bill Cosby for VP.....I'm sure we would have a winning combination with two brilliant minds running the Country. Speaker of the House? Colin Powell. We just mght find that the "little people" are cared about again...
Burn Washington down and make sure the bureaucrats don't escape. I sure won't shed any tears if somebody nukes them
LOL ; this spot offers a place to socially vent , laugh , and gain a kind of satisfactional composure , '' after expressing our frustrations. GOD IN HEAVEN KNOWS
I won't vote for them... that oughta scare them! HA HAHA
Class warfare. Let's just start from scratch
OF COURSE I want to screw Wall Street and the Upper Class for every last dime I can. Haven't you HEARD?? GREED is good. More power to ANYBODY who robs them blind, burglars and muggers included
Bernie Madoff is my hero. He screwed a LOT of rich guys. Deserves a spot in heaven
You know, I've had contact with Fannie Mae during this crisis, and their lack of professionalism and the lack of concern for saving money for the company, and thus the taxpayer, was appalling. So this revelation about Freddie Mac is no surprise to me. I even had my US Senator write to Fannie Mae and they did not even respond. Apparently, they only want to talk to the US Senate when they need money -- which they expect Congress to hand over without a whimper. As far as I am concerned, the lot of them should be in jail.
Well now you know why.
Well we know Newt is involved in this. Mittens too. I would call for an investigation of these Rethugs immediately. Their name is all over this one. Taking advantage of homeowners again. Hang these two high.
Kevin, How about Barney Frank? Who when George Bush, concerned about the growing # of Foreclosures asked for an outside audit of Freddie and Fannie. Frank said there was nothing wrong. That Freddie and Fannie were in good shape and would never need a Federal bailout. This was in 2006. The People who were in charge AT THE TIME are the ones responsible.
Were Newt or Mitt even on the committees? No. They were not.
It's easy to blame the CEO's of the banks who made millions on these bad loans. I'd be more apt to check out Barney Frank and Dodd. Fine out what THEY made on the government level.
You can blame this crap all on Bill Clinton.
He tried to "one up" the "chicken in every pot" when he signed this into law.
He had surplus from the republicans before him, saw an opening and went for it.
Granted, the republicans voted for it too (and it was all wrong).
But, Brother Bill signed it into law.
He lined his wallet and blew on a blue dress.
Got away with it all, now everyone wants to blame Bush.
For shame, let the truth out from time to time.
BUSH , AND HIS WMD MISSIONARIES , '' BANKRUPT THE UNITED STATES OF AMERICA ''. just letting the truth out, '' from time to time ''. oooo, and good night , i've had the last word. sarrenora , arrivedurche , estalevista , '' you bunch of cry babies ''!!!!!!!!!!!!!!!!!!!!!!!!!
Clinton may have signed it inot law but the Republicans did nothing to correct it. So, as usual, they are all corrupt.
How about doing the right thing? It may not be illegal but it's wrong.
...the Republicans did nothing to correct it.
Correct it? Hell, they exacerbated it! Do you forget the American Dream Act? Where it actually reduced the downpayment required for Fannie/Freddie backed mortgages to 3%? For blacks and Hispanics of course. Then they tried for years to get zero downpayment passed. In the meantime, Bush directed the FHA to accept zero down, Fannie/Freddie to buy up mortgage bundles with zero down and refused to let any states regulate the mess he created.
You can lay most of the housing bubble at the feet of a Republican president backed by solid majorities in both house of Congress.
This is known as hedging a risky investment. Any other financial institution would be expected to do the same thing. When politicians try to run financial companies, you get "scandals" like this one. Idiots. And the writer of this article should be ashamed.
although the company began making bets on high-interest mortgages starting in 2010, around the same time the entity issued new rules that made it harder for many people stuck in such mortgages to refinance.
*shakes head* Yeah, who needs to regulate these guys, letting them run rough shod over everyone is the way to go.
/sarcasm
Wasn't this Franks and Dodds big thing. Just like Franks, gets you from behind and is not nice enough to give a reach around.
One reason existing refinancing efforts have fallen far short of their goals is that Fannie and Freddie continue to charge homeowners high, risk-based fees up front to refinance their loans you can avoid this if you check your rates and fees at 123 Refinance before you sign
This is Big Money and the Republican arm of our government at work!!
This is what you get when you vote Republican Newt or Romney!! Big Money have both in there pockets!!!
But Republicans can only say NO! NO! NO! The Rich make JOBS!!!!!!!!!!!
Bohica: Bend over here it comes again!
We the People!!! Bailed out Freddie Mac and Fannie Mae now look!!! the middle class home owner is getting screwed again!!!!
Freddie Mac is supposed to be dedicated to backstopping mortgages and making it easier for people to get housing loans, but instead of dumping riskier investments as it was ordered to under terms of its government bailout in 2010, it doubled down on securities that pay off when homeowners lose.
Well all I can say is thank god the federal Reserve is on top of this stuation. LOL
Banks refinanced sixteen TRILLION (that we know of) at zero percent from the Federal Reserve. Why can't the near bankrupt home owners get the same deal? Less than a trillion in refi would save the economy.
You know the answer. The powers that be don't want an economic recovery. Whatever their purpose, it hasn't played out yet.
Yes-and both Newt and Mitthead benefited from this becausse they invested in feddie and Fannie. so there really is no rest for the wicked this fall because we will remind them of thier profits at every turn-and how the soaked and exploited underwater homeowners
Actually there is more government retiremnet money locked up in Feddie and Fannie then almost any other source. The same reason why certain brokage firms and banks got more bailouts then others. If Lehman Brothers had a lot of federal government retirements then they would have got bailedout. Like certain businesses and areas are exempt from the health care plan or the credit card bill, just ask pelosi. You will also find out that a lot of democrats where heavly invest also.
The entire problem is, this probably isn't illegal, (betting against the loanee being able to repay).
Definitely a conflict of interest though from what their mission statement is supposed to be though.
Smacks of highly "morally unethical" behavior, but illegal? I don't think so.
The main problem as I see it, is that what they have been doing, is exactly the opposite of what they SHOULD be doing. Getting mortgages refinanced, to lower payments, would actually put MORE steady income and consistent income into their coffers, would majorly help the overall economy, ie fewer homes going into foreclosure, etc.
"...calling their fees 'difficult to justify.'" Well, no. Not hard to understand at all...They had to pay Newt.
I remember when I lived in California 20 years and a hundred pounds ago a man lost on the three strikes law for stealing a slice of pizza and was sentenced to life. LIFE! FOR A SLICE OF PIZZA! These jerks made themselves rich while making the WORLD poorer. And nobody goes to jail? Really? May I suggest a stay in Club San Quinton in general population? I'd love to see some of these guys on "Lockup" yelling "GET ME OUT OF HERE!!!" Ahhh...sweet justice.
Fannie and Freddie are just two tools that the wealthy use to redistribute wealth from the poor to themselves. I wouldn't count on the Repugnicans to fix this problem, since they're the ones who created it in the first place.
That's right Bush was so powerful he set it all up and obama is too weak to fix it.
And btw when did barney franks switch to the republican party? Of course he's resigning to spend more time with his family,BWAAAHHHHAHA
That's the official Republican party line - blame it all on Barney.
Google the American Dream Downpayment Act - sponsored by a Republican, co-sponsored only by Republicans, passed by Republican majorities in the House and Senate. But, nooooo, Republicans had nothing to do with it!
Bush signed this act in 2003. GSE (includes FHA, Fannie and Freddie) default rates were 4.3% of their mortgages (private mortgages were running 15.1%). By 2007, GSE deafult rates were 14.9% and private default rates were 45%!!! Triple in the space of 4 years! Do you really think the Bush administration had nothing to do with this?