Posted on 16 July 2010.
WILL WE FIND OUT THE TRUTH…THESE LOANS NEVER MADE IT TO THE POOLS?? NEVER SECURITIZED??
WASHINGTON – July 16, 2010 – A federal regulator is taking steps that could lead to the recovery of some losses sustained by mortgage giants Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency said Monday it is looking to get back money that the two government-controlled companies have lost on mortgage securities packaged and sold by Wall Street firms.
During the housing market’s boom years, the two government-sponsored companies snapped up those securities, which contained some of the riskier loans made during the housing boom years. But they declined dramatically in value after the market went bust.
The regulatory agency said it has issued 64 subpoenas seeking loan files and other documents to determine whether the sellers of those securities made any false statements or omissions. Fannie and Freddie had tried to do so themselves but have faced resistance in getting the loan documents, said the agency, which was given subpoena power two years ago.
The agency said in a statement that it is “prepared to take appropriate action to ensure compliance, if necessary.” Any money recovered by the government would offset losses at Fannie and Freddie, which have cost taxpayers $145 billion so far.
Many analysts agree that Fannie and Freddie fed the boom in shady mortgage lending by snapping up billions in dubious mortgage investments and by lowering standards for the mortgages they guaranteed.
“It’s a shame Fannie and Freddie didn’t ask these questions themselves when they were buying these securities in the first place,” said Howard Glaser, a Washington mortgage industry consultant who formerly had both companies as clients. “The truth is that they never really wanted to dig too deep into the true nature of the loans they were buying.”
But the government’s ability to recover money will depend on whether the mortgage companies that made the loans are still operating, said Scott Buchta, chief mortgage strategist with Braver Stern Securities. Many of the lenders who made the worst-performing loans have gone out of business.
“It’s going to be a long process,” Buchta said.
Fannie and Freddie currently hold about $255 billion of these mortgage-backed investments, known as “private label” securities. They amount to less than 5 percent of the $5.5 trillion in mortgage securities the companies own or guarantee and are separate from those issued by Fannie Mae and Freddie Mac themselves.
Fannie and Freddie have also been trying to recover money on their own securities by forcing lenders to buy loans that have gone into default.
Copyright 2010 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.