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Holding Bankers’ Feet to the Fire | GRETCHEN MORGENSON

Holding Bankers’ Feet to the Fire | GRETCHEN MORGENSON


By GRETCHEN MORGENSON Published: July 16, 2010



KUDOS to the Federal Housing Finance Agency, overseer of Fannie Mae and Freddie Mac, the crippled mortgage finance giants. While some in Washington have continued to coddle the big banks even after they drove our economy into the ditch, this agency seems serious about recovering money for taxpayers by holding bad financial actors to account.

The agency announced last Monday that it had issued 64 subpoenas to a throng of unidentified financial services institutions, seeking documents related to mortgage securities that Fannie and Freddie bought from Wall Street during the boom years.

The subpoenas are designed to tell the agency what many of us want to know: How did Wall Street package and sell private-label mortgage securities to investors, even though the nature and quality of some of the loans crammed inside those tidy little packages were, at best, suspect?

Once that question has been answered, Fannie and Freddie can force the institutions that sold the securities to repurchase the improper loans, allowing taxpayers to recover some of the losses they’ve swallowed on Fannie’s and Freddie’s federal bailout.

Investigating this aspect of the mortgage mess seems a pretty logical step for a regulator. But in the topsy-turvy world of Washington, the housing finance agency’s move is unusually aggressive. Edward J. DeMarco, its acting director, seems to be that rarity — a regulator who not only talks about looking out for the taxpayer, but actually does something about it.

The subpoenas went to companies that act as trustees for mortgage pools or that service the loans in them. The housing finance agency wants to see loan files and transaction documents related to those pools, including mortgage applications and property appraisals. Recipients of the subpoenas have 30 days to produce the requested documents. Additional subpoenas may follow, it said.

The agency had to resort to subpoenas, it said, because when it asked the institutions for the records it got nowhere for many months. “Difficulty in obtaining the loan documents has presented a challenge to the enterprises’ efforts” to ascertain whether losses at the companies are the responsibility of others, its press release said.

Fannie and Freddie bought only the highest-rated pieces of these deals, but they bought buckets of them. During 2006-7, these entities bought $294 billion of so-called private-label securities. Not all of these purchases are under scrutiny, the agency said.

It is clearly turning up the heat on the major players in mortgage servicing and securitization. Among the bigger trustees in the business are Deutsche Bank and the Bank of New York, while loan servicers include Bank of America and many more. None of the banks would confirm if they had received subpoenas.

Continue reading…The New York Times

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, bank of new york, deutsche bank, fannie mae, Freddie Mac, mbs, mortgage, STOP FORECLOSURE FRAUDComments (0)

US tries to recoup Fannie, Freddie losses

US tries to recoup Fannie, Freddie losses


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.
AP Logo 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.



Posted in fannie mae, FHA, Freddie Mac, mbs, mortgage, STOP FORECLOSURE FRAUD, wall streetComments (0)


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