Skip to comments.Bankers urge gov't to pull plug on Fannie, Freddie ('a brain dead patient')
Posted on 09/11/2010 4:46:09 PM PDT by Libloather
Bankers urge gov't to pull plug on Fannie, Freddie
By Corbett B. Daly
Published September 08, 2010
WASHINGTON (Reuters) - The federal government should take mortgage finance giants Fannie Mae and Freddie Mac off life support sooner rather than later, the Mortgage Bankers Association urged Wednesday.
The bankers said Fannie Mae and Freddie Mac should move beyond the "conservatorship" that started two years ago and be placed "receivership."
"Fannie Mae and Freddie Mac have already moved well beyond the points where any other financial institution would have been put into receivership," MBA Chief Executive John Coursonand MBA Chairman-elect Michael Berman wrote in a seven-page letter to the Federal Housing Finance Agency.
As the financial crisis unfolded in 2008, then-Treasury Secretary Henry Paulson effectively took control of the firms, although he stopped short of full nationalization by placing them in a "conservatorship" to keep them off the federal balance sheet.
The government controls 79.9 percent of Fannie Mae and Freddie Mac, just shy of the 80 percent threshold for placing them on the federal books. Conservatorship is intended for firms that could be restored to health, while receivership is the end-of-the-line liquidation phase.
"The current situation is not unlike a brain dead patient who is being kept alive indefinitely by artificial life support," Courson and Berman wrote.
(Excerpt) Read more at foxbusiness.com ...
Yeah, pull the plug on Bwanny and Dodd.
Gotta hurry and bury the evidence. This aint Waco, you can’t just burn it all up and claim ignorance!
Also pull the plug on the $1 Billion going to Mexico so they can drill in the gulf while our rigs are under a moritorium. I swear, this President is our to ruin this country.
Bankers: Quick, gotta cover up our tracks! The Republicans are coming!
I heard that Chase just lost a big lawsuit with Fannie regarding the lack of documentation Chase has on mortgages backed by Fannie.
Minor things like the lack of the actual title or signed mortgage paperwork.
More money for banker bailout loans!Get rid of bankers and the federal reserve so they/vultures have no pie to eat from.
The real problem here is they can’t shut it down. The purpose of Fannie and Freddie today has little to do with mortages, but to act as a conduit for Quantitative Easing.
If true that's huge. Can you by any chance tell me where you read that?
Pull the plug on a financial rat-hole GSE sucking money out of our pockets for totalitarian crooks without anyone’s head on a pike? You financial oligarchs see no evil, hear no evil, speak no evil.
Another asinine remark from someone who has no clue of what he is talking about.
Fannie and Freddie should die. But if they go on balance sheet, we will be FORMALLY revealed to have, by far, the highest debt to GDP ratio in the world. 90% is consider the breaking point, we are at 120%.
For the bank haters, you should know that Obama and the Dems have really screwed them over (Even under Bush).
Do some research. Look up John Taylor and the Community Reinvestment Act Coalition.
Taylor’s representatives visit all banks and demand that they invest in a fund called CRAIX. If they don’t, they get sued for racial discrimination and the labor unions and other deadbeats picket the headquarters and branches.
John Taylor has cleared at least $10 million for the fund.
He is an ex labor union “recruiter.” And out of Barney Frank’s district.
Look at a conservative college economics professor eat his lunch on Kudlow.
Thanks for the post/info/link. Good stuff.
My point is the bankers should be screaming for the heads of those who pushed these mandates on them, much like the states or we the people should be screaming for the heads of these collectivist’s representatives pushing fed mandates for mythical “victims”...instead of yukking it up with them...enabling totalitarians.
They should never have allowed the banks to sell their loans to these government agencies in the first place. If they wrote it, they should have to live with it, or find a willing buying in the private sector to take on the risk.
"I'm the only thing standing between you and the pitchforks." President Obama, April 2009
Speaking of heads on pitchforks. Thanks.
Another asinine remark from an idiot liberal on FR and FR has been invaded with these ASSWIPES for the past 10 years!
No wonder so many people have left this site.Stuff it pal!
It’s not just Chase ,, it’s all the “lenders” that used the fraudulent company MERS to hide transfers and assignments ,, no docs today , no docs tomorrow ,,,
FNM FRE have nothing to show for what they bought , the chain was broken at the very first link...
Nice to see someone else paying attention. From the article:
The government controls 79.9 percent of Fannie Mae and Freddie Mac, just shy of the 80 percent threshold for placing them on the federal books.
Here’s some light reading ... http://www.reoi.com/news/gse-foreclosures-and-short-sales-rising-despite-loss-mit-efforts
So you're telling me that there's a very high likelihood that almost none of these companies could actually produce the original paperwork for these mortgages if the were ordered to by a Court?
I'm not being flippant I just want to be sure I understand what you're trying to tell me.
Yes, you’ve nailed the issue. Once they move beyond that 79.9% threshold, the government has to own up to the liabilities, and the liabilities are HUGE. I don’t know, however, if we realized these liabilities whether we’d surpass Japans debt:GDP ratio (which is currently 190% and going up).
This was the very reason why Fannie was spun out as a “private” enterprise during the Johnson administration: to get the Fannie liabilities off the US Treasury’s balance sheet, back in the days when the US dollar was already under pressure in value and it was backed by gold, which other central banks could demand in return for Federal Reserve Notes and other obligations.
So to stall the devaluation of the US dollar in the face of the deficits caused by combined outflows from Vietnam and The Great Society, Johnson spun Fannie out. And then because Congress didn’t want to be seen as creating a ready-made monopoly, they created “Freddie” as “competition.”
The situation was made far worse in the Nixon administration, when Nixon allowed Fannie/Freddie to purchase “conforming” mortgages from the private sector.
The problem with Fannie and Freddie are that they’ve cultivated a very lush network of political hacks on their payroll from both parties. Short of a “throw all the bums out of office” revolution, there’s scant chance of any real reform of these organizations by Congress.
Its definitely true as one of my customers hired another 100 people to support a big bank affected by the decision. I don’t have any specific case information.
I’ve tried doing a search but there are too many lawsuits against the specific bank.
Here is a link with some background on what they are doing - http://online.wsj.com/article/SB10001424052748704343104575033543886200942.html
And if these now Nationalized banks don't happen to have $2.7 billion dollars lying around?
It was the derivatives desks that sat along side the RE and loan desks. Leveraged a mortgage 20 maybe 30 times or more when it was all said and done.
It’s no secret that banks are losing foreclosure cases in Courts when asked to produce the title deed. Sliced and diced 20 times, there is no document showing the deed holder any longer. Banks who sold derivatives of their mortgages are left with just servicing the loans and have no standing in a court trying to foreclose.
Could account for the backlog of foreclosures and ex-note payers hanging out for years in bank owned home. Beside the GSEs beginning to kick back bailed out mortgages to originating banks due to lack of proper paperwork.
No wonder entities want the GSEs shut down before banks go belly up.
Very interesting. Thank you.
Most of the original paperwork was reduced to a scanned image and was shredded, some companies did the right thing and stored the paperwork at a secure place like an “Iron Mountain” sort of company.
More importantly in the securitization process the note and the deed were seperated so that the borrower received claim on the deed while the note was never acted upon and instead the actual cash money lender created and sold some kind of a mortgage backed bond through their purchase of a CMO/CDO. The “bifurcation” of the note (splitting and selling the obligation , usually to a pool , and the comingling of funds by the servicer & master servicer) makes it a legal nullity, it is unenforceable on the borrower... the borrower is not a part of the “bond” agreement, the parties there are the cash money lender and his pigeon.
This explains why the mortgage creators were unconcerned with the creation of MERS to track ownership of the notes through their electronic system. They knew what was being tracked was a nullity and would eventually be challenged in the courts, however it made their system workable by allowing mortgages to be traded rapidly and without paying the counties their recording fees, they just assumed with 62 million mortgages in the system that the courts would allow it to continue just on the sheer weight of the fraud they were perpetuating.
IMO its larger than $2.7B since Fannie and Freddie back 90% of the loans in the US. Most loans are sold shortly after closing. The problem they are having is in the transfer of the loan from the originator to the investment company. They transferred ownership electronically and not the actual paper. From what I've read and seen I'd wager a significant portion of those loans are legally un-collectable.
For 12 years or so the “assignments” (transfers of ownership) were nothing more than a name change on one line of a spreadsheet,,, NEVER LEGALLY SIGNED, NOTARIZED or RECORDED AT YOUR COUNTY COURTHOUSE ... This is where the foreclosures fail ,, the lawyers are forging proper assignments (years after they should have actually occurred) and offering them as “evidence” of ownership...
The homeowners owe “somebody” , the discovery of who that “somebody” is and what they owe is being blocked... and false lenders are substituting themselves as the “party in interest” ... It’s a KLUGE.
I’ve considered requesting this information from my mortgage servicing company. I’m sure it would require a subpeona.
Wow and you deduced that I am a liberal merely from my statement that you have no clue on the subject? As if we needed more proof that you have not ability to think whatever.
It's also funny to see a leftist ignoramus calling someone a "liberal." Your level of discourse is really an asset here.
Take more meds and buy yourself a book. Without pictures this time.