Free Republic

The Obama administration's decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday. The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each. Unlimited access to bailout funds through 2012 was "necessary for preserving the continued strength and stability of the mortgage market," the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since...

The Treasury snuck in another big bailout on Christmas Eve: It removed the cap on the amount of money it will provide to Fannie Mae and Freddie Mac to cover their ongoing mortgage losses. There is now no limit on how much we taxpayers will shovel down these black holes. The move is designed to reassure Fannie and Freddie bondholders, who provide a lot of the money the companies use to support the housing market. These bondholders have now apparently been given an explicit government guarantee, in perpetuity. The move is also obviously designed to continue to prop up house...

Fannie / Freddie - What Does Treasury Know? by: Karl DenningerDecember 25, 2009 On Christmas Eve one would think you could have a nice evening with your family. Little did I know what Timmy Geithner had up his sleeve: The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012. I see. But I thought housing was getting better? That's what I...

Huge Bonuses for Failed Fannie, Freddie Mortgage Chiefs AP/The Australian The two chief executives of Fannie Mae and Freddie Mac could get paid up to $6 million each for 2009, despite the companies' dismal performance this year, which cost US taxpayers more than $100 billion. Fannie's CEO, Michael Williams, and Freddie's CEO, Charles "Ed" Haldeman Jr, each will receive $900,000 in salary, $3.1 million in deferred payments next year and another $2 million if they meet certain performance goals, according to filings with the Securities and Exchange Commission yesterday. The pay packages were approved by the Treasury Department and the...

The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress. The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama's current term. But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from...

The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac. The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government's estimate this summer of $170 billion over 10 years. Treasury Department officials said it will now use a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell...

The top regulator for Fannie Mae and Freddie Mac is expected to announce millions of dollars in pay packages for top executives at the government-run mortgage-finance titans, people familiar with the matter said. The Federal Housing Finance Agency approved compensation plans for Fannie Chief Executive Michael Williams and Freddie CEO Charles Haldeman Jr. Those packages are expected to be in a range of $4 million to $6 million, people familiar with the matter said. The companies are expected to spell out pay details for their top executives in securities filings Thursday morning. The Christmas Eve announcement is likely to provoke...

US Senators John McCain (R-Ariz.) and Maria Cantwell (D-Wash.) proposed reinstating the Depression-era Glass-Steagall Act that split commercial and investment banking to rein in Wall Street firms in response to the financial crisis. McCain and Cantwell join other lawmakers in Congress proposing to reinstate the 1933 law, repealed a decade ago by the Gramm-Leach-Bliley Act that led to a rise in conglomerates including Citigroup, JPMorgan Chase and Bank of America active in retail banking, insurance and proprietary trading. Legislation to reinstate the ban was introduced yesterday in the House. Under the Senate legislation, financial firms operating commercial banks and investment...

And the total risk they pose to the taxpayer far exceeds that of the big banks. Fannie and Freddie, in the final days of the year, are even said to be negotiating with the Treasury about greatly expanding the money available to them. Though the four are not in all the same businesses, they were caught in one of the same traps: They sold mortgage guarantees — in some cases to each other. Now when homeowners default, as they are doing in record numbers, these companies are covering the losses. Essentially, taxpayer money to these companies is being used partly...

The U.S. Treasury faces a decision by year end on whether to increase its bailout of Fannie Mae and Freddie Mac beyond the $400 billion it has already committed. So far, the companies have taken $112 billion in capital infusions from the government, and most analysts believe they are unlikely to use up the full $400 billion. But some analysts say the Treasury and regulators should take precautions, in case losses run higher than expected. After Dec. 31, the U.S. government would have to seek congressional approval for any increase. Until then, it can increase its commitment unilaterally. The politics...

"HE SEEMS TO SPEND 10 MINUTES writing his columns," observes Columbia Business School Professor Charles Calomiris, "and he makes up his facts as he goes along." The object of the professor's low opinion is [NYT] columnist Paul Krugman. Three years ago, I published a book called Econospinning, with several chapters devoted to Krugman's gaffes. I guess that prompted the Nobel committee to give him the prize, thereby magnifying his enormous influence. So perhaps a brief update on Krugmania is in order. No, his coverage isn't always misleading or misinformed. But let's say an expert in science were to tell me...

In July 2008 Nobel laureate Paul Krugman wrote that Fannie Mae and Freddie Mac (the GSEs) "didn't do any subprime lending, because they can't: the definition of a subprime loan is precisely a loan that doesn't meet the requirement, imposed by law, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income." (New York Times, July 18, 2008) Earlier this month he compounded his error when he stated: "Zombies, zombies, everywhere. One of the enduring myths of the financial crisis has been the claim that it was the result of...

The situation in housing is taking a turn for the surreal. As of tomorrow, bankrupt Fannie Mae will offer deadbeat housing speculators, aka homeowners who bought at the market peak and now can't pay their mortgage, the option to live in their foreclosed upon home while renting it out on a month-to-month basis from the government. As the WSJ reports, "borrowers-turned-tenants will be able to sign leases of up to 12 months and will pay market rents, which in most cases are lower than the cost of mortgage payments." The catch: Fannie will be able to hold the home as...

) today reported its third-quarter 2009 results and filed its quarterly report on Form 10-Q with the Securities and Exchange Commission. The filing provides consolidated financial statements for the third quarter of 2009. The following documents are now available on Fannie Mae’s Web site: News Release reporting third-quarter 2009 financial results Fannie Mae’s quarterly report on Form 10-Q Third-Quarter 2009 Credit Supplement Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to enhance the...

WTF is this? Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday. The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that. This has exactly nothing to do with helping "homeowners." It is entirely about Fannie not having to recognize the written-down value of these houses - that is, allowing them to hold the "mark" on the loan at it's original value, rather than recognize...

Oh boy: (h/t Doug Ross) The [Fannie Mae] "seriously delinquent" rate has gone parabolic, increasing by roughly 5% sequentially and just under 300% YoY [year-over-year]. As mere text will simply not do this metric justice, please enjoy this chart of the dataset from Blytic. It tells you all you need to know about the Fed's containment of the housing problem. The August seriously delinquent single-family number comprised of a 2.87% non-credit enhanced delinquencies and a very bothersome 11.52%, consisting of credit enhanced loans ~~~ The deterioration of FNM's book however did not stop it from increasing the size of its...

Make My GSE a McGE Sarah Carlsruh, October 22, 2009 The burden of bailing out mortgage giants Freddie Mac and Fannie Mae will fall to taxpayers, predicted Brooklyn Law School Professor David Reiss, at a cost which the Cato Institute suggested could top $200 billion. The Cato Institute hosted a lecture on October 19th called, “Which Way Forward for Fannie Mae and Freddie Mac?,” where economics and real estate savvy speakers discussed secondary mortgage markets and the government sponsored enterprises (GSE’s) Fannie Mae and Freddie Mac. Subprime loans were, until recently, considered by the Mortgage Bankers Association (MBA) to be...

A new analysis of loss-ridden mortgage giants Fannie Mae and Freddie Mac tries to nail shut the coffin on their common stocks. In a report, financial services research specialist Keefe Bruyette & Woods says the companies’ shares would have zero value under the workout scenario the firm believes is most likely: the creation of new Fannie and Freddie entities as mortgage guarantors owned by the banks that use their services, while the government continues to support the old Fannie and Freddie loan portfolios as they wind down. Keefe may not be telling speculators in Fannie and Freddie shares anything they...

Housing Mess: A huge, government-run housing agency shows massive losses and needs a bailout. Fannie Mae? Freddie Mac? No. It's the Federal Housing Administration, in a bad case of financial-meltdown deja vu. The FHA, which insures mortgages made by first-time buyers with low down payments, says it may need a bailout because it will have losses of — get this — $54 billion. And how did it lose all that? By backing home loans made to people who couldn't pay them off. Where have we heard this before? At a time when we talk routinely of trillion dollar deficits, $54...

RUSH: Let me go back to the Washington Post, because on Monday the 7th, the Washington Post published an article that very few people talked about and was little noticed, about changes in the mortgage market since Freddie Mac and Fannie Mae were taken over a year ago. According to the Washington Post -- this is a quote -- "Only one lender of consequence remains [in the mortgage market]: the federal government..." The mortgage industry has been nationalized. "[N]early 90 percent of all new home loans are funded or guaranteed by [YOU!] taxpayers... The government has the power to decide...

It's careful, it's complicated, it's got a catchy name, and it's first. At face value, that's what I see in the Mortgage Bankers Association's proposal to formulate a new, government-guaranteed, mortgage backed securities market to take the place of Fannie Mae and Freddie Mac.Let's start at the very beginning, with the MBA press release: The centerpiece of MBA’s recommendation is the creation of a new line of mortgage-backed securities (MBS). Each security would have two components – a loan level guarantee provided by privately-owned, government-chartered and regulated mortgage credit-guarantor entity (MCGE) and a security-level, federal government-guaranteed wrap.America, meet the MCGE,...

I thought I had seen it all when it comes to dumb. I was wrong. video at site This is idiotic. Let's count the ways: A "strong regulator" eh? You mean like the FHFA? Fannie and Freddie had a so-called "strong regulator" that nonetheless allowed them to lever up at 80:1 (or 200:1 depending on how you looked at their books) which was clearly outrageous on its face and led to their demise. That same "strong regulatory framework" had Fannie and Freddie buying other-than-actual-prime paper. It detonated. Any questions? Fannie and Freddie turned into revolving-door agencies with the government, winding...

A mortgage-industry trade group is calling for Congress to transform Fannie Mae and Freddie Mac into several smaller privately held companies that would issue mortgage securities carrying an explicit government guarantee. Some foreign investors in China and elsewhere lost confidence in that fuzzy implied guarantee last year and reduced their holdings of the companies' debt, though the U.S. government has propped up Fannie and Freddie with capital infusions. "If we're going to restore and maintain investor confidence and...consistent liquidity, that is going to require an explicit backstop," said John Courson, chief executive and president of the MBA. Shares of both...

Equities broke their winning streak on Friday and now they may be looking to start a new streak. All three major indices are down between one half and three quarters of a percent. That's not that bad. One major index in China was off by 6% this morning on price to earnings "fears". Stocks retreated from Shanghai to Frankfurt on speculation the six-month rally has outpaced prospects for earnings growth.

Fannie Mae reported another terrible quarter today. Fannie Mae, the largest provider of U.S. home mortgage funding, on Thursday reported a $14.8 billion quarterly net loss that it said would force it to go to the U.S. Treasury trough a third time for money to stay in business. The company noted a "significant uncertainty" of its long-term financial health in reporting its eighth consecutive quarterly loss, which illustrates its struggle to make money in the face of rising defaults and pressure to do more to stabilize the housing market.

Facing the first real rough patch of his presidency, President Obama and his supporters are once again resorting to a tried-and-true tactic: attacking George W. Bush and Dick Cheney. In his White House press conference last week, Mr. Obama referred to the Bush era at least nine times, three times lamenting that he "inherited" a $1.3 trillion debt that has set back his administration's efforts to fix the economy. With the former president lying low in Dallas, largely focused on crafting his memoirs, Mr. Obama has increasingly attempted to exploit Mr. Bush when discussing the weak economy, the wars in...

Republicans on Thursday lashed out in opposition to legislation that would require more than $6.5 billion of funds from the federal government's bank-bailout package to be used to help troubled homeowners and neighborhoods on Main Street. House Financial Services Committee chief Barney Frank, D-Mass. "We need to restore fiscal discipline," said Rep. Spencer Bachus, R-Ala., the ranking member of the House Financial Services Committee, during a hearing of the panel. "Treasury needs flexibility and this won't give it to the agency." The legislation, introduced by Rep. Barney Frank, D-Mass., would require that some remaining funds from the Troubled Asset Relief...

Fannie Mae and Freddie Mac were the chief culprits in the housing crisis because they encouraged people who could not afford payments to borrow money, according to a congressional report released Tuesday. The claims in the report have long been advanced by conservatives, who argue that the Community Reinvestment Act and other federal programs fed the housing bubble that burst in 2007 and led to the economic downfall in 2008. But the report explains in detail how Fannie and Freddie -- government sponsored enterprises (GSE) that were not subject to the same oversight as other publicly traded firms -- “privatized...

Homeowners taking part in the Obama administration's housing rescue program through Fannie Mae and Freddie Mac will now be eligible even if their loan-to-value ratio is up to 125 percent. That means they can have up to 25 percent negative equity and still get a refinance.The rule changes, part of the government's attempts to restore housing affordability and stem the foreclosure crisis, apply to loans backed up by Fannie Mae and Freddie Mac.Previously, homeowners could borrow up to 105 percent of their home's value. The new loan-to-value ratio is set up at 125 percent in a further effort to address...

Our favorite Congressman from MA is back in the news again. No, there's not a male escort service operating out of his townhouse this time. That's so 1989. This time, Barney is pushing for, you guessed it, relaxed mortgage standards. Since that worked out so well for our country the first time, Barney wants an encore: Rep. Barney Frank says that unless Fannie Mae and Freddie Mac relax their recent tightening of mortgage standards on new condominiums, the economic recovery could be threatened. That would be the same Barney Frank who famously boasted that the two federal agencies -- which...

Banking Queen Barney Frank, having not learned anything from the mortgage crisis he helped create, asked both Fannie Mae and Freddie Mac to relax condo lending rules.

(I DON'T CARE IF THIS HAS BEEN POSTED 300 TIMES BEFORE, IT IS NECESSARY THAT WE ALL UNDERSTAND WHO IS RESPONSIBLE FOR THE CURRENT MESS. AND, YES, I MEAN TO SHOUT. I'M MAD AS HELL!! IF YOU'RE NOT ALSO MAD AS HELL, YOU DON'T UNDERSTAND WHERE THIS IS TAKING US AND WHO ORCHESTRATED IT. BEFORE IT IS PULLED FROM THE CANADIAN SITE, WATCH THIS 4 MINUTE VIDEO TO UNDERSTAND WHY I'M SICK AND TIRED OF OBAMBI MUTTERING THAT HE "INHERITED" THIS MESS. THE MESS HAS ITS ROOTS WITH THE DEMOCRATS GOING ALL THE WAY BACK TO CARTER!! FRANK, DODD, SCHUMER,...

REAL ESTATE APRIL 14, 2009, 4:02 A.M. ET Older Borrowers, Out in the Cold By ELLEN E. SCHULTZ YUBA CITY, Calif. -- In 2006, Carol Couts, a 66-year-old widow in Yuba City, Calif., was living in her home, payment-free, when a mortgage broker persuaded her to refinance her no-cost mortgage for one that exceeded her monthly income by more than $400. She can't afford the payments, and unless her lender modifies the loan to make it affordable, she'll lose her home of 25 years.

Frank acts like a deranged lunatic while this student was intelligent, calm and rational. Frank adds there is a “systematic right-wing attack to try and divert the blame.” It amazes me how Frank continues to act like a child, knowing full-well that he shares a substantial amount of the blame for sub-prime mortgages which contributed to the current recession.

It has been tough on Fannie and Freddie. They've lost so much money (-$50 billion in 2008, more than the $42 billion they made in total from 1971-2006) that some of their top talent might be getting nervous and would consider leaving. Never fear. Bonuses are here! Ce~lebrate good times, come on! . . . it's a celebration.

Fannie Mae and Freddie Mac, the two troubled companies at the heart of the nation’s mortgage market, are set to pay their employees “retention bonuses” totaling $210 million, despite calls from lawmakers to cancel the payments.

WASHINGTON – Mortgage finance giants Fannie Mae and Freddie Mac plan to pay more than $210 million in bonuses through next year to give workers the incentive to stay in their jobs at the government-controlled companies. The retention awards for more than 7,600 employees were disclosed in a letter from the companies' regulator released Friday by Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee. The companies paid out nearly $51 million last year, are scheduled to make $146 million in payments this year and $13 million in 2010.

Bill Haling: Where’s the outrage? President Obama has been in office just 60 days and we have tripled the nation’s debt. Wow! All those that voted for change certainly got it — along with the rest of the taxpayers. Everyone knows this depression is Bush’s fault. “Give the stimulus time!” is the response. The Bush depression will take time for the Democrats to rescue this country. How long will it take for our children and grandchildren to pay for the excesses? Any outrage? The news of AIG paying $165 million in executive bonuses has certainly created a lot of media...

Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator. One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort. ... He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and...

After being widely derided for being asleep at the switch while folks like Bernard Madoff gradually stole tens of billions of dollars from unwitting clients, the SEC is now targeting subprime lenders, hedge funds and home builders. Imagine what kind of mixer that group would throw! From a BuilderOnline.com story: The U.S. Securities and Exchange Commission (SEC), which has been roundly chided for not uncovering several high-profile investment fraud schemes, is getting more aggressive. It now has launched a series of investigations focusing on subprime lenders, hedge funds, and home builders.“The SEC is fully committed to addressing the [economic] crisis,”...

Freddie Mac and Fannie Mae beg not to be included in "Bonus Gate". The root causes of the problem beg that they are now the good guys.

Proposal Could Put Housing Recovery Programs at Risk if Employees Leave Legislation to severely tax bonuses at companies receiving government aid may imperil the Obama administration's housing recovery program by igniting an exodus of employees from Fannie Mae and Freddie Mac, employees at the companies said. (snip) By including Fannie Mae and Freddie Mac in the measure, legislators fueled feelings of fear and betrayal at those two companies, where some employees polished their résumés and began to call headhunters who had tried to recruit them in recent months. (snip) The legislation could affect hundreds of people at the companies, which...

Fannie Mae and Freddie Mac: More Bonuses for Failure It is almost like the movie Jaws, once you think you can go back in the water the Great White Shark appears again. We are experiencing virtually the same situation in bonuses paid out for ineptitude. It seemed very clear there was a backlash…an outrage at the bonuses given to AIG employees who single handly destroyed a major company and almost the the US economy. Now Fannie Mae (FNM) is giving bonuses as well. The difference is the linguistics. They are calling them “Retention Payouts”. Unfortunately, failure is being rewarded again....

While everyone assails AIG for using less than 0.1% of the taxpayer-bailout money it received to meet contractual obligations in compensation through retention bonuses, another recipient of government largesse has its own bonus program in operation. According to their annual report, Freddie Mac has a generous retention bonus plan built into its operation for the next year. Eligibility includes all of the senior and executive VPs. It comes in four payouts, and only the last has any connection to company performance. Exhibit 10-4 on page 414-5 lays out the program:Objective To retain as many people as possible for 18 months...

LETTER: Bush raised red flags about Fannie and FreddieMarch 14, 2009 6:00 AM Bush raised red flags about Fannie and Freddie In its editorial, "Protect homeowners: It's job No. 1 for Congress" (March 8), The Standard-Times proclaimed that Rep. Barney Frank has been a victim of unfair criticism and that he was actually among the voices "warning that disaster loomed" at government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Having an entirely different recollection of the facts, I did a little digging. Here is what I found. Starting with the 2002 budget request in April 2001, the Bush administration raised...

During the Great Depression, as borrowers defaulted on mortgages en masse and banks found themselves strapped for cash, President Franklin D. Roosevelt and Congress created Fannie Mae in 1938 in order to buy mortgages from lenders, freeing up capital that could go to other borrowers. Although Fannie Mae began with just $1 billion in purchasing power, the agency helped usher in a new generation of American home ownership, paving the way for banks to loan money to low- and middle-income buyers who otherwise might not have been considered creditworthy.

Despite assurances that the takeover of Fannie Mae and Freddie Mac would be temporary, the giant mortgage companies will most likely never fully return to private hands, lawmakers and company executives are beginning to quietly acknowledge.

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest...

<p>WASHINGTON — JPMorgan Chase & Co. and Citigroup Inc. are expanding their efforts to halt home foreclosures while the Obama administration develops its plans to help the U. S. housing market.</p> <p>JPMorgan Chief Executive Jamie Dimon said the New York company plans to halt new foreclosures for owner- occupied home loans through March 6. Dimon made the pledge in a letter to Rep. Barney Frank, D-Mass., chairman of the House of Representatives Financial Services Committee, who released it Friday.</p>

WASHINGTON (Reuters) – The Obama administration is crafting a mortgage-rescue program that would see Fannie Mae and Freddie Mac ease payments for hundreds of thousands of borrowers and offer a model for Wall Street to do the same, sources familiar with the plan said. Late last week, officials from the Treasury Department and Department of Housing and Urban Development worked with the companies' regulator to agree on standards for who could get relief and how they might coax other finance companies to follow their lead, said two industry sources familiar with the deliberations. Those discussions were still going on over...