Free Republic

Treasury Blocks the Sale of Tax Credits by Fannie By NICK TIMIRAOS The U.S. Treasury blocked Fannie Mae's proposed sale of nearly $3 billion in low-income housing tax credits to Goldman Sachs Group Inc. and Berkshire Hathaway Inc. on Friday after concluding that the deal was too costly for taxpayers. The extraordinary move was the latest sign of tensions within the Obama administration over how to balance political and financial pressures resulting from the housing crisis. Fannie Mae had agreed to sell roughly half of its $5.2 billion tax-credit portfolio and had received approval to proceed with the sale from...

Fannie Mae and Freddie Mac are burning a huge hole in the Treasury's pocket. But the Obama administration is getting something very valuable in return: the ability to provide immense support to the housing market with only limited interference from Congress. The credit crunch has displayed yawning democratic deficits, like the inability of Congress to get a proper handle on the Federal Reserve's emergency lending programs. But with Fannie and Freddie, it is the Treasury that gets to freely commit massive amounts of money. Both companies have bought most of the mortgages written in America this year and are modifying...

Democrats' Ethics Targeted by GOP By BRODY MULLINS Republicans are seizing on newly revealed ethics probes of congressional Democrats ahead of next year's midterm elections, accusing House Speaker Nancy Pelosi and her colleagues of failing to make good on their pledge to clean up Washington when they regained control of Congress. None of the Democratic lawmakers under investigation by the House Ethics Committee is expected to lose in 2010. And ethics concerns are usually less important to voters than pocketbook issues. But Republican campaign strategists say ethics issues rumbling under the surface could help the GOP pick up a few...

Fannie Mae is asking for an additional $15 billion in government aid after posting another big loss in the third quarter as taxpayers' bill from the housing market bust keeps getting bigger. The mortgage finance company, seized by federal regulators in September 2008, posted a quarterly loss of $19.76 billion, or $3.47 per share. The loss includes $883 million in dividends paid to the Treasury Department and compares with a loss of $29.41 billion, or $13 per share, in the year-ago period. The results were driven by $22 billion in credit losses as the company continued to build its reserves...

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...

Politics: Democrats say Rush Limbaugh is running the Republican Party. Better Rush than George Soros, who is running the Democrats. At least Rush believes in freedom, capitalism and letting you keep what you earn. The cover of the March 7 issue of Newsweek shows a picture of conservative icon Limbaugh with a piece of tape covering his mouth and the word "Enough!" So much for disagreeing with what you say but defending to the death your right to say it. Voltaire could never be a contributor to Newsweek

From 2002 to 2007, Fannie Mae and Freddie Mac loaded up on $1.73 trillion of subprime and $1.44 trillion of Alt-A loans and securities, taking a lion's share of these markets, according to mortgage market guru Ed Pinto. The agencies' share of loans and securities, then, was higher than the total for all private label mortgage-backed securities market held outside the agencies' purchases -- contrary to widely held views in the mortgage markets. The two agencies hid the level of risky lending and investment in securities by failing to classify the loans initially as subprime or Alt-A.

In the Medieval era -- when the periodic table of the elements was comprised of only Fire, Earth, Air, and Water -- alchemists posited the existence of a fifth magical substance, Quintessence, which when mixed in combinations of the other four would create every other form of matter. They searched in vain for this ethereal substance in their pursuit of a means of changing base metals into gold. Their quest went unrealized, but this magical quintessence was subsequently discovered five centuries later by the new alchemists: mortgage bankers and investors. They found a way to turn worthless mortgages into hordes...

Here is video of Karl Rove absolutely schooling Juan Williams (sitting in for Bill O'Reilly) when Williams made the mistake tonight of accusing President Bush and his administration of "doing nothing" to reign in Fannie Mae and Freddie Mac to avoid a Housing Meltdown. That's all it took. Rove proceeded to lay out the facts that the Bush Administration tried to get legislation to regulate the mortgage lenders, but were blocked by Democrats, including then Senator Barack Obama.

Not only is Fannie paper NOT full faith and credit but in addition THEY ARE EXPLICITLY DISCLAIMING AGENCY STATUS! This is on the face of EVERY Fannie (and Freddie) prospectus. All of them. So where is the authority of The Fed to buy this paper, given the constraints in Section 14? Who is The Fed bailing out by monetizing Fannie and Freddie paper when it is quite clear on the face of that prospectus and a clean read of Section 14 that they don't have the authority to buy that paper in the first place? Now do you understand why...

In an alleged effort to protect against a recurrence of the financial collapse of 2008, Congress is considering a slew of new mandates, regulations and agencies. At the top of the list is an expansion of the very government mandate that is at the heart of the financial collapse, the Community Reinvestment Act. It appears that rather than learning from mistakes of the past, Congress is taking steps that could exacerbate the problems in the future. The CRA has been credited by many experts as a key contributor to the financial meltdown of 2008. Originally introduced in 1977, it was...

The Acorn scandal, in which amateur journalists posing as a prostitute and a pimp went seeking a mortgage for a house of prostitution and received advice on how to evade the law, is a fitting new chapter in the controversial history of the advocacy group. Acorn found its way into the mortgage business through the Community Reinvestment Act, the 1977 legislation that community groups have used as a cudgel to force lenders to lower their mortgage underwriting standards in order to make more loans in low-income communities. Often the groups, after making protests under CRA, were then rewarded by banks...

The Subprime home mortgage collapse...a Primer. It's ALL about the CRA of 1977 Community Reinvestment Act (CRA) of 1977 - This required banks to offer credit throughout their entire market area for “underserved” populations and small businesses. The CRA gave incentives to help low income borrowers become “home owners”. Liberals call this group “low income borrowers”. Conservatives call them a RISK!The CRA was passed by the Carter administration. In 1995 the Clinton administration authorized subprime loans under the CRA. Democrats added these provisions for the securitization of subprime loans and then ENFORCED the lending to high risk individuals. By 2000,...

DALLAS - When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it. As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February. In the view of the real estate industry and some economists, all that money is well spent. They...

Oversight: As the Senate votes to de-fund Acorn, add pimping, tax evasion and human trafficking to voter fraud paid for with taxpayer dollars and you have an organized criminal enterprise. It's time to investigate.After Acorn workers were caught on tape in three cities allegedly abetting what they believed was a fraudulent-mortgage and sex-trafficking scheme, the Senate has voted overwhelmingly to strip the group of funding in the Transportation/Housing and Urban Development appropriations bill. The amendment, offered by Nebraska Republican Sen. Mike Johanns, passed by an 83-to-7 margin and marked the third time this year that Republicans have tried to block...

Stimulus: The group that pushed banks into the risky loans that brought the economy down is now eligible for a huge chunk of stimulus cash. The stimulus plan does create jobs — for community activists.As in any agreement, contract or piece of legislation, the devil is in the details. So it is with the stimulus package percolating in Congress. Analysts are beginning to figure out that only a small percentage of the money will actually trickle down into the economy in the first two years, not enough to do much stimulating. Yet in this package is a $4 billion pot...

Investor's Business Daily has an article that will raise some eyebrows for the mortgage market. Skyrocketing growth in loans from the Federal Housing Administration and Ginnie Mae have helped support the mortgage market — but could leave taxpayers on the hook for massive new losses. FHA-insured loans have more than tripled from 530,000 in fiscal year 2007 to 1.7 million thus far in 2009. The Government National Mortgage Association, which securitizes FHA loans, has boosted its mortgage-related issuance to $287 billion from $85 billion.

Fair Game They Left Fannie Mae, but We Got the Legal Bills By GRETCHEN MORGENSON PRECISELY one year ago, we lucky taxpayers took over Fannie Mae and Freddie Mac, the mortgage finance giants that contributed mightily to the wild and crazy home-loan-boom-turned-bust. In that rescue operation, the Treasury agreed to pony up as much as $200 billion to keep Fannie in the black, coughing up cash whenever its liabilities exceed its assets. According to the company’s most recent quarterly financial statement, the Treasury will, by Sept. 30, have handed over $45 billion to shore up the company’s net worth. It...

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,...

In the late 1970s, as the federal government arranged to bail out Chrysler, not-yet-famous economist Alan Greenspan warned the problem “was not that it would fail, but that it would succeed.” And it did, thus paving the way for more bailouts, including (again) Chrysler. But the first Chrysler bailout was just one company, one time. The rolling series of financial bailouts over the past year -- Fannie Mae and Freddie Mac, AIG and Citibank, General Motors and Chrysler, etc. -- have not yet succeeded or failed. But they’ve raised a new moral hazard. These days, having invested so much in...

Are journalists playing favorites with some of the key political figures involved with regulatory oversight of U.S. financial markets? MSNBC’s Chris Matthews launched several vitriolic attacks on the Republican Party on his Sept. 17, 2008, show, suggesting blame for Wall Street problems should be focused in a partisan way. However, he and other media have failed to thoroughly examine the Democratic side of the blame game. Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae’s main defenders in the House – Rep. Barney Frank, D-Mass., a recipient...

Before beginning, I want to quote from this Wall Street Journal article last fall. Is a housing bailout the solution for clogged-up credit markets and a faltering economy? What the Fed has been doing and did again yesterday hasn't really worked, notwithstanding the pops it produces in the stock market every time it shovels liquidity into the system. The Fed's latest move provides financial institutions another $200 billion in direct short-term lending against their unsaleable housing collateral. The Dow Jones jumped 416 points. But it won't restart markets for the underlying collateral.

Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too. Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount...

Politics: Democrats say Rush Limbaugh is running the Republican Party. Better Rush than George Soros, who is running the Democrats. At least Rush believes in freedom, capitalism and letting you keep what you earn.The cover of the March 7 issue of Newsweek shows a picture of conservative icon Limbaugh with a piece of tape covering his mouth and the word "Enough!" So much for disagreeing with what you say but defending to the death your right to say it. Voltaire could never be a contributor to Newsweek. But David Frum is, and his inside cover story, "Why Rush Is Wrong,"...

In a series of articles published from 1902-1904, Ida Tarbell attacked Standard Oil, the leading US supplier of kerosene lamp fuel. The centerpiece of Ms. Tarbell's criticism was that the company had engaged in predatory pricing by continually lowering its prices. Her readers must have asked themselves, "How is that a bad thing? Am I supposed to be outraged that the amount I pay for lamp oil has fallen?" Although company cofounder John Rockefeller had retired from actively managing Standard Oil in 1896, Ms. Tarbell vilified him in her articles, even criticizing his elderly appearance. Populist US president Theodore Roosevelt...

WASHINGTON (AP) -- Fannie Mae plans to tap $11 billion in new government aid after posting another massive quarterly loss as the taxpayer bill from the housing market bust keeps growing. Fannie Mae's new request for $10.7 billion from the Treasury Department will bring the total for Fannie and Freddie to nearly $96 billion. Freddie is expected to report its quarterly results on Friday. Together, Washington-based Fannie and McLean, Va.-based Freddie own or guarantee almost 31 million home loans worth about $5.4 trillion. That's about half of all U.S home mortgages. "We are dependent on the continued support of Treasury...

<p>The new infusion means the troubled company has drawn a total of $45.9 billion of its $200 billion lifeline this year. Fannie Mae and its sister firm, Freddie Mac (FRE, Fortune 500), were taken over by the federal government last September amid the global financial meltdown.</p>

Troubled state-backed mortgage firm Fannie Mae took a massive 14.8-billion-dollar second-quarter loss

The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said....

Corruption: Chris Dodd's teetering re-election chances weren't helped by news that the senator may have lied about not knowing he got preferential treatment as one of Countrywide Financial's Friends of Angelo program.Can you foreclose on a house of cards? Dodd, D-Conn., may soon find out after the official who handled his mortgages testified before both the House Government Reform and Oversight Committee and the Senate Ethics Committee that Dodd did in fact know he got sweetheart deals from a company that went on to lose billions of dollars on home loans to credit-strapped borrowers. As the No. 1 recipient of...

Well, the media has successfully distracted itself from the failure of Obamacare by focusing on the recent Cambridge police drama. Here's your substantive list of daily diggs to balance the MSM fluff: http://diggsandburies.blogspot.com/

Over the past several years, I have traveled to every corner of this state, from the Gulf Coast to the Tennessee Valley, and I have heard a lot of the same stories from people. They wonder if Alabama will keep its promises to our young people; they sense that Alabama is not doing enough to grow our job base; and they know that our state has never fulfilled the commitment to give our children the schools and the education they deserve. In short, we all know that Alabama can do better. But it's going to take all of us, working...

The first big government bailout of the financial crisis -- the takeover of mortgage finance giants Fannie Mae and Freddie Mac -- is poised to be the most expensive and complicated to complete. Since Congress essentially wrote a blank check to the Treasury Department in July 2008 to do what needed to be done to inject capital into the two firms, Fannie (FNM, Fortune 500) has received $34.2 billion of direct government support while Freddie (FRE, Fortune 500) has received $51.7 billion. While that's lower than the $117.5 billion poured into insurer AIG (AIG, Fortune 500) by the Federal Reserve...

...Section 286 proposes “additional credit for Fannie Mae and Freddie Mac housing goals for energy efficient and location efficient mortgages.” In effect, this section plans to give a more than 125 percent credit for government-backed mortgages to people with homes that comply with energy-efficiency regulations...

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...

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.

In a stunning report (pdf) released yesterday by the House Committee on Oversight and Government Reform, the current financial crisis was traced back to government intervention in the U.S. housing market. Yes, you read that right. The report issued by the Republican minority didn’t disclose the names of the culprit individuals, but it sure pointed a lot of fingers at organizations, politicians, lobbyists and Fannie Mae/Freddie Mac. According to the report, government intervention “created ‘affordable’ but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage. Finally, government intervention created a nexus of vested interests --...

In order that Freepers have direct access to it, I am re-posting this link to yesterday's report "The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008" from the U.S. House of Representatives Committee on Oversight and Government Reform. The link has been noted in at least two other threads today, however I believe that because it's (a) timely, (b) important, and (c) comprehensive, that it warrants its own thread. And this version will get you straight to the report without having to wade through the snark of those other threads. By the way, this...

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...

The Republicans have again chosen their favorite boogey men for blame in the mortgage crisis, Fannie Mae, Freddie Mac and the Community Reinvestment Act. The Republicans House Committee on Oversight and Government Reform lead by Congressman Darrell Issa has released this white paper today on all three entity's roles in the mortgage crisis. In my opinion, the Republicans have once again inflated the role of all three in the crisis.

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...

Today the US Treasury Department announced an update to allow refinancing of mortgages backed by Fannie Mae and Freddie Mac up to a first lein position of 125% of the home’s appraisal value. This is a level that was previously set at 105% loan to value.

The blunt truth is that even if we had had President Obama's financial regulatory "reforms" in place four years ago--reforms designed to prevent another financial meltdown--we would still have experienced a horrific economic disaster. In other words, the Administration's prescriptions deal with the symptoms--and those badly--not the underlying causes. The astonishing housing bubble could not have happened without the Federal Reserve's easy-money policy, which got under way in late 2003. If not for the excess liquidity created, there would not have been sufficient fuel to distort the housing market and ultimately the financial system. Yet President Obama has remained mum...

They went over a series of topics but I want to focus on Congressman Frank's directive to Fannie/Freddie to loosen their restrictions on condominiums. Many in the media, like the Wall Street Journal, are characterizing this as a repeat of mistakes that caused the crisis.

(Reuters) - Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said. In March, Fannie Mae (FNM.N)(FNM.P) said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent, the paper said. Freddie Mac (FRE.P)(FRE.N) is due to implement similar policies next month, the paper said. In a letter to the CEO's of both companies, Representatives Barney...

One of the biggest mortgage frauds over the last ten years was appraisal fraud. Unscrupulous mortgage brokers would get together with unscrupulous appraisers and the appraisers would create values that were simply not there. Other times, unscrupulous mortgage brokers would pressure appraisers to inflate values. In any case, it created an epidemic and lead in part to the place we are in now.

How many uninsured Americans are there really? It’s a number that the mainstream media have repeatedly misrepresented to make the health care “crisis” seem worse than it is.

WASHINGTON (AP) - Herbert Allison, the former head of troubled mortgage giant Fannie Mae, has been confirmed to oversee the government's $700 billion bank bailout program. The Senate voted Friday to confirm Allison as the Treasury Department's assistant secretary for financial stability. In that role, Allison will oversee the Troubled Asset Relief Program, which was established last fall to inject capital into banks hit hard from the mortgage crisis. "Herb Allison has extraordinary experience strengthening American financial institutions and has demonstrated great leadership in recent months at Fannie Mae," Treasury Secretary Timothy Geithner said in a statement Friday.

President Obama and James Lockhart have decided to (financially) rape Americans. Yes, really: June 19 (Bloomberg) -- President Barack Obama’s program to help more homeowners refinance may be expanded to include borrowers who owe more than 105 percent of their homes’ values, Federal Housing Finance Agency Director James Lockhart said. The Obama administration is considering allowing Fannie Mae and Freddie Mac to refinance loans with current loan-to-value ratios of 125 percent or higher, Lockhart said at a National Association of Real Estate Editors Association conference in Washington yesterday. Let me be absolutely clear so nobody can ever accuse me of...