Freddie Mac‘s Regulator “Completely Puzzled” by Accusations of Immorality.
Saying he is “completely puzzled by the notion that there was something immoral that went on here,” the man at the top of the agency that regulates Freddie Mac has explained why he believes the taxpayer-owned mortgage company did nothing wrong when one of its arms, as NPR and ProPublica have reported, “placed multibillion-dollar bets against American homeowners being able to refinance to cheaper mortgages.”
Edward DeMarco told Morning Edition co-host Steve Inskeep in an interview broadcast on today’s show that Freddie Mac’s actions were “in the class of ordinary business transactions.” The “reverse floaters” in Freddie Mac’s investment portfolio, which as NPR has reported “brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing,” did not affect the agency’s efforts to stabilize the mortgage market, DeMarco said. So, all of you homeowners waiting for your bank to give you a loan modification, don’t hold your breath.
Instead, DeMarco characterized the investments as part of Freddie Mac’s effort to make sure it doesn’t lose money. And he said one of his major responsibilities, is to “make sure Fannie Mae and Freddie Mac undertake activities that don’t cause further losses to the American taxpayer.”
I know someone who submitted paperwork to Chase Bank (his mortgage servicer) every month from the period beginning in January 2011 and ending in October 2011. Chase kept sending form letters requesting the same documents that this guy had already submitted. He then would write a letter explaining that he had already submitted those documents and attached same, month after month. In all, nine separate letters, some requesting the documents he had submitted in the first month. This was clearly a game, manufactured to appear that Chase was in compliance with the Obama Administration’s Loan Modification Program. When the robo-signing investigation concluded in September of 2011, Chase (along with the other 26 banks that had been held up), denied the request and moved to foreclose.
That began in November 2011. He has until the end of this month to vacate and then the home becomes REO’ed and will come onto the market at a fire sale price. And, we are not talking about Las Vegas pricing here or a Floridian market. This home is in Pebble Beach, CA and was real-estate appraised at $2.4m twelve months ago. The most recent real estate appraisal was in September, and it came in at $1.2m. This is the beginning of the high-end inventory that will be coming to market over the next few months, and is why I keep saying that the housing market is only going to get worse.
DeMarco is acting director of the Federal Housing Finance Agency (FHFA) — the agency that regulates Freddie Mac and Fannie Mae.
Two key senators “who have taken the lead on legislation aimed to help homeowners refinance at historically low interest rates,” are critical of FHFA’s oversight of Freddie Mac. One of them, Democratic Sen. Barbara Boxer of California, laid much of the blame on DeMarco and accused him of not looking out for American homeowners who want to refinance at today’s historically low interest rates.
DeMarco said though, that “not only I, but my staff think of the average homeowner on a daily basis” and believe that their efforts to stabilize the mortgage market and prevent losses at Freddie Mac and Fannie Mae are good for all Americans in the long run. Of course you do.
And by the way, the comment about ” preventing further losses to the American taxpayer’ is the height of dis-ingenuity. If anyone thinks that for one second, Freddie Mac’s or Fannie’s profits are coming back to it’s shareholders (aka, the American People) they need to see a talking doctor, cause it ain’t ever gonna happen!