$150 Billion & Counting-What Should We Do With Fannie Mae & Freddie Mac?
Today, the news agencies are abuzz with the headline that taxpayers have spent approximately $162 Million on legal fees to defend the very criminals at Fannie & Freddie that got us into the mess we're in. Yawn! Right?
What's worse is that we (you and I) as taxpayers, have spent approximately $150 Billion thus far bailing them out, and many experts expect that number to double to $300 Billion before all is said and done. Yawn again, right? I know, by now many have already closed this post out and moved onto other, "more fun" stuff to read.
Folks, that's $300 BILLION of our hard-earned dollars going to pay for their mistakes! But, we NEED Fannie & Freddie, right? After all, without them, who would guarantee and/or purchase the mortgages? Could the "too-big-to-fail" banks pull it off? Who knows (above my pay grade). All I know is I'm not seeing Fannie or Freddie doing ANYTHING to help get us out of the mess we are in. As a matter of fact, I'm seeing them doing the complete opposite.
As a Phoenix short sale Realtor® who helps clients avoid foreclosure on a daily basis, I'm seeing a very disturbing trend from Fannie Mae & Freddie Mac. Instead of working with homeowners to avoid foreclosure (through loan modification or short sales), both Fannie & Freddie are "stepping on the gas", as if they can't wait to foreclose.
Case in point... I noticed this trend back in September/2010. While we strive to have 100% success on our Phoenix short sale listings, we occasionally lose one to foreclosure. Basically, in August/September 2010, we lost two to foreclosure, and both were owned by Fannie Mae. In both cases, I was notified by REO agents that had just received their new listings WITHIN 48 HOURS OF THE FORECLOSURE AUCTION. They politely asked me to remove my sign/lockbox ASAP. No problem.
Then, I decided to do some research. I studied the Phoenix market, and found that on average, Fannie Mae REO's hit the market within 10 DAYS OF THE AUCTION DATE. Hey, maybe they're just being diligent, and want to dispose of their "bad debt" in a timely manner, I thought.
Then, I took it a step further. Lo-and-behold, Fannie Mae had just announced a new "directive" for lenders servicing their loans. Naturally, I wrote a blog on it. Basically, as of August 31, 2010, Fannie has been punishing servicing lenders for not foreclosing in what they call "a timely manner". In other words, if the servicing lender doesn't foreclose quick enough, Fannie Mae fines them. Nice, huh? Does this sound like a government-owned entity intent on helping homeowners (as they continuously proclaim)? Umm, NO.
Call it a case of "unintended consequences" if you like, but I call it yet another taxpayer bailout. Only this time it is different. You see, you and I (the taxpayers) now own Fannie & Freddie. WE pay for their mistakes. WE pay for their ridiculous executive bonuses. And last but not least, OUR NEIGHBORHOODS pay for their insistence to foreclose at all costs.
Personally, I don't think we should get rid of Fannie & Freddie. We just need to hold them accountable. If they don't work with homeowners, they don't get reimbursed. Folks, it's that simple. The problem is, we don't have lawmakers that have the guts to make them accountable (as is the case with every government program introduced thus far). I recently read an article that claims that 90% of all new mortgages are either backed or owned by Fannie or Freddie. If we don't force our lawmakers to hold them accountable, we will continue this free-fall into the abyss.
In this blog, I've cited various blogs/articles that describe in more detail this ridiculous bailout that is rewarding bad behavior by Fannie & Freddie. Please do yourself a favor and spend some time educating yourself on this wanton waste. Then, take a moment to call your local congressman/senator and voice your concern.
To learn how to contact your lawmakers, visit this site.
The word on the street is that in 2-3 weeks, our government leaders are going to be deciding the future of Fannie & Freddie. DO YOUR PART and write/call them to voice your opinion.
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Bob Hertzog
Summit Home Consultants
Copyright © By Bob Hertzog 2011 *$150 Billion And Counting-What Should We Do With Fannie Mae & Freddie Mac?*