Fannie report warned of foreclosure problems: report
WASHINGTON |
WASHINGTON (Reuters) - Fannie Mae was warned in a 2006 internal report of abuses in the way lenders and their law firms handled foreclosures, The Wall Street Journal reported on Thursday.
Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) have both been under investigation since September 2008 for their role in the mortgage crisis.
The 2006 report said foreclosure attorneys in Florida had "routinely made" false statements in court in an effort to more quickly process foreclosures, The Wall Street Journal reported.
The report said Fannie Mae officials "believe foreclosure counsel are sacrificing accuracy for speed" but did not name any firms, the Journal said.
The internal document also raised questions about whether some mortgage servicers or another entity had the legal standing to foreclose, the newspaper said.
The Fannie Mae report found no evidence that borrowers were improperly placed in foreclosure, The Wall Street Journal said.
"Fannie Mae took the necessary steps to address the specific issues identified by the 2006 report and regularly evaluates and enhances oversight of its retained attorney network," a spokeswoman for the government-controlled firm told the newspaper.
The U.S. Treasury took control of Freddie Mac and Fannie Mae at the height of the financial crisis in September 2008 as losses mounted from mortgages gone bad.
(Reporting by JoAnne Allen; Editing by Gary Hill)
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But the real story is the popular misconception, told over and over in Republican circles, that the Fannie Mae bureaucracy was the driving element behind the financial meltdown of September 2008.
In fact it was the banking industry, from the beginning in 1937, and continuing for years and years, that created the political will for the creation and growth of Fannie Mae, so that they, the bankers, would have somebody to sell their mortgages to.
It was the bankers’ lobbyists that came up with Fannie Mae, and nurtured it along, as the bankers used it to leverage themselves to skyrocketing profits by originating loans, taking wonderful origination fees, then fobbing off the mortgages to Fannie Mae, thus freeing up their capital to quickly do another deal.
Republican circles like to say that Fannie Mae is an institution created by Liberals. The truth is the idea of Fannie Mae was created by the banking industry, and was their dream come true — an institution that would instantly buy up any and all their mortgages, and allow them, the bankers, to free up capital, and operate with tiny amounts of capital.
When Fannie Mae needed vastly increased funding from the government, guess who was there lobbying for it? Banking industry/Republican lobbyists.
Right now, Obama, refreshingly, is saying maybe we don’t need Fannie Mae. Maybe we shouldn’t foster artificial demand for housing. And guess who is resisting that? Guess who wants to keep Fannie Mae? Yes, the Republican banking industry!
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