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Keep in mind when you read this that TARP made money and was a huge success!
The federal bailout for Fannie Mae and Freddie Mac could more than double in size during the next three years, according to projections from the companies’ federal regulator.
Fannie and Freddie, the federally-controlled mortgage finance giants, will likely need at least another $73 billion and perhaps as much $215 billion from taxpayers in the next three years to meet their financial obligations, the Federal Housing Finance Agency said.
Quick question: Where are the Fannie and Freddie losses coming from? Answer: bad loans they bought. Quick question: Where did the bad loans come from? Answer: the banks.
I love this line in the piece: “The projections of additional bailouts for Fannie and Freddie are in sharp contrast to recent discussions by the Obama administration about how the bank rescue known as the Troubled Assets Relief Program, originally valued a $700 billion, is expected to cost taxpayers less than a tenth of that.” Yeah, there’s a reason for that “contrast.” It’s because the losses of TARP are being realized in Fannie and Freddie.
Never mind the fact that TARP offered no strings for bailing out the banks, no prosecutions of fraud, no firing of top managers, no forcing to lend to small businesses, no mandating of cramdown or mass loan modifications, etc., etc., etc. TARP, if you look at it fully, didn’t make money, either. Far from it.
By the way, this could be a major reason why Fannie and Freddie’s oversight chair at the FHFA, Ed DeMarco, is lawyering up for the banks to take back the loans with faulty underwriting standards or other deficiencies. It cuts the losses to the programs, which is his mission.
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Whatever you do…
Don’t tell Barney Frank about this.
Now is a real bad time to bring this up.
I refied with wells fargo, having my original with them too for 10 years. This time they sold it immediately to freddie mac. Why would they do that? It’s not like we are borderline with equity. We owe very little compared to what the house is worth, so if we default, they would make a lot of money on it.
Thank you David. Stellar reporting from both you and
Marcyempty this morning.I think that sanskrit I tweeted you is connected to David’s post – help a sistah out
Know it’s a dumb question, but will no one ever be held accountable for any of this fraud?
Another dumb question. What are the chances that Clarence Thomas will be challenged for the conflict of interest of his wife’s lobbying firm, which is reaping a bonanza in the wake of his voting with the majority in Citizens United? If a member of the Supreme Court can have such glaring conflicts of interests, what kind of signal does that give to the rest of the judicial branch?
Good luck putting that turd back in their pocket.
Have Fannie and Freddie even stopped buying more of this crap from the banks?
Or is this one of Geithners unlimited backdoor bailout facilities?
This is more proof of how Fannie and Freddie were used as a clearinghouse for all these toxic mortgage liabilities that were soaked up into these hybrid mammoths to become the TAXPAYERS LIABILITY!
DEMO-rats and GOPigs alike have privatized the nations wealth and nationalized the debt created to make it impossible without an act of GOD,to ever dig ourselves out!!!!
I don’t understand the priorities either.
BoA contacted us out of the blue and said they could refi and lower our rates. We went from a 30 yr. 6% to 15 yr. 4.375% for the same monthly payment. What’s in it for them?
Says the same thing. The report cited, by painting the rosiest picture possible, grossly underestimates what the ultimate cost will be. I suspect over a Trillion. We can discuss in depth face to face.
cathy @2 relays something I further suspected; the big banks continue to immediately sell notes to F&F to book cash not an assest that may or may not be tainted by clouded title.
Clean paperwork.
Yeah! Whatever happened to the 600 trillion in the toxic derivatives market that ultimately led to our demise!??
Lots of empty store fronts and factories thanks to the Depression tell me were their price drops also factored in or just home prices?
I know Obama plans to restart the economy based on exports but America is the largest consumer of goods in the world so just who will buy from us no buyers stores and factories stay closed.
The only we way can get market share from China is to compete with them on price which would lead to a revolt Americans can’t live on Chinese wages we import to many things we can’t give up like oil.
If gas goes up because we devalue the dollar then workers won’t drive to jobs unless they are compensated for gas we may have a bunch of unemployed people but skilled workers do not all live within a 20 minute drive.
Bosses are reluctant to hire new workers everytime they get a job thats a 2 hour drive from the last job.
The underlying assests are being culled to transfer anything even remotely construed as possibly toxic and dumped on Fanny and Freddy. The balance of the pool will be fairly sound. Then they, the banks, will only have to cover that which was double or triple sold.
What about Bush Remember the Ownership Society he and Greenspan created the housing bubble and refused to regulate the banks for fear it would hurt Bush’s economy.
thanks
but per your comment above ‘selling the notes to Fannie & Freddie’ – why would F/F Conservator need those 64 subpoenas for something they are supposed to already have ?
That is how the home loan business works. It is nothing new and it is not underhanded. Loans that qualify are sold to FNMA and FHLMC in a routine manner.
Remember about 1 1/2 yrs ago I told you OMG they’re playing asest, asset, who’s got an asset? They deep down don’t know.
Banks have sold loans routinely to FNMA and FHLMC long before Decider Bush made toxic loans possible.
“What actually happened can be described in the precise language of a criminal ring:
– The [companies that produced sub-prime mortgages] were, in effect, counterfeiters. They produced documents that resembled mortgages but which were known, by those who made them, to be fakes – destined either to be renegotiated or to default. An entire underworld lexicon described this craft: liars’ loans, NINJA loans (no income, no job or assets), neutron loans (that would destroy the people but leave the buildings intact), toxic waste. This fact alone reveals clearly that the participants knew what they were about.”
I thought that Fannie & Freddie were in bad shape because of dusky-hued minorites??? Something about the minorities “forcing” Fannie & Freddie to give them loans that the minorities knew they couldn’t afford. And the minorities are just lazy slackers who always are causing no end of problems for real “hard working” people (aka whites). And that’s why Fannie & Freddie are in bad shape: because of minorities & probably that d*mned ACORN, too. Isn’t that so? /s
Because once they move that loan to Freddie, they can re-loan the money to another buyer. The bank will make it’s money on the loan origination and Freddie will pay them a fee to collect your mortgage each month and send it on to Freddie.
Boxturtle (Same thing happened to me on my refi last December)
Not to mention that despite Alan Grayson’s “successful” efforts to force Fed Reserve transparency, I do not believe we know what price the FED took all that MBS-crapola off the banks’ hands at? So yeah, even Bill Maher is now parroting shit about how TARP was cost-free!
habeus instrumenti !
(mrs ellard forgive me)
It’s the secondary mortgage market where loans are securitized, for lack of a better word. It’s where the stuff hits the fan in creating toxic assets.
To me GSEs are private enterprise at the public’s expense in the most formal sense of the concept.
Are you trying to be funny?If your post is a serious one,someone needs to step away from the GOPig KOOL-AID!!!
How does that alter the fact that every marginal mortgage in the country is gettin dumped on them now? Not that cathy @2 is in any way in that catagory but as I said, they are booking cash rather than notes trying to cover up the fact that prior to TARP and ben running the presses hot and handing out cash, they were insolvent.
The TARP was the dangling carrot;the real story is what is going on inside the Federal Reserve with the 18 trillion dollars worth of,as you say,crappola,and how the Taxpayer has become responsible for all the debt created,while the BANKSTERS are laughing all the way to the BANK!!!!!
Btw, David’s report is excellent exposure to the shifting/diffusion of responsibility in the mortgage markets. Well done.
Chill, my friend. I put a snark tag at the end. Go back and check it out…. /s = snark. fyi.
Guess what I said is all too close to the reality of what rightwingers say and think, though… more’s the pity.
Or I could be full of shit. That is possible.
Can we export the Obama admin? /s
I think just about every nation wants to restart thier economy based on exports.
Forgive me!
How is that possible when our main export is our jobs?????
All is forgiven… no sweat. Watch for snark tags, though.
Oh yeah, onitgoes is all about clapping for our esteemed banksters, and for Congresscritters too. But, because of onitgoes’ REFUSAL to clap louder, Tinkerbell will die. /s
(couldn’t resist. the snark was too delicious to pass up.)
This whole quagmire is such a swirly mess, I have a hard time wrapping my brain around it all. A massive amount of money has already been essentially flushed away, but that amount is a pittance compared to the losses to come. To me, the question is, when will the other shoe drop? So far, all manner of widgets have been used to delay what seems inevitable. How will the banksters try to dodge the debt when the other shoe does drop? And assuming Obama continues his pattern, how will the White House sell a message of statemanship to the country when they foist the next wave of bankster debt onto us?
Lesson being – securitizing peoples’ home loans is a bad idea. Can we please just make mortgage backed securities illegal?
WheresTheNote.Org
You are right thats why we are about to face a world wide currency war with a race to the bottom.
When will it drop after Bankers get their Christmas bonus this year if the banks have anything to say about it but one more war in the middle east, one more Greece or Dubai threatening to default and the Bankers get screwed earlier than they expect.
Did Greenspan not know any of this shit was going on? WTF did he think his job was? Did F&F not know there was something squirrely happening? And the banks, well shit, they made these fraudulent loans. Why is nobody in jail? WTF? And we, the people, we never knew? Holy shit. Giant cluster fuck.
What’s in it for them?
Clean papework and servicing fees.
I’ve been amusing myself by reading some of the MERS depositions. Something rather interesting is the involvement of Fannie and Freddie in creating MERS in the first place. I’m pretty sure in the Alabama deposition of the MERS President he said the involvement and contributions from Fannie and Freddie were the major impetus for getting that entity off the ground.
. . . . .Interesting. Why did Fannie and Freddie get involved in setting up a framework that ultimately obscured note ownership and deprived cities and towns of recording income? What was in it for them or the people who headed them?
Can we have perspective?
The Mortgage Interest Deduction costs the Treasury over $100 billion a year.
http://tpcprod.urban.org/publications/url.cfm?ID=412099
Most of that benefit goes to the top 20% of income earners. But the actual cash goes to the mortgage lenders, the “banks”.
No one is up in arms about this? This is $100 billion every year.
The past 40 years of urbanization and property asset inflation is unraveling which is the basic reality behind this foreclosure crisis. It will end badly for all as millions of homes will need to be sold probably by the government in large blocks to various investor groups leaving large parts of the American residential RE market depressed for many decades as the homes themselves are poorly built,expensive to maintain and generally long distance from employment centers. Banks,government and homeowners are in denial over these longer term implications given the role that the home industrial complex has played in American post world war economy. The foreclosure numbers continue to expand from 2 million to 7 now over 11 million which moves the problem quickly from individual MODS or individual foreclosures to very large scale financial operations that will impact every aspect of American life. No place to hide, no deals only the unraveling of the largest credit asset bubble in recorded history.”
We need a Financial Transactions tax or “Bank Tax” to pay back this $300 billion!!!
Also, every loan that the taxpayers insured at Fannie and Freddie from the last four years should be scrubbed for improper documentation. If any underwriting standard was not followed or bad documentation is found the banks should be required to “buy back” the loans and the taxpayers SHOULD NOT pay.
Well this is super horrendous timing on this news. As if the DADT saga wasn’t bad enough for the White House, but to have the bailouts brought back in the spotlight 2 weeks out…
I recall reading the Fannie and Freddie were essentially forced to buy these mortgages from the banksters, but I don’t have a link. Any citations?
Yes, a disaster for humanity and a huge win for the folks that make the Forbes list.