Fannie Mae and Freddie Mac: Past Their Prime

Wed Feb 15, 2012 by on Florida Law News

Just like Old Yeller, Freddie Mac and Fannie Mae need to be put down

There were two players conspicuously absent when last week’s $25 Billion settlement was unveiled; two players that absolutely should have been front and center.

What are their names? If you’ve followed the housing crisis as closely as we have, then you probably know.

Our old and unwanted cousins Fannie and Freddie.

Their omission from the settlement was perhaps its biggest flaw.

There are millions upon millions of homeowners with mortgages controlled by Fannie Mae and Freddie Mac, yet they aren’t getting a single penny.

We’ve been advocating principal reduction as one of the best ways to help beleaguered borrowers, and we’re not alone in that assessment. That’s why it was at the center of the settlement.

Yet Edward DeMarco, the man behind both companies, still clings to the outdated notion that principal reduction would lead to a moral contagion among homeowners otherwise known as a “moral hazard”.

He’s forbidden Fannie and Freddie to even entertain the idea.

While President Obama and others, such as Massachusetts AG Martha Coakley have turned up the heat on DeMarco, he hasn’t budged.

DeMarco is more concerned about his political ideology than helping the American homeowners, who are in essence, is his clients.

He’s like that annoying relative that no one invited, yet keeps showing up every Thanksgiving. But DeMarco is far from the only problem.

When you have Freddie Mac trying to profit from securities that paid more if homeowners couldn’t refinance, that is proof that we are just too far down the rabbit hole.

Want more evidence? The SEC is suing six former execs for fraud. Still not convinced? They’re also accused of not paying millions in real estate transfer taxes in Michigan.

President Obama, there is only one conclusion you can draw. Just like Old Yeller, Fannie and Freddie need to be put down. They are spoiled milk, and there is only one thing you can do with spoiled milk, pour it down the drain.

You’ve already started to shrink their authority in the housing market, why not just go all the way and eliminate it?

It’s been over three years since the government took them over, and still the two companies have done little to offer the American people any real relief. Fannie Mae and Freddie Mac have created nothing but a den of iniquity, where the bottom line means more than helping the homeowner.

We are starting to see some real changes to the way business is conducted in the real estate market, so we say it’s time to make a real change and kick these two companies to the curb.

Tags: economics, economy of the united states, Edward DeMarco, fannie mae, federal takeover of fannie mae and freddie mac, fixed income securities, Freddie Mac, homeowners, homeowners affordability and stability plan, mortgages, principal reduction, Real Estate