When Freddie Mac Wins, Homeowners Lose
Tuesday, January 31, 2012
For those who purchased a home between 2003- 2009, they owe it to themselves to talk with a Realtor about the ins and outs of a short sale, says Chris White, and here's why...
"Freddie Mac, a taxpayer-owned mortgage company, is supposed to make homeownership easier. One thing that makes owning a home more affordable is getting a cheaper mortgage.
But Freddie Mac has invested billions of dollars betting that U.S. homeowners won't be able to refinance their mortgages at today's lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom", according to National Public Radio.
White is very concerned for his clients and these investments, while legal, raise concerns about a conflict of interest within Freddie Mac.
Freddie Mac, formally called the Federal Home Loan Mortgage Corp., was chartered by Congress in 1970. Their website says it has "a public mission to stabilize the nation's residential mortgage markets and expand opportunities for homeownership." Owned by U.S. taxpayers and overseen by a regulator, the Federal Housing Finance Agency (FHFA).
Charles Haldeman, Freddie's chief executive, assured Congress his company is "helping financially strapped families reduce their mortgage costs through refinancing their mortgages."
Oh really, Chris White asks? Public documents show that in 2010 and 2011, Freddie Mac set out to make gains for its own investment portfolio by using complex mortgage securities that brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing.
This makes for a major conflict when Freddie Mac's own financial health improves when homeowners can't refinance.
Here's why when homeowners lose, Freddie Mac wins: in 2010 and 2011, Freddie didn't just hold a simple pile of loans. Instead, for hundreds of thousands of home loans, it used Wall Street alchemy to chop these loans up into complicated securities — slices of which were sold in financial markets.
For some homeowners underwater with their mortgage it's impossible to refinance because the new appraisal will show the home to be worth less than what is owed. The writing on the wall is that for some the only way out is to perform a short sale. For those who purchased a home between 2003- 2009, they owe it to themselves to talk with a Realtor about the ins and outs of a short sale.
For those who purchased a home between 2003- 2009, they owe it to themselves to talk with a Realtor about the ins and outs of a short sale, says Chris White, and here's why...
"Freddie Mac, a taxpayer-owned mortgage company, is supposed to make homeownership easier. One thing that makes owning a home more affordable is getting a cheaper mortgage. But Freddie Mac has invested billions of dollars betting that U.S. homeowners won't be able to refinance their mortgages at today's lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom", according to National Public Radio.
White is very concerned for his clients and these investments, while legal, raise concerns about a conflict of interest within Freddie Mac.Freddie Mac, formally called the Federal Home Loan Mortgage Corp., was chartered by Congress in 1970. Their website says it has "a public mission to stabilize the nation's residential mortgage markets and expand opportunities for homeownership."
Owned by U.S. taxpayers and overseen by a regulator, the Federal Housing Finance Agency (FHFA). Charles Haldeman, Freddie's chief executive, assured Congress his company is "helping financially strapped families reduce their mortgage costs through refinancing their mortgages."
Oh really?, Chris White asks. Public documents show that in 2010 and 2011, Freddie Mac set out to make gains for its own investment portfolio by using complex mortgage securities that brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing.
This makes for a major conflict when Freddie Mac's own financial health improves when homeowners can't refinance.
Here's why when homeowners lose, Freddie Mac wins: in 2010 and 2011, Freddie didn't just hold a simple pile of loans. Instead, for hundreds of thousands of home loans, it used Wall Street alchemy to chop these loans up into complicated securities — slices of which were sold in financial markets.
For some homeowners underwater with their mortgage it's impossible to refinance because the new appraisal will show the home to be worth less than what is owed.
The writing on the wall is that for some the only way out is to perform a short sale. For those who purchased a home between 2003- 2009, they owe it to themselves to talk with a Realtor about the ins and outs of a short sale.
"Unfortunately you are not alone. It's more than an outcry. The powers that be really need to come down harder on Bofa than they already are. Working on these short sale for over 2 years now I've uncovered down right fraud happening on the lenders parts. If they cared more about moving this country forward than protecting their own wallets then they would cut the red tape and approve these short sales in a timely manner. Our team made the wise decision to get BofA loans which were FHA or Freddie Mac backed, approved prior to listing on the market. Then we can list the home as "Price Approved" and close in 30 days. In this instance BofA does a full appraisal, rather than an incompetent "Broker Price Opinion" (nothing against agents but they have no idea how to make adjustments on comparable homes) and then the bank issues an "Approval To Participate" letter which dictates what price we can go on the market and take anything north of 88%. I really do hope your situation improves. " about Congressional Bill to Speed Up Short Sales
on Tuesday, August 30, 2011 @ 9:15 AM
Lisa Zeiner said
"We made an offer 4 months ago to BofA, and have heard nothing. It was a cash offer which is better than the zero money they are collecting now. And since the people don't care they are trashing the place, by the time BofA gets around to it our offer will be gone as the place is a mess!! Septic issues now, garbage being dumnped. All of this could have been avoided if BofA really wanted to correct their cash flow problem and sell these properties in a timely manner. They cry about cash but then do nothing intelligent to fix the problem" about Congressional Bill to Speed Up Short Sales
on Tuesday, August 30, 2011 @ 9:06 AM
aluminum composite panel said
"Every time i come here I am not dissapointed, nice post." about Bank of America to Offer Principal Reduction to Underwater Borrowers
on Sunday, April 24, 2011 @ 9:11 PM
Jones Ramirez said
"Thank you for the work you have done into this post, it helps clear up a few questions I had." about How do appraiser’s determine a homes value?
on Tuesday, April 19, 2011 @ 10:07 PM
HollyRobsonf said
"Hey - I am certainly happy to find this. great job!" about Bank of America to Offer Principal Reduction to Underwater Borrowers
on Wednesday, April 13, 2011 @ 6:45 PM