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Qtec
10-04-2011, 12:53 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Fannie Mae Knew About Allegations Of Improper Foreclosures In 2003: Government Report

WASHINGTON — Mortgage giant Fannie Mae knew about allegations of improper foreclosure practices by law firms in 2003 but did not act to stop them, a government watchdog says.

Similar allegations are the subject of a probe by state attorneys general into how lenders and law firms ignored proper procedures to handle a crush of foreclosure paperwork.

<span style='font-size: 14pt'>An unnamed shareholder warned Fannie Mae of alleged foreclosure abuses in 2003,</span> the inspector general for the agency that regulates Fannie says in a report being released Tuesday.

Fannie Mae responded by hiring a law firm to investigate the claims in 2005. <span style='font-size: 14pt'>The law firm reported in 2006 that it had found foreclosure attorneys in Florida <span style="color: #990000">"<u>routinely filing false pleadings and affidavits</u>."</span></span>

Fannie officials said they told a government official about the law firm's findings in 2006. That unnamed official, who now works for Fannie's regulator, the Federal Housing Finance Agency, said he couldn't recall the conversation, the report says.

Fannie began using a network of attorneys in 1997 to help handle foreclosures, evictions and bankruptcies. In 2008, the network grew to 140 law firms. And the number of foreclosures in Fannie's portfolio reached historic highs. <u>Foreclosures more than doubled from 2007 to 2008.</u> They grew 50 percent in 2009. </div></div>

link (http://www.huffingtonpost.com/2011/10/03/fannie-mae-imporer-foreclosure_n_993421.html)


The evidence to date shows the banks engaged in massive fraud and market manipulation. It was one huge Ponzi scheme and we know who walked away with the money.
Ponzi went to jail, the bank CEOs got $20,000,000 bonus's.

Q

LWW
10-04-2011, 02:18 AM
So ... why did FNMA ignore this in 2003?

Answer that honestly and you shall find enlightenment.

Qtec
10-04-2011, 03:11 AM
I don't know.


Why did the SEC fail to stop Bernie Madoff when they were bombarded with red flags?

IMO it was pressure from Wall St that made sure this was dumped in the back drawer.


The point is, the banks have been shown to have been using robo-signing, etc and everyone thought this just happened recently.
The fact is, that from 2003 they were committing fraud.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> <span style="color: #3333FF">[ Robo-signing: Just the start of bigger problems
By Tami Luhby, senior writerOctober 22, 2010: 7:38 AM ET


NEW YORK (CNNMoney.com) -- Robo-signing is just the tip of the iceberg.

The revelation that loan servicers were rapidly signing foreclosure documents without even reading them has uncovered a morass of serious paperwork problems.]</span> </div></div>


When the whole Ponzi scheme went down the tubes, the guy who was sold a mortgage he could never afford gets the blame, when ALREADY in 2003, the banks had to resort to fraudulent practices to keep the whole Ponzi scheme afloat.

Q .... link (http://money.cnn.com/2010/10/22/real_estate/foreclosure_paperwork_problems/index.htm)

Gayle in MD
10-04-2011, 08:07 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body"> <div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Fannie Mae Knew About Allegations Of Improper Foreclosures In 2003: Government Report

WASHINGTON — Mortgage giant Fannie Mae knew about allegations of improper foreclosure practices by law firms in 2003 but did not act to stop them, a government watchdog says.

Similar allegations are the subject of a probe by state attorneys general into how lenders and law firms ignored proper procedures to handle a crush of foreclosure paperwork.

<span style='font-size: 14pt'>An unnamed shareholder warned Fannie Mae of alleged foreclosure abuses in 2003,</span> the inspector general for the agency that regulates Fannie says in a report being released Tuesday.

Fannie Mae responded by hiring a law firm to investigate the claims in 2005. <span style='font-size: 14pt'>The law firm reported in 2006 that it had found foreclosure attorneys in Florida <span style="color: #990000">"<u>routinely filing false pleadings and affidavits</u>."</span></span>

Fannie officials said they told a government official about the law firm's findings in 2006. That unnamed official, who now works for Fannie's regulator, the Federal Housing Finance Agency, said he couldn't recall the conversation, the report says.

Fannie began using a network of attorneys in 1997 to help handle foreclosures, evictions and bankruptcies. In 2008, the network grew to 140 law firms. And the number of foreclosures in Fannie's portfolio reached historic highs. <u>Foreclosures more than doubled from 2007 to 2008.</u> They grew 50 percent in 2009. </div></div>

link (http://www.huffingtonpost.com/2011/10/03/fannie-mae-imporer-foreclosure_n_993421.html)


The evidence to date shows the banks engaged in massive fraud and market manipulation. It was one huge Ponzi scheme and we know who walked away with the money.
Ponzi went to jail, the bank CEOs got $20,000,000 bonus's.

Q </div></div>

I don't think Fannie and Freddie has any authority over what was happening among the banks, and Wall St. Ratings agencies, and in fact, F & F got out of sub prime, after an accounting scandal, in 2003..and stayed out for some time, which was part of the reason other entities were able to get so heavily involved in insuring bad loans...

Here are a number of articles about this subject...including the explanation of how the Bush Administration, immediately blamed Fannie annd Freddie, to cover up for their own laxed regulations during the buid up of the R.E. Bubble....

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Cheney: Don’t Blame us, Blame Fannie and Freddy
4:57 am in Uncategorized by BayStateLibrul

"I’ve planned for reirement all my life. I never planned for this."

Talk to Dick.

Dick Cheney, the master con artist will tell you Fannie Mae and Freddie Mack are our villians.

Do we dare call it Casino Capitalism?

Someone hijacked our 401K Retirement Security Blankets and we need a face to smack.

It’s good to discuss how we got into this fucking mess.

People are outraged, and fearful, and rightly so.

Robert Johnson, in a FDL compares the meltdown to the Horatio Alger story gone awry. “Government has not, even now, erected adequate boundaries vis a vis taxpayer money for the financial sector and the excesses of the financial sector have exploded Horatio Alger. Alger has been blown off his moorings due to no fault of his own. Yes Horatio, you can be destroyed by the actions of others and it is the role of government to set up a context which maximizes your "freedom to" while giving you the most "freedom from" harm by others.”

Yes. We were harmed. By whom?

A whole cast of reckless characters and Wall Street corporations.Dick Cheney, you lying sack of shot, blames Fanny Mae and Freddie Mack for the collapse, the demons who ignited the September collapse.

I’d like to offer a different approach.

The myth of the free market is dead. For Republicans, this is heresy. The Wall Street Journal (editors), Investors Business Daily, CNBC, Republican leaders, and many others are in denial. “In an insane world, the person who is rational has the problem,” Andrew Lo, a Professor of Financial Engineering says, “Money is as addictive as cocaine.”

Called upon to explain what happened, the financial community hid their cocaine in their Mercedes glove compartment. “Fanny Mae and Freddie Mack did it” and they went thattaway!”

How convenient.And simplistic.

There are many causes. Economists, historians, and financial analysts will be kept busy for decades.

Fanny and Freddie played a role in the housing bubble, but not as nefarious as you think.They were private, profit-making institutions whose debt was implicitly guaranteed by the federal government. Many folks, including me, thought they were governmental entities. They weren’t.

Remember the S&L scandals?

The S&L’s blew up due to deregulation and bad lending practices. Fannie and Freddy drove in and capitalized on the market. Growth fanned their troubles between 2002-2004, but the numbers show they were not the underlying reason for the Ponzi schemes.

“What followed from 2004 through 2006:” economist Krugman writes, “The two mortgage giants got muscled aside by Wall Street firms willing to underwrite bigger, riskier mortgages than Fannie and Freddie were allowed to touch. Their joint market share fell to only about 25% in 2006.”Paul Krugman goes on, “Fannie and Freddie had nothing to do with the explosion of high-risk lending a few years ago, an explosion that dwarfed the S&L fiasco. In fact, Fannie and Freddie, after growing rapidly in the 1990’s, largely faded from the scene during the height of the housing bubble. Partly, that’s because regulators, responding to accounting scandals at the companies, placed temporary restraints on both Fannie and Freddie that curtailed their lending just as housing prices were really taking off. Also, they didn’t do any subprime lending, because they can’t: the definition of a subprime loan is precisely a loan that doesn’t meet the requirement, imposed by law, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income.”

Fanny and Freddie deserve no white hats and share some blame, but for the entire stickin mess?

They are a nice target though. Especially for Republicans looking for a scapegoat.

So, let’s put a smiley face to the reasons. Picture, if you will, Fuld, Raines, Mozillo, Thain, Lewis, and Cassano.

Richard Fuld, former CEO of Lehman Brothers. Under Fuld’s leadership, Lehman went belly up last September, triggering the financial crisis we’re still dealing with today.

Franklin D. Raines, former CEO of Fannie Mae. Under Raines’ leadership, Fannie approved many of the disastrous home loans that ultimately led to it being taken over by the federal government last summer.

Angelo Mozilo, former CEO of Countrywide Financial. The SEC is investigating Mozilo and two other Countrywide executives for lying about credit risks– a critical factor in the mortgage company’s collapse.

John Thain, former CEO of Merrill Lynch. Thain served as Merrill’s CEO while it posted massive losses late last year, but still approved billions in bonuses for Merrill staffers. Thain also spent 1.2 million of Merrill’s money on a redecoration of his office suites. After being ousted, Thain reportedly walked Merrill’s halls declaring: "I don’t know how these people can run this company without me."

Kenneth D. Lewis, Bank of America’s embattled CEO. Lewis was subpoenaed last month in NY Attorney General Cuomo’s investigation into the billion dollar bonuses awarded to Merrill Lynch execs just before the company came under Bank of America’s control. Lewis continues to refuse to disclose information on these bonuses.

Joseph Cassano, former head of AIG’s financial products division. That was the unit responsible for the disastrous credit default swaps that triggered AIG’s collapse — which we’re still paying for. Back in August 07, Cassano declared that it was difficult to imagine "a scenario within any kind of realm of reason that would see us losing $1." Cassano left AIG in February 2008, but was initially given a $1 million a month retainer — which has since been terminated.

Investor’s Business Daily, in an editorial, concludes that the real culprits in this meltdown were Fanny and Freddy. “Market failure? Hardly.”, they wrote. “Once again the crisis has government’s fingerprints all over it.”

They rip Raines apart, but no mention of Fuld, Mozillo, Thain, Lewis, or Cassano.

I’m putting my money on Credit Default Swaps, naked selling, hedge fund managers, big bad banks, gambling, and lax governmental oversight. Those are the bad guys.

“Whatever credit defaults are in theory, in practice they have become mainly side bets on whether some company, or some subprime mortgage-backed bond, some municipality, or even the United States government will go bust.”Michael Lewis writes. “In the extreme case, subprime mortgage bonds were created so that smart investors, using credit-default swaps, could bet against them. Call it insurance if you like, but it’s not the insurance most people know. It’s more like buying fire insurance on your neighbor’s house, possibly for many times the value of that house — from a company that probably doesn’t have any real ability to pay you if someone sets fire to the whole neighborhood. The most critical role for regulation is to make sure that the sellers of risk have the capital to support their bets.”

You can kick the Democrats all you want. I think they are trying to put out the fire.

For Republicans and Cheney, get another mantra

Note: Thanks to TPM for the bios on the fat cats.

http://my.firedoglake.com/baystatelibrul/tag/fanny-mae/







Please don't blame Fannie Mae and Freddie Mac, guarantors of most of the housing market's conventional mortgages and reason the housing market continues to function at all, for the housing bust. The bust was caused by the oversupply of housing built during the bubble, and aggravated by many commercial banks and hedge funds cooking up every kind of 'liar' loan they could think of to sell to Wall Street securitizers -- including to themselves.

Sure, Fannie/Freddie had to be taken over by the federal government and are being subsidized with approximately $167 billion to date, but that is because banks and other commercial lenders then withdrew from financing the housing market, leaving government to clean up the mess. So the government subsidy is a very cheap price to pay to keep housing from collapsing completely.

Credit was too cheap in early 2000, as Fed Chairman Alan Greenspan's Federal Reserve kept short term interest rates below the inflation rate to pay for the Bush tax cuts and wars. I.e., when short term interest rates were 1-2 percent and inflation in the 3 percent range at the time, it was borrowers who actually profited since inflation deflated the value of the debt This meant it was interest free money!

Economists have estimated that below inflation interest rates were probably also responsible for the double digit housing price rises during the height of the bubble. Don't take my word for it. Almost everyone, including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, have rejected the argument of conservative think tanks such as the American Enterprise Institute that it was federal affordable housing policies designed to make housing available to a broader public, that created so many high risk loans.

Fannie and Freddie created and have always maintained the gold standard of mortgage qualification standards, with the highest income, credit, and ability to pay requirements. As a mortgage banker/broker for 30 years, I have never originated or underwritten a conforming mortgage that didn't meet those standards.

So why do conservatives hate Fannie and Freddie so much? Because of their ties to the Democratic Party, mainly. As Gretchen Morgenson and Joshua Rosner detail in their book, Reckless Endangerment, Fannie Mae and Freddie Mac grew hugely under Democratic Administrations eager to encourage more affordable housing. And they did buy subprime mortgages from Countrywide Financial that were not underwritten to their conforming underwriting standards, thus fattening their portfolios in a bid to play catchup to the issuers of so-called 'private label' mortgages. But the subprime purchases were a drop in the bucket; just $60.8 billion for Freddie Mac, according to David Min of the Center for American Progress, with borrowers who had FICO scores under 620, a common definition of subprime mortgages.

In fact, the current delinquency and foreclosure rates of Fannie and Freddie, guarantors of Agency Prime mortgages, are close to the historical norm. Fannie Mae reported that the serious delinquency rate decreased to 4.27 percent in March, close to the long term historical average. This is down from 5.47 percent in March 2010. The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59 percent. Freddie Mac reported that the serious delinquency rate decreased to 3.57 percent in April. (Note: Fannie reports a month behind Freddie). This is down from 4.06 percent in March 2010 and Freddie's serious delinquency rate also peaked in February 2010 at 4.20 percent.



See chart:



http://populareconomicsweekly.blogspot.com/2011/07/dont-blame-fannie-and-freddie.html


And their foreclosure rates are approaching the 1 percent historical average of all conventional loans. The Calculated Risk graph shows the latest foreclosure rates for all mortgage categories. It may not be surprising that Option ARMs (those with negative amortization that caused the principal loan balance to increased substantially in many cases) have the highest foreclosure rates, even above the Subprimes.
Sadly, Lender Processing Services, Inc. (NYSE: LPS) Mortgage Monitor report shows the number of mortgages 90 or more days delinquent, combined with the foreclosure inventory at the end of June, still totaled 4,073,00 down very slightly from its May 4,084,557 total. so it looks like without additional government help, which doesn't seem likely (see Renae Merle at Washington Post: Obama administration not planning another big housing program), most of those units will be added to the existing home inventory over the next 2 years.

Then why doesn't the Obama Administration spend more of the reportedly $11 billion set aside for the HAMP loan modification program? It may be because Timothy Geithner's Treasury Department isn't requiring banks holding the delinquent loans to get them off their books more quickly. And that means not much upside potential for housing prices until when, maybe 2014?

Harlan Green © 2011



http://populareconomicsweekly.blogspot.com/2011/07/dont-blame-fannie-and-freddie.html




Don't blame Fannie and Freddie
The financial excesses of the housing bubble were not the fault of America's biggest mortgage lenders




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Comments (16)


Thomas Palley
guardian.co.uk, Tuesday 29 July 2008 16.00 EDT
Article history
Many progressives now believe the age of Milton Friedman may be drawing to a close. Their hope is the current financial crisis has shown the costs and dangers of inadequate market regulation, thereby discrediting the anti- regulation philosophy of Milton Friedman and his Chicago School colleagues.

Evidence of the changing times is supposedly provided by public admissions from treasury secretary Paulson and Federal Reserve chairman Bernanke about the need for regulatory change.

Yet the reality is far more complex, and economic conservatives will not roll over and surrender just because of a financial crisis. Instead, if history is a guide, they will blame regulation for the crisis. That was Milton Friedman's modus operandi when he launched the modern era of deregulation and animus to government with his false claim that the Fed caused the Great Depression.

This tried and tested conservative tactic is already surfacing in the debate surrounding Fannie Mae and Freddie Mac, the giant mortgage financing companies. The conservative argument is government's provision of an implicit guarantee to Fannie and Freddie distorted the market by giving them subsidised finance. The implication is that this enabled them to pump up the housing bubble, while simultaneously making them the dominant players in the securitised mortgage market.

The conservative view makes Fannie and Freddie the fall guys for the bubble's financial excesses, when the true cause was failed macroeconomic policy and inadequate regulation of mortgage lending.

The insinuation that Fannie and Freddie were primary movers of the housing market excesses of 2004–2006 lacks even superficial merit. This is because since 2003 both Fannie and Freddie have had limited asset growth, and Fannie's assets actually fell significantly after 2003.

Moreover, the roots of the crisis lie in the sub-prime, Alt-A, and jumbo mortgage markets. That is where "no doc" and "zero down" mortgages proliferated, where loan originations exploded in volume, where losses started, and where the bulk of losses have been so far. Yet, Fannie and Freddie are prevented from financing such mortgage products by their charters.

These facts should make clear that Fannie and Freddie did not cause the crisis. Instead, it was driven by loose and negligent lending by banks and Wall Street. That behaviour was due to lack of regulatory oversight, combined with a failed incentive system that rewards management and mortgage brokers for pushing loans rather than prudent lending.

Such loan pushing was even promoted by conservative animus to Fannie and Freddie, as Wall Street was encouraged to muscle in on the former's business. That is why the Bush administration sought regulatory limits on Fannie and Freddie's asset holdings. However, unlike Fannie and Freddie, Wall Street has no legal restrictions on loan quality and opted for gorging on sub-prime.

The bubble's origins lie in failed macroeconomic policy that prompted the Fed to push interest rates too low for too long, combined with loose lending by banks and Wall Street. This inflicted a huge negative "pecuniary externality" on Fannie and Freddie, driving up house prices in the normally sound mortgage markets they serve. Consequently, they too have been battered by the bubble's implosion.

The bottom line is that Fannie and Freddie had little to do with the bubble. That said, conservatives raise a legitimate question of how to organise the securitised mortgage market.

Fannie and Freddie's implicit government guarantee has helped them lower the cost of mortgage finance, making home ownership more affordable to millions. In effect, the guarantee has made government's lower borrowing cost available to the public, which is good. The downside is it has made Fannie and Freddie overwhelmingly dominant in the securitised mortgage market.

This suggests that in addition to tighter mortgage lending regulation, there is a case for nationalising Fannie and Freddie on grounds that they are natural monopolies. That is the very opposite of the conservative okey doke opposing need for tighter regulation and proposing disbanding Fannie and Freddie. That would leave Wall Street unreformed, and make home ownership more expensive by removing the assist provided by access to government's lower borrowing cost.

http://www.guardian.co.uk/commentisfree/2008/jul/29/usa.mortgages









Fannie and Freddie, which didn't make subprime loans but did buy subprime loans made by others, were part of the problem. Poor Congressional oversight was part of the problem. Banks that sought to meet CRA requirements by indiscriminately doling out loans to minorities may have been part of the problem. But none of these issues is the cause of the problem. Not by a long shot. From the beginning, subprime has been a symptom, not a cause. And the notion that the Community Reinvestment Act is somehow responsible for poor lending decisions is absurd.

He goes on:

The Community Reinvestment Act applies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren't regulated banks. They were outfits such as Argent and American Home Mortgage, which were generally not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand in glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn't apply. There's much more. As Barry Ritholtz notes in this fine rant, the CRA didn't force mortgage companies to offer loans for no money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on packages of subprime debt.

Just to reiterate: I know there were big problems with Fannie and Freddie. And I'm sure there were some problems with CRA as well. As one reader e-mailed this morning:

As a mortgage originator for 20 years at Bank of America I know the pressure we faced due to the Community Reinvestment Act. Banks were penalized for not complying.

But banks weren't at the leading edge of the subprime boom. In the hierarchy of causes of our current debacle, I just don't think Fannie-Freddie and the CRA make it into the top 5. The CRA probably doesn't even make it into the top 10. And yes, I know, I should probably get to work compiling that hierarchy of causes.



Read more:
http://curiouscapitalist.blogs.time.com/2008/10/07/dan_gross_on_the_blame_fannie/#ixzz1Zovxe8Ew

LWW
10-04-2011, 01:19 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body">I don't know.


Q .... </div></div>

I want you to figure it out on your own.

Here's a clue, or a few actually ... who was making millions as head of FNMA in 2003 ... and was found to have overstated FNMA earnings by $2,700,000,000.00 ... and who would have received less income had FNMA incurred more expenses in foreclosures ... and who appointed them ... and what members of congress ran interference for him?

If you really want to know ... that's all you need to find the truth.

LWW
10-05-2011, 03:10 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body">I don't know.

Q .... </div></div>

Figure it out yet?