Tag Archives: Housing

Newt Gingrich's Record: Uncomfortable But True

I’m going to say something uncomfortable to many of you, but it has to be said:

Newt Gingrich has a history of flip-flopping on issues which rivals that of Mitt Romney.

There, I said it. I’m not the only one to say it, either.

Let’s look at Gingrich’s record:

On global warming: He supported government sponsoring of alternative energy programs. He supported cap-and-trade. He supported ethanol subsidies. “Green” was the fad, people were spellbound by it, and Newt being the clever politician he is, he got behind it, too.

And then there’s Fannie Mae and Freddie Mac. When asked about his lobbying efforts on their behalf, he lied. He claimed he never lobbied for them. When proof of payment from them to him was made public, he claimed he worked for them as an historian. Do people seriously believe this? A financial institution hires an historian about as often as the Marine Corps hires an interior decorator.

And then there’s the substance of the “historical analysis” he allegedly gave them (from the National Review link two paragraphs below):

It wasn’t obvious until 2007… Initially, it wasn’t Fannie Mae and Freddie Mac. Initially, it was things like Countrywide, but the minute you started getting people who could buy houses with no credit, no money down, I mean, these things are insane. And I was cheerfully saying that in my public speeches.

Gingrich contradicts himself here: It certainly was obvious, long before 2007, that a policy of government guarantee of loans without proof of the borrower’s ability to repay was a bad idea (and defies basic common sense). The existence of this program was well-known within government circles and by “policy wonks” (such as yours truly), but largely ignored by the media and the public at large. I have also criticized Herman Cain for the same failure of common sense in this regard.

On government-run medicine, Gingrich’s record rivals that of many prominent Democrats. He was an early champion of the individual mandate, more than a decade before Romneycare. He now excuses himself from the criticism Romney recieves, claiming that his endorsement of an individual mandate was an effort “to block Hillarycare“. Let’s state this another way: Gingrich’s response to a massive government healthcare initiative was to offer a slightly less-massive initiative of his own.

Gingrich was also one of the minds behind Medicare Part D. Newt again excuses himself from criticism for this multi-trillion-dollar giveaway, claiming that it helped reduce the cost of government-provided health care by subsidizing medicines in lieu of more-expensive surgeries, ignoring one of the basic principles of government interference in the market: Subsidizing a product makes it more expensive in the long-run. If the government gives people a dollar to buy an apple, the cost of an apple goes up by a dollar.

Gingrich, in keeping with his long-standing record of favoring greater government intervention in the health care industry, described Paul Ryan’s proposal to convert Medicare into a premium support plan as “right-wing social engineering“. Of course, Gingrich changed his tune when he caught flak for saying this, and has spent the last six months crafting an “alternative history” of his 17+ year record of supporting socialized medicine.

Jacob Sullum from Reason made an excellent point on this topic: Gingrich’s rhetoric actually endangers real reforms while giving the public a painless-sounding but totally ineffective placebo of “cutting waste, fraud and abuse”- a rhetoric he (along with numerous Democrats) also applies to other areas of government spending by advocating ‘modernization’, rather than actual cutbacks, as his primary concept for controlling the cost of big-government programs, as if new computers will make big government acceptable.

In sum: I’m frankly disturbed by the recent fascination with Gingrich and the amnesia regarding his record. Somehow, conservatives have developed a belief that intellectualism and con artistry are mutually exclusive. Voters have been lulled by the superficially-impressive nature of his speeches.

This means the Tea Party effort to push out slick salesmen in favor of principled, fiscally-minded, small-government representatives is failing. And “slick salesman” is an apt description of Gingrich’s career: People wanted free medication for Grandma and Grandpa, and Newt delivered. People wanted a house they couldn’t afford, and Newt delivered. Gingrich will give the public whatever they want, and sound convincingly principled while doing it. The fact that Newt also participated in welfare reform and budget balancing isn’t a demonstration of his bona fides, it’s merely another thing the public asked for and got (for a brief period).

The notion that Gingrich is the ideal “not-Romney” candidate is wholly misguided: Newt Gingrich is Mitt Romney without running shoes.

Home Sales Follow Seasonal Trend, But Remain Higher Than a Year Ago

DENVER, Nov. 17, 2011 /PRNewswire/ — October home sales were 9.0% above sales in October last year, according to The RE/MAX Monthly Housing Report, a survey of housing data from 53 metropolitan areas. As the market settles in for the winter, an expected monthly decline in home sales from September to October registered 9.8%.  However, October is the fourth consecutive month to show a year-over-year sales increase. With a foreclosure inventory that has been falling for several months, the resulting overall housing inventory dropped for the 16th straight month, according to the survey. Accompanying the ongoing reduction of inventory was a further correction in home prices, down 5.4% from October 2010.

“It appears that home sales are coming more closely in line with the levels we saw last year, which should hold up through the winter months,” said Margaret Kelly, CEO of RE/MAX, LLC.  “While it’s good to see sales still running higher than last year, at some point we would like to see prices rising higher than the previous year, as well.”  

Transactions – Year-Over-Year Change

Closed transactions for October followed an expected seasonal trend and dropped 9.8% from sales in September. However, when compared with October 2010, sales transactions were 9.0% higher this October.  Year-over-year transactions have now risen for five of the ten months in 2011. Of the 53 metro areas included in the survey, 38 experienced a rise in home sales from 2010, including: Albuquerque, NM+36.1%, Minneapolis, MN +34.3, Birmingham, AL +32.9%, Des Moines, IA +32.6%, Chicago, +22.3%,Providence, RI +21.0% and Raleigh-Durham, NC +20.5%.

Median Sales Price

In the 53 metropolitan areas surveyed in The RE/MAX National Housing Report, the Median Sales Price of sold homes was $ 176,770. This is just 2.0% lower than the median price for September, and 5.4% lower than the median price in October 2010.  The 5.4% decline is just below the 5.6% year-to-year average for the ten months of 2011.  Of the total 53 metro areas, 11 saw price increases from last year, including:  Detroit, MI +11.5%, Omaha, NE +10.0%, Orlando, FL +6.7%, Des Moines, IA +3.6%, and Houston, TX+2.0%.

Days on Market – Average of 54 Metro Areas

For the properties sold in the month of October, the average Days on Market was 95, just 2 days higher than the average of 93 seen in September, but 4 days higher than the average seen in October 2010. This past July and September 2010, both had an average Days on Market of 88, which represents the lowest average in the last 12 months. Days on Market is the number of days between first being listed in an MLS and when a sales contract is signed.

Months Supply of Inventory – Average of 54 Metro Areas

The total number of homes for sale, or inventory, has dropped for 16 straight months. The average inventory of homes-for-sale in the 53 metro areas surveyed dropped 7.3% from September and 21.0% fromOctober 2010.  The result is a 7.7 Month Supply of homes for October, the same as September, but down from the 9.7 supply seen in October 2010. Months Supply is the number of months it would take to clear a market’s active inventory at the current rate of sales.  A six-month supply is considered a balanced market between buyers and sellers.

Fannie and Freddie: Dark Clouds Looming Over Near-Term Outlook

WASHINGTON, Aug. 22, 2011 /PRNewswire/ — The economy was hit by a barrage of disappointing news during the last month, which led to a significant downgrade in the overall macro economic forecast released today by Fannie Mae’s (OTC Bulletin Board: FNMA) Economics & Mortgage Market Analysis Group. While the August 2011 Economic Outlook does not forecast a double dip recession, the downgraded forecast reflects the Group’s view that the probability of another recession is close to a coin toss. For all of 2011, economic growth is expected to downshift to 1.4 percent from 3.1 percent in 2010. Growth is expected to pick up in 2012, but only to about 2.0 percent, compared with 3.1 percent projected in the July forecast.

“Key factors, including revisions to gross domestic product (GDP) data, have revealed that we have a bigger hole to dig out of, which explains the consumer angst over the lack of employment growth,” said Fannie Mae Chief Economist Doug Duncan. “Moreover, European financial market and fiscal policy turmoil, coupled with the U.S. debt ceiling debate, have hit on consumer confidence, which is at recessionary levels.”

“Macro economic factors are clearly driving the mindset of consumers and housing is being impacted by this,” Duncan continued. “However, housing has moved into second position behind general economic concerns among consumers, which is demonstrated in our National Housing Survey results. Our July data shows that 70 percent of Americans think the economy is on the wrong track, up from 60 percent a year ago. In turn, despite historically low interest rates, consumers are still saying they don’t see this as a good time to go out and borrow money to buy a house.”

Housing activity is expected to weaken along with the overall economy due to a renewed decline in business and consumer confidence and a softening hiring trend. One exception is the rental housing market. The rental vacancy rate (the share of rental housing that is vacant and for rent) plunged from 9.7 percent to 9.2 percent in the second quarter of 2011, the lowest rate in nine years. This is consistent with the declining trend in the homeownership rate, indicating that a rising share of households have shifted to renting over owning.

Mortgage Rates Continue to Fall

CHARLOTTE, N.C. Aug. 17, 2011 /PRNewswire/ — Average mortgage rates continued to fall week-over-week, once again marking the year’s lowest levels according to the LendingTree Weekly Mortgage Rate Pulse, which tracks the lowest and average mortgage rates offered by lenders on the LendingTree network.

On August 16, average home loan rates offered by LendingTree network lenders were 4.35% (4.59% APR) for 30-year fixed mortgages, 3.59% (3.68% APR) for 15-year fixed mortgages and 3.56% (3.80% APR) for 5/1 adjustable rate mortgages (ARM). Average 30-year and 15-year fixed showed a 14% decrease week-over-week.

On the same day, the lowest mortgage rates offered by lenders on the LendingTree network were 3.875 percent (4.01% APR) for a 30-year fixed mortgage, 3.125 percent (3.36% APR) for a 15-year fixed mortgage and 2.50 percent (3.04% APR) for a 5/1 ARM, showing about a 50 basis point difference between average and lowest rates offered.

“Lenders on the network have recently seen more borrowers make the rational switch to shorter-term mortgages,” says Mark Fowler, senior vice president of exchange operations at LendingTree. “With rates as low as we’re seeing today, it makes sense to consider shorter term loan options where borrowers can quickly build equity and pay less interest. Homeowners who want to refinance should at least look into less popular loan options like a 15-year fixed-rate mortgage.  If it financially makes, you’ll be able to shave years off the loan”

Massive Overhang of Existing Homes Putting Downward Pressure on U.S. Home Prices and Demand

LOS ANGELES, June 16, 2011 /PRNewswire/ — A massive inventory of existing homes is dampening the recovery in the U.S. housing sector according to Brendan Lowney, macroeconomist with Forest Economic Advisors (FEA). Lowney estimates excess home inventories at 2.5 million. He says that this oversupply has put downward pressure on home prices, which in turn has caused a variety of undesirable effects, such as pushing more houses “under water” – the term for when a home’s value falls below its existing mortgage balance. This negative worth causes even more defaults, thereby increasing the oversupply.

Using U.S. Census vacancy data and housing occupation trends, Lowney states his estimate of the housing overhang sheds light on when the housing market will recover. It will take a gradual rebuilding of new home inventories and an average of 1.3 million household formations per year for five years before a significant portion of the 2.5 million excess home inventory can be cleared.

It will take several years to absorb existing home inventory

(All numbers in thousands)

Housing

starts

Home

removals

Change in new

home inventory

Household

formations

Change in existing

home inventory

2011 580 300 20 600 -340
2012 775 300 80 1,100 -705
2013 1,150 300 100 1,300 -550
2014 1,570 300 130 1,600 -460
2015 1,870 300 150 1,900 -480
Cumulative 5,945 1,500 480 6,500 -2,535

 

Mortgage Rates Reverse Course

NEW YORK, June 16, 2011 /PRNewswire/ — Mortgage rates increased this week, following a nine-week streak of declines. The benchmark conforming 30-year fixed mortgage rate is now 4.71 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.41 discount and origination points.

The average 15-year fixed mortgage jumped up to 3.86 percent and the larger jumbo 30-year fixed rate ticked up to 5.20 percent. Adjustable rate mortgages were higher also, with the average 5-year ARM rising to 3.40 percent and the 7-year ARM climbing to 3.63 percent.

Following nine straight weeks of declines, this week’s increase puts mortgage rates back to where they were the last week in May. The turnaround wasn’t spurred by economic news that was any better. It just wasn’t any worse. Further, the release of producer and consumer price measures for the month of May show inflation isn’t going away despite lower commodity prices. This is likely to put a floor under mortgage rates, pending any evidence of continued economic weakening.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.71 percent, the monthly payment for the same size loan would be $1,038.48, a difference of $203 per month for anyone refinancing now.

SURVEY RESULTS

30-year fixed: 4.71% — up from 4.65% last week (avg. points: 0.41)
15-year fixed: 3.86% — up from 3.79% last week (avg. points: 0.36)
5/1 ARM: 3.40% — up from 3.35% last week (avg. points: 0.33)

Mortgage Banking Giant Agrees to Pay Homeowner $30,000 as Part of Settlement Agreement

With pending counterclaims of fraud and predatory lending, Deutsche Bank agrees to pay defendant $30,000 and issue a letter to correct credit to settle a New Jersey foreclosure action

PHILADELPHIA, June 14, 2011 — Shaffer & Gaier, LLC announced today that its client has agreed to a $30,000 cash settlement with Deutsche Bank in an action filed by the banking giant to foreclosure on a New Jersey investment property worth approximately $65,000.00. As part of the terms of the settlement, the homeowner is entitled to retain the property and collect rental income for an expected period of 15-18 months, free of mortgage payment obligations, after which time he will walk away from the underwater property. The bank has also agreed to issue a letter to correct credit to the defendant, which will be distributed to the three credit bureaus to repair any credit blemishes caused by the suit.

Deutsche Bank, the plaintiff in this case, was acting as the trustee on behalf of Morgan Stanley ABS Capital Inc., Trust 2006-NC5, Mortgage-Pass Through Certificates, Series 2006-NC5, the mortgage pool that claimed to own the defendants loan. While the bank was able to produce an assignment dated and recorded prior to the filing of the foreclosure complaint, one of the most commonly raised foreclosure defenses, defense counsel was able to challenge the bank on several other issues of standing, but ultimately it was the counterclaims of fraud and predatory lending that drove the settlement.

Although predatory lending and fraud claims are common allegations in the foreclosure defense arena, foreclosing banks are usually successful at overcoming the charges with a “holder in due course” defense, hiding behind a securitization process that serves as smoke and mirrors for the true parties to a mortgage transaction. Michael Gaier, partner at the Philadelphia-based law firm of Shaffer & Gaier, LLC, with the help of his partner Michael Shaffer, and a team of mortgage experts, paralegals and associates, has dedicated the last two years of his life to crafting a legal argument that has survived summary judgment motions, overcome protective orders to depose high-level banking executives and gained nine dismissals or settlements in the last 10 weeks alone. “I’m especially pleased with the outcome of this case,” said Mr. Gaier. “This was not the most compelling story of our cases. It was an investment property that was purchased with a limited down payment and has been earning income for the last two years. The issue is that my client never should have been approved for this loan in the first place. The lenders grossly inflated his income on the application, and then hid that from him, and disclosed a rate and payment vastly different from what he ended up with at the closing table and pressured him to close with the threat of forfeiting a deposit. Bottom line is fraud is fraud. I anticipate there will be many more settlements going forward.”

 

Fannie and Freddie Fatcats Still Raking in Taxpayer Dollars. $35M in Bonuses

Fannie Mae and Freddie Mac executives raked in over $35 million dollars in bonuses while sucking another $153 BILLION dollars out of taxpayers for being nothing more than an epic failure.

A report issued Thursday by the Federal Housing Finance Agency’s Office of the Inspector General shed some light on the following payoffs for incompetence, ineptitude or just plain theft of taxpayer dollars:

  • At Fannie Mae (Federal National Mortgage Association), its chief executive officer received $9.3 million in total compensation in 2009 and 2010, the report reveals. The CEO is Michael J. Williams, who joined the company in 1991.
  • At Freddie Mac (Federal Home Loan Mortgage Association), CEO Charles E. Haldeman Jr., former head of Putnam Investments, made $7.8 million in the two years since the company was taken over by the federal government.
  • Fannie Mae’s chief financial officer made $4.6 million, and its chief accounting officer/general counsel received $4.5 million.
  • At Freddie Mac, the CFO made $3.9 million, and the general counsel/secretary received $5.1 million
  • In all, the top six executives made $35.4 million. Meanwhile, total losses at the two companies could reach $363 billion through 2013, according to government estimates.

So who just keeps on authorizing these huge bonuses for the wholesale theft and abuse of taxpayer dollars? What the Federal Housing Authority  bureaucrats of course! Why does this kind of taxpayer dollar theft continue?  It is called Crony-Capitalism and is explained in detail here.

The stated mission of the FHFA responsible for this kind of fraud would be laughable, if not for the seriousness of this longtime Fannie and Freddie theft of taxpayer dollars. Their mission is *supposed* to be, to ensure that the fat-cat bonuses paid out to Senior execs at Fannie and Freddie are “reasonable.”   The taxpayers are on the hook for a total of $363 Billion dollars through 2013, and they give over $35 billion dollars to the people perpetuating this fraud under the guise of it being “reasonable?”  The FHFA Inspector general now says that Fannie and Freddie should install written criteria and procedures for performance evaluation in order to figure out what bonuses, if any, would be “reasonable” for these crony-capitalists. Oh Really? Why in the hell isn’t that type of system already in place ? So they just take $35 million tax dollars in bonuses, with no system in place to see if they actually earned it, and Congress is sitting on their hands letting this continue for decades.

Darrell Issa is the chairman of the House Government oversight committee, and where is he on this “oversight” of executive bonuses at Fannie and Freddie?  I am getting sick and tired of all these theatrical investigations in Congress that NEVER end up accomplishing a damn thing!  There is no stoppage of the theft of tax dollars over at Fannie and Freddie, even though we have seen what,  30, 40, or 50 so-called ” investigations ? ” If any action is ever taken, it is so ludicrous that it hurts me to even type it, such as giving someone a $50,000 fine for stealing 3 or 4 million in tax dollars.

U.S. taxpayers are on the hook for over $363 BILLION dollars through 2013, thanks to the corrupt fatcats over at Fannie and Freddie. Those same crony-capitalistic thieves were rewarded for their incompetence/ corruption with over $35 million dollars of your hard earned money. Think about that, as you write out that income tax payment check this month.

Whitehouse Ignores the Rule of law, refuses to report on Fannie and Freddie once again!

       The Whitehouse continues to stall on reforming the money train known as Fannie Mae and Freddie Mac, even though they are breaking their own so-called Financial Reform, ( also known as the Dodd-Frank Bill) laws to do it. This article is a part of the continuing exposure of the fraud, corruption and waste of taxpayer dollars by the F&F (Fannie and Freddie) club here at CDN.*

      While decades of fraud, corruption and shifty accounting practices have been exposed within the F&F club, our elected officials seem content to let it continue, from The Whitehouse, to Congress,and right on down to the U.S.  Treasury Department. Today we see another direct, in your face refusal to address this problem by none other than Obama’s own administration. I stumbled upon this latest act of  criminal behavior yesterday over at National Review Online.** I was stunned by the revelations in this article by Rep. Jeb Hansarling (R-TX).

“The Obama administration failed to release a report today on how Freddie Mac and Fannie Mae could be reformed, despite being required to do so by the Dodd-Frank law passed last summer.

Rep. Jeb Hensarling (R., Texas), who chairs the House Republican Conference, said in a statement that the White House’s failure to meet the deadline made it “crystal clear that the President is not serious about reforming Fannie Mae and Freddie Mac.”

As this writer reported earlier here at CDN, the GOP called for reform of the F&F club during the financial reform debate last year. Democrats flat out refused to even allow an amendment that would stop the abuse of taxpayer dollars through Fannie and Freddie. Now we have the Whitehouse, which happens to have approved the Democrats most recent blank check written to the F&F club, also breaking the law that required them to submit the report on how to stop the bleeding here. Amazing.

The Financial Services Committee isn’t too happy about this latest revelation either, as exposed further down in the same National Review Online article:

“Financial Services Committee chairman Spencer Baucus (R., Ala.) also criticized the administration, saying in a statement that “the Democrats always offer an excuse for not meeting deadlines, even those they themselves impose.”

I also mention the U S treasury department in my opening paragraph, and here is what I found at the bottom of the National Review Online article:

” A Treasury Department spokesman told Dow Jones Newswires that the administration hoped to release a report in February.”

Apparently, when it comes to reforming the malfeasance over at Fannie and Freddie, we are left with nothing more than the hope part of Obama’s Hope and Change campaign theme of 2008. There certainly is no change in the fraud, corruption, and outright theft of taxpayers dollars by the corruptocrats in bed with the criminal enterprise over at the F&F club.

 

* http://conservativedailynews.com/2011/01/fannie-freddie-and-foreclosures-exploring-the-true-costs-to-the-us-taxpayer/

   http://conservativedailynews.com/2011/01/money-for-nothing-and-houses-for-free/

** http://www.nationalreview.com/corner/258499/white-house-misses-deadline-freddie-mac-fannie-mae-report-katrina-trinko

Fannie, Freddie and Foreclosures- Exploring the True Costs to the US taxpayer

Introducing Fannie Mae, their mission and purpose as explained on fanniemae.com:

“Fannie Mae, (Federal National Mortgage Association) is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S. housing and mortgage markets.”

Yet they have managed to do just the opposite of the purpose for which they were created. With record numbers of foreclosures and mortgage problems being reported, I fail to see how I can paint this organization in any kind of favorable light here today.

Fannie Mae would have been in bankruptcy – if they actually applied the true principles within the realm of their creation, as further explained on their homepage (emphasis mine) :

“Fannie Mae was established as a federal agency in 1938, and was chartered by Congress in 1968 as a private shareholder-owned company.”  Yet once again, a company deemed “too big to fail” by our government was in effect bailed out by the U S taxpayers. Whatever happened to investors that do not monitor their investments properly, being made to accept the loss here? Why should our government step in and make the taxpayer bear this debt burden?

Introducing Freddie Mac should have been more aptly named Fannie Mae II, as their mission statements are virtually the same, as reported on freddiemac.com (emphasis mine).

“Freddie Mac was chartered by Congress in 1970 with a public mission to stabilize the nation’s residential mortgage markets and expand opportunities for homeownership and affordable rental housing. Our statutory mission is to provide liquidity, stability and affordability to the U.S. housing market.

Read that mission statement again, then ask yourself, “Have they accomplished their mission, or any part of it today? ” Again, I am trying to shed a positive light on Freddie Mac, but all I see are huge abject failures as to their own mission statement. I think the statement, “To stabilize the nation’s residential mortgage markets,” when looking at our mortgage foreclosure/ housing crisis of today, is ludicrous, to say the least. They claim to be playing an important role in helping people avoid foreclosure, yet at what price to the taxpayers and the economy?

Fannie and Freddie admit to 20 billion in losses.

While it is almost impossible to put a total cost to the taxpayers the full extent of the Fannie Mae and Freddie Mac GSE’s, ( Government Sponsored Enterprises) figures are now emerging that show us the enormity of the waste, abuse and corruption inherent in both of the organizations once again. Another fact that must be addressed is that Congress passed a “Financial Reform Bill” in July of last year that ignored the problems at Fannie and Freddie completely. How can you claim to reform the financial system and ignore the largest mortgage holder in the USA ? That just doesn’t make sense.

Earlier in the spring of 2010, Bloomberg Businessweek printed an article that tried to summarize the problems and expense of taxpayer funding through the government backing of Fannie Mae and Freddie Mac.* The fact that the Fannie and Freddie Foreclosure club is at the center of the housing crisis and financial collapse just cannot be denied. Note that this exposure was before they passed the financial reform bill. They knew the basic facts and chose to ignore them anyway.

When the history books are written about America’s early 21st Century financial system breakdown, what will they make of Fannie Mae and Freddie Mac? These two government-sponsored enterprises (GSEs) that own or guarantee 76 percent of all mortgage originations were at the center of the credit market collapse. Bailing them out has cost the U.S. taxpayer $145 billion and counting.” Estimates of their losses today run much, much higher as new facts emerge.

Keep in mind that this article was written in May of 2010, yet the costs to the taxpayer had already soared to $145 billion dollars. In an earlier article at CDN, “Money for Nothing and Your Houses for Free“, I pointed out how the taxpayer was also paying for the legal costs incurred by the top 3 corruptocrats at Fannie and Freddie, who continued to rake in huge salaries and bonuses after admitting to complicity in cooking the books and inflating the financial outlook at Freddie Mac to increase their bonuses. There appears to be an ever emerging pattern of corrupt practices within the higher ups in both organizations, and it certainly appears to have the approval of our elected officials in Congress, as they refuse to stop this madness mo matter how much proof is put in front of them.

Bloomberg Businessweek further goes on to state how with very little public discussion, or exposure in the media, “ Uncle Sam has basically nationalized their $5.5 trillion in home-loan assets. The Obama Administration has pledged to cover unlimited losses at Fannie and Freddie through 2012, a commitment that goes beyond a prior credit line of $400 billion (which itself had been doubled). In early May, Fannie posted a $13.1 billion loss while Freddie fessed up to losing $6.7 billion. The pair now tote $340 billion in nonperforming assets. ( 2012 also happens to be an election year, and without government protection, the people just might find out how bad this situation really is here, and that could have an enormous effect on said elections).

With all of the books being cooked to the point of complete confusion, I can’t fault the 111th Congress completely here, yet the bleeding of taxpayer dollars was very obvious, even to the most naïve and incompetent of government accountants. On May 11th of that same year Senator McCain called for the stoppage of the Fannie and Freddie debacle. What did the Democratic Majority in the Senate choose to do then? They ignored the calls for true reform at F&F and instead shifted responsibility to the Treasury Department to do some “studies” on how to take F&F off the taxpayers bank account. Meanwhile, record foreclosures, high unemployment, and an economic recession were crushing the country. Is this what the people voted for in the 2010 elections? This writer certainly doesn’t think it is.

There is also a Ginnie Mae, as in Government National Mortgage Association. (GNMA)

This company was originally a part of Fannie Mae and was originally created during the recovery from the Great Depression. This was widely known as the lending arm of HUD, or Housing and Urban Development. In 1968 Fannie Mae and Ginnie Mae split with Fannie Mae going public on the NYSE with Ginnie Mae remaining as a government owned association. So why haven’t we heard much about Ginnie Mae during this housing mortgage crisis in recent years? I plan on researching this entity more thoroughly in a upcoming article in this continuing saga. I can give a hint of what I have found so far on Ginnie Mae. It fits the same pattern as the other family members in the mortgage business attached to our government. One top executive was convicted of mortgage fraud at Lend America.. and continued to to help run the company, with the full endorsement of Ginnie Mae. In December of 2009 the FHA removed Ginnie-approved Lend America from the FHA program completely, mainly due to corruption, fraud and bad lending practices. Yes we have a definite pattern of corruption and incompetence emerging here in all three of these entities.

Fast forward to today. Fannie and Freddie still basically operate on a blank check written on the taxpayers bank account. The housing and mortgage crisis is still crippling our economy, yet I see no proposed legislation to put a stop to this debacle. We the people need to call up and write to our representatives and demand that the taxpayer funding of Fannie and Freddie be stopped immediately. A few Bernie Madoff-style criminal charges are also warranted here, to forcefully send the message that those responsible for this kind of debacle will be held accountable. With the recent announcement by the CBO of the 2011 Federal deficit hitting $1.5 trillion, immediate action is needed. Congress has all the data. No more“studies, no more “reviews”and no more dithering. Stop the bleeding of taxpayer dollars through Fannie and Freddie and do it now, there is no excuse for continuing to allow this massive fraud and abuse of taxpayer dollars.

Sources:

* http://www.businessweek.com/magazine/content/10_21/b4179025062530.htm
** http://conservativedailynews.com/2011/01/money-for-nothing-and-houses-for-free/

Money for Nothing and Houses for Free.

How would you feel if a burglar was caught inside your home stealing everything of value, and when the police went to make out the police report, you were told that you would have to write a check for $5000.00 to pay for the burglar’s legal fees? Well that happens indirectly, with the Lawyer-enriching “Right to Legal counsel” laws we have today. Those public defenders are not working for free. Another kind of this Lawyer – enriching thievery from the taxpayers was exposed this past week involving two companies whom I feel have as much culpability as Wall Street did in the housing crash of today. Meet Freddie Mac and Fannie Mae. These two companies announced that they want you the taxpayer to pay for their 160 million dollars in legal fees stemming from investigations of long-term fraud and corruption. With a new Republican majority in the House of Representatives today, it seems like Fannie and Freddie were/are trying to take in every single taxpayer dollar they can before serious investigations expose their dealings.

The New York Times ran a piece on this on 01/24/2011.* While this article does address some serious facts, it also seems to deny the responsibility of the top three executives to pay for their own legal fees stemming from years of their own corrupt, incompetent practices. The Times also refused to state the huge bonuses and salaries the top three culprits raked in right in the middle of the housing crisis. Here are a few observations from that article. Parenthesis at end are my comments.

The Times points out three key players in the story:

“Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller.”

The story then demonstrates how for the last 4 years of Democratic rule, the House has done little, if anything to investigate the travesty, that both Freddie Mac and Fannie Mae have become:

“Since Fannie Mae and Freddie Mac were taken over by the government in September 2008, their losses stemming from bad loans have mounted, totaling about $150 billion in a recent reckoning. Because the financial regulatory overhaul passed last summer did not address how to resolve Fannie and Freddie, Congress is expected to take up that complex matter this year.”

Could it all be simple ineptitude?  Of course not – outright corruption is certainly another part of the problem:

“ Well before the credit crisis compelled the government to rescue Fannie and Freddie, accounting irregularities had engulfed both companies. Shareholders of Fannie and Freddie sued to recover stock losses incurred after the improprieties came to light.”

So here we have evidence of “accounting irregularities” resulting in lawsuits, yet instead of criminal charges and government intervention to stop the fraud, our Congress not only turns their heads the other way…But decides to put the taxpayers on the hook for the entire bill, as evidenced further in The Times article:

“Freddie’s problems arose in 2003 when it disclosed that it had understated its income from 2000 to 2002; the company revised its results by an additional $5 billion. In 2004, Fannie was found to have overstated its results for the preceding six years; conceding that its accounting was improper, it reduced its past earnings by $6.3 billion. Mr. Raines retired in December 2004 and Mr. Howard resigned at the same time. Ms. Spencer left her position as controller in early 2005. The following year, the Office of Federal Housing Enterprise Oversight, then the company’s regulator, published an in-depth report on the company’s accounting practices, accusing Fannie’s top executives of taking actions to manipulate profits and generate $115 million in improper bonuses. ( So they were found to be cooking the books to enrich themselves, paid fines that prove it, yet still feel the taxpayer should pay their legal fees? )

This is like a bad remake of the movie Groundhog Day here, where the mistakes and improprieties happen over and over again. When President Obama and the Democrats passed the partisan Financial Regulatory Reform bill last year, they also once again chose to ignore  the problems at F&F. That’s right, when Republicans tried to demand that the Financial Regulatory Reform bill include Fannie Mae and Freddie Mac, they were told told no. Coincidence? Everything happens for a reason, and I would like to hear the President’s and his  Democratic Party’s reason for allowing F&F to continue writing checks on the taxpayers account.

“Fannie Mae also settled a fraud suit brought by the Securities and Exchange Commission without admitting or denying the allegations; the company paid $400 million in penalties.” (Nothing to see here folks, just move on, but make sure you keep writing those checks drawn on the people’s Federal funds.)

When it comes to our Government today, we have such a bloated beauracracy that the checks and balances within Government, written into our  Constitution are being ignored. The “Federal Housing Finance Agency” agreed to pay for the proven fraudster’s legal fees?  What next?  Bernie Madoff being pardoned, so he may become the Secretary of the Treasury? Or maybe the Chairman of the Federal Reserve? Further on in The Times piece we see:

“After the government moved to back Fannie and Freddie, the Federal Housing Finance Agency agreed to continue paying to defend the executives, with the taxpayers covering the costs.”

So here we have proven fraud, corruption and incompetence within Fannie and Freddie, with absolutely nothing being done about it over the past eight years. Not one person has even been given criminal charges or jail time. Just the opposite, they still have that blank check written on the taxpayers account.  Seems to me it is pretty obvious here, as to why the people no longer trust their government.

Sources:

http://www.nytimes.com/2011/01/24/business/24fees.html?src=me&ref=business *