|New Profiteers: "I'm with the Government and here to help you."|
We've learned that the biggest culprit in the mortgage scandal is none other than Freddie Mac! Freddie took $125 BILLION in Federal bail-out money and leveraged it for profiteering while denying refinancing for eligible homeowners -- the original purpose of the bail-out money.
Their objective: Make more money!
Hmmm. Wasn't the bail-out money supposed to be used to assist eligible homeowners stabilize via refinancing into affordable monthly payments so they wouldn't default? -- thus helping to stabilize the housing market, a key component of our economy?
Freddie Mac [and Fannie Mae], protected from regulatory oversight by Barney Frank and Chris Dodd, promoted subprime loans and predatory lending, then sold the repackaged bad loans to banks as "Mortgage Backed Securities", and backed banks in their sales of these relabeled toxic asset bundles, now called CDOs [Collateralized Debt Obligations], setting the stage for the collapse of the US and international financial market.
The Federal Government came to the rescue with a bail-out; Freddie then came up with a convoluted way to use their bail-out money to bolster their bottom line. The first part looked good.
2) Freddie also bought performing mortgages with comparatively high interest rates [7%] and held these for profitable returns via the interest. In today's market, that's a higher risk, although, since the homeowner makes his monthly payments, it's very profitable for Freddie.
All this sounds good since billions of dollars of mortgages were removed from the market inventory.
The rub comes in as Freddie has been found to be denying the homeowners with the higher interest rates the opportunity to refinance to the lower market rates in the 3 - 4% range -- which could cut monthly payments in half -- thus giving homeowners a reason to hold onto their properties, and their credit ratings. The purpose of the bail-out money was to help home-owners reduce their mortgage rates.
By denying mortgagees the opportunity to refinance, Freddie Mac defied its charter to assist homeowners, and became the biggest predator in the financial market; its practices perpetuate the "housing crisis" by forcing homeowners into financial instability and probable bankruptcy.
Keep in mind, Freddie created the problem [compliments of Chris Dodd and Barney Frank]; it was then bailed out by the Federal Government [i.e., you the taxpayer], its disgraced executives were paid massive bailouts on their exits --- after which many went into senior executive government positions, and now, Freddie continues to undercut the housing market by using the bailout money which was intended to help homeowners. Freddie became a profiteer using your tax money.
|I am not a crook! (c) Politico|
Time to restructure Freddie [and Fannie] and escort their leadership [and perhaps Barney Frank] to a nearby federal prison?
|I am not a crook!|
As a footnote; you'll recall that Chris Dodd [former Senator [D]] is currently the force behind SOPA and trying to shut down Megauploads -- and the Internet. [What a guy!]