Posted on 12/28/2009 7:22:35 AM PST by WashingtonSource
A Treasury announcement Christmas Eve raises a lot of questions about the future of Fannie Mae and Freddie Mac.
Is the Administration planning a future where the two companies become permanent government agencies?
Is the Administration laying the groundwork to expand the capacity of the two agencies to retain more mortgages and buy more mortgage-backed securities?
Is the administration planning to ramp up loan modifications involving principal reductions, which would mean more near-term lossess for Fan and Fred?
Those are some of the questions posed by mortgage industry consultant Ed Pinto.
(Excerpt) Read more at robertstoweengland.com ...
What are they up to now?
It’s really quite simple. Fannie and Freddie can now become infinite payoff slush funds. Payoffs will now be given in foreclosed real estate. Rahm will give “swing voters” like Ben Nelson 2 dozen foreclosed houses...to a twice-removed proxy, of course, perhaps a relative or cutout...and the homes can be sold for anything the market will bear. Ben’s cost = zero, or a very small token amount. Internal to FNM, the homes will have appeared to have been legitimately sold, at modest discount, and marked “paid”. No money will have changed hands. It won’t be the largest slush fund in history by any means, but don’t think Rahm knows three ways around any kind of internal control. This will be a multi-use pattern: Use taxpayer funds for payoffs. So much cheaper that way.
It now sounds like the amount of federal funds that can now be pumped into Barney Frank’s favorite firms is now INFINITE! It was previously capped at $200 billion each. This could be the largest slush fund ever.
Rahm had something to do with the legislative language in a bill passed earlier that allow the Treasury to do this — but only if they act before December 31st.
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