Fraudclosure | Inside Fannie Mae: Confidential Records Show how Fannie Mae Breaks the Rules

Inside Fannie Mae: Confidential records show how Fannie Mae breaks the rules

Confidential records obtained by the Free Press show that Fannie Mae pressed lenders to foreclose on homeowners, even if they were negotiating for a loan modification — a violation of the government’s own rules.

Those rules tell banks they “may not refer a loan for foreclosure sale or proceed with a foreclosure sale” while homeowners are seeking loan changes under the federal Home Affordable Modification Program, which was designed to provide mortgage relief.

The confidential records are at odds with that promise. They directed banks to foreclose on mortgages more than 12 months delinquent, regardless of whether homeowners were applying for relief. Other documents show that Fannie Mae made clear to banks that Fannie expected a certain percentage of delinquent borrowers to lose their homes.

What Fannie told banks

The Free Press obtained copies of more than 2,300 requests from various banks asking Fannie Mae for permission to delay foreclosure sales. These excerpts show two requests from Bank of America and Fannie Mae’s response, which reveals a directive to deny postponements when borrowers are more than 12 months delinquent, even when homeowners are negotiating loan modifications.

Foreclosure targets

In this June 2010 letter to PNC, a Fannie Mae vice president, Javid Jaberi, outlines third-quarter projections for the bank. Fannie Mae officials “project and expect” roughly 10%-12% of the bank’s monthly foreclosure inventory to be sold in the third quarter. Jaberi said in an interview that the letters reflect an effort by Fannie Mae to get banks to respond more quickly when loans are delinquent, even if that meant pushing some homeowners seeking changes to their loans to foreclosure sale.

Related PDF: This excerpt is from the second of six letters Fannie Mae sent to different banks.

Fannie’s foreclosure costs exceed debt

This internal Fannie Mae memo, labeled confidential, shows how far Fannie Mae is sometimes willing to go to foreclose on a home. In this case, Fannie (FNMA) spent $27,000 to foreclose on a debt of $3,000.

Be sure to check out the rest here…

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4closureFraud.org

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12 Responses to “Fraudclosure | Inside Fannie Mae: Confidential Records Show how Fannie Mae Breaks the Rules”
  1. yvonne says:

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    Preserved federal mortgage role sought

    NAR supports continued government role

    In July, the National Association of Realtors announced support for continued government involvement in the secondary mortgage market. NAR says it wants to make sure that mortgage money continues to flow to buyers, and a bill, H.R. 2413, offers the best solution for the real estate industry. Read more.

    WASHINGTON – Aug. 16, 2011 – President Obama has directed a small team of advisers to develop a proposal that would keep the government playing a major role in the nation’s mortgage market, extending a federal loan subsidy for most home buyers, according to people familiar with the matter.

    The decision follows the advice of his senior economic and housing advisers, who favor maintaining the government’s role as an insurer of mortgages for most borrowers. The approach could even preserve Fannie Mae and Freddie Mac, the mortgage finance giants owned by the government, although under different names and with significant new constraints, said people knowledgeable about the discussions.

    A decision to preserve a major government role would mark a big milestone in the effort to craft a new housing policy from the wreckage of the mortgage meltdown and could mean a larger part for Fannie and Freddie than administration officials had signaled.

    In a statement, the White House said it is premature to say that senior officials have agreed on any of the three main options outlined earlier this year in an administration white paper on reforming the housing finance system.

    “It is simply false that there has been a decision to move forward with any particular option,” said Matt Vogel, a White House spokesman. “All three options remain under active consideration and we are deepening our analysis around how each would potentially be implemented. No recommendation has been made to the president by his economic advisers.”

    The proposal is likely to draw criticism from many Republicans, who blame the financial crisis on policies they say overly encouraged the housing market. And many economists, including some who have worked in the White House under Obama, consider the federal role harmful to the free market.

    But if this approach became law, it probably would keep in place the kind of popular home loans that have been around for decades – 30-year fixed-rate mortgages with relatively low interest rates.

    Officials have not determined whether to advance a final proposal before the 2012 presidential election. Officials from the White House, the Treasury Department and the Department of Housing and Urban Development are working out the details.

    The government could maintain a substantial role in various ways. These include restructuring Fannie and Freddie as public utilities overseen by a government regulator. The government would no longer guarantee their financial health, as in the past, but would continue to backstop the mortgage-backed securities they issue using loans made by private banks.

    Or the two companies could be shut down and replaced with several successors that, likewise, would have their mortgage-backed securities guaranteed by the government in exchange for a fee. A federal guarantee, by reducing the risk to investors, can make it cheaper for firms to raise money for making home loans, in turn reducing mortgage rates.

    For years, Fannie and Freddie – shareholder-owned companies chartered by Congress to support the housing market – owned or insured trillions of dollars in home loans. When the housing market crashed, the government seized the firms, and it has spent more than $150 billion propping them up.

    Since then, Fannie and Freddie have played a key role in ensuring the availability of mortgages amid the market upheaval. But the Obama administration has said it wants to scale back the federal role.

    In weighing whether to preserve Fannie and Freddie, administration officials have several concerns, said people familiar with the discussions. They spoke on the condition of anonymity because the talks are still preliminary.

    The firms spent decades developing a market in which investors worldwide can buy and sell securities backed by U.S. home loans, and administration officials don’t want to jeopardize it.

    In addition, officials don’t want to punish the thousands of Fannie and Freddie employees who have specialized knowledge about the mortgage market and had nothing to do with the poor business decisions top executives made in the run-up to the financial crisis.

    But some critics warn that nearly any government role could leave taxpayers on the hook.

    “The long-term consequence is that the taxpayers ultimately have to bail out the government’s losses,” said Peter Wallison, a fellow at the American Enterprise Institute. He added, “There is only one legitimate role for government in guaranteeing mortgages: That is mortgages for low-income people, to enable them to buy homes.”

    Under the approach Obama endorsed, the government would seek to limit the exposure of taxpayers. Fannie, Freddie or other successor firms would charge a fee to mortgage lenders and banks and use the money to create an insurance pool to cover losses on mortgage securities caused by defaults on the underlying loans. The government would be the last line of defense in case of another housing market meltdown, using taxpayer money to cover losses only if the insurance pool ran dry.

    Some special advantages awarded to Fannie and Freddie would be eliminated, according to people familiar with the matter. For example, the two companies were allowed for decades to do business while holding a fraction of the reserves – essentially, rainy-day money – that banks and other financial firms were required to hold. This advantage allowed Fannie and Freddie to grow very large. The companies, or the firms that replace them, would have to start holding much more in reserve.

    The administration’s strategy also would require Fannie and Freddie, if they remain in some form, to shed many of the mortgages they own. Their loan portfolios, which have ballooned recently, would shrink greatly over coming years and perhaps be eliminated. Private firms would have to fill the void.

    “We remain committed to winding down Fannie and Freddie, though such significant measures would need to be done gradually and with care,” said Vogel, the White House spokesman. “We believe that it is essential to bring private capital back to the center of a reformed housing system.”

    Although banks would be able to make any home loans they wanted, only those that met federal standards would be eligible to be included in securities assembled by Fannie, Freddie or successor companies. And only those securities would have a government guarantee.

    Any effort to remake the nation’s housing finance system would be phased in over five to 10 years.

    Since early in his tenure, Obama has promised to offer a proposal to overhaul the nation’s housing finance system.

    In February, the administration released a long-awaited white paper discussing an overhaul of the housing finance system. The paper called for the end of Fannie and Freddie but did not say what should replace them.

    Three options were presented. The first two called for greatly reducing the federal role in the mortgage market, perhaps eliminating it. A third option called for largely maintaining the government’s footprint but introducing several changes to reduce the chances that another taxpayer bailout would be needed. (All the options preserved the Federal Housing Administration, a government agency that helps low- and middle-income and minority homebuyers.)

    The administration’s decision in February to release a series of options – and not make a formal recommendation – reflected a political calculation and a disagreement among Obama’s advisers.

    Two top Obama advisers, HUD Secretary Shaun Donovan and Treasury Secretary Timothy F. Geithner, think the government should maintain an outsize role in the housing market, administration officials said.

    Donovan thinks federal support for housing fulfills a public service, while Geithner has been focused on the need for the government to have a way to keep the mortgage market operating during a financial crisis.

    Other advisers, however, opposed a continued government role over the long run. Austan Goolsbee, who this month left his job as chairman of Obama’s Council of Economic Advisers, argued that the federal role in housing distorts the free market. By subsidizing mortgage investments, he argued, the government drives capital away from other types of investments – for example, those in companies developing environmentally friendly technology. He also warned that the government is putting enormous sums of taxpayer money on the line while conveying little actual benefit to homebuyers.

    In a meeting with the president, Goolsbee said that the government had finally brought Fannie and Freddie’s excesses to heel by taking over the companies and that it would be a mistake to let them loose in the market again, said a person familiar with the meeting. Goolsbee likened the companies to a villain held in a special prison who shouldn’t be freed just because he promises to help the poor, the source recounted.

    Lawrence H. Summers, who was director of the National Economic Council until early this year, argued that, over the long term, it didn’t make sense to have a government-backed agency providing guarantees to the mortgage market but that Fannie and Freddie still play a crucial role.

    “My position was that we needed to maximize activity in the short run to support the housing market,” Summers said in an interview. “Discussions of scaling down Fannie and Freddie were vastly premature under the circumstances of a collapsing housing market.”

    After a decade or so, he added, the government role might be phased out. He cautioned that models similar to Fannie and Freddie “were problematic because they were likely to lead to the same type of abuses” that Fannie and Freddie engendered.

    Gene Sperling, who became director of the National Economic Council this year, shepherded the release of the white paper. He agreed that a continued government guarantee made sense.

    In the end, Obama signaled agreement. The White House, however, says the president has not made a final decision.

    Copyright © 2011 washingtonpost.com, Zachary A. Goldfarb

    Related Topics: Federal regulations

    Press Releases

  2. lvent says:

    LMAO, This is good one from CNBC….Gov Rick Perry told the White House , this is not a direct quote but it is close enough, that if the White House allows Ben Bernanke to print more money (I am guessing he means a QE3) the American people are going to come after him with pitchforks and that the White House would be committing TREASON against the American people by allowing Bernanke to print more money…..The White House is said to pretty peeved and told Perry to tone down the rhetoric….some in his own Repub party are stabbing him in the back for his remark….I say, whatever it takes to rout out the traitors and the treasonists…..Gotta hand it to Gov. Perry, he hasn’t won me over, that would take a lot, but chalk one up for Mainstreet!!!!!!. That was a good one!!!!

  3. lvent says:

    These are unsecured debts and these crooks know it…..
    Proof:
    Was Fannie Mae’s ownership ever recorded at the Recorder of Deeds? No!!! yet they are be allowed to hide behind their criminal attorney networks and fraudclose on homes they have no legal standing to take……They are ALL being allowed to commit RAMPANT Federal crimes on the American people with impunity………
    THESE PRETENDER LENDERS HAVE NO STANDING BECA– USE THEY HAVE NO MORTGAGE OR DEED OF TRUST EVER RECORDED WITH THEIR NAMES INSERTED IN THE MORTGAGE DEED OR THE DEED OF TRUST NOR WERE THEY EVER ASSIGNED AS SUCH…

    When the ORIGINAL LENDER sold the mortgage to other parties, were the exchanges ever recorded or assigned, in the county recorder’s office? NO!!!!!!! BECA– USE ALL THEY SOLD WAS AN INTEREST IN A NOTE ON A GAMBLE OF OUR ABILITY TO PAY OR NOT PAY….WHAT THEY DID IS..THEY SOLD AN INTEREST IN UNSECURED NOTES, TO UNSECURED MORTGAGES LOANS THEY DO NOT OWN, THEY COMMITTED SECURITIES FRAUD AND IT WAS MASSIVE…….

    THE SERVICERS ARE NOT A SUCCESSOR OR ASSIGN OF THE LENDER UNDER THE MORTGAGE DEED OR DEED OF TRUST BECA– USE THE PREVIOUS LENDER NEVER RECORDED AN ASSIGNMENT..A RECONVEYANCE….

    THE SERVICERS ARE COLLECTION AGENTS FOR SUCH A SUCCESSOR/ASSIGN…..

    SERVICERS ARE NOT NOTE HOLDERS..NEITHER IS FANNIE MAE…NOR WERE THEY EVER LEGALLY RECORDED AND ASSIGNED AS SUCH….IF THEIR NAME IS NOT INSERTED IN THAT MORTGAGE DEED, AND THERE IS NO ASSIGNMENT RECORDED RECONVEYING THE LOAN TO THEM, THEY HAVE NOTHING….ZERO….ZILTCH…..THEY ARE ALL BEING ALLOWED TO STEAL HOMES THEY DO NOT OWN FOR UNSECURED DEBTS THEY ARE NOT OWED..BECA– USE THE TRUTH IS BEING HIDDEN FROM THE PEOPLE AND THEY DO NOT KNOW THEIR RIGHTS OR THE LAWS THAT PROTECT THEIR PROPERTY RIGHTS…..THE TRUTH IS, THESE ENITITIES LOST TRACK OF OWNERSHIP OF THESE MORTGAGE LOANS AT ORIGINATION…..AND HAVE BEEN COLLECTING TRILLIONS IN ILL GOTTEN GAINS FOR YEARS, THEY STILL ARE AND THEY ARE STILL STEALING HOMES WHEN THEY DO NOT OWN THE LOAN AND THE U.S. GOVERNMENT IS ALLOWING THIS…..NEW WORLD ORDER, HITLER PLAN TO BE CARRIED OUT ON ITS OWN PEOPLE…THROW ALL OF THE BASTARD POLITICANS AND ALL OF THEIR MINIONS AND COHORTS.. OUT AMERICA!!!!!!!

    • disableddad says:

      Ivent, I don’t know who you are, but I have found that when I get a little down about the enormity of this task, your comments fire me up to continue…..So, THANKS

      • lvent says:

        disableddad, I agree with you,this is an enormous task. We all have to stick together to fight this vast ongoing crime syndicate. Do you ever watch Max Keiser? The Keiser Report today features William K. Black who is an expert on White Collar Crime and describes what is happening in America today as criminogenic..Mr. Black suggests that we demand the resignation of Eric Holder and he be replaced by a real criminal prosecuter..I suggest Elliot Spitzer. I guess Obama made a speech to the bankers after he became President and told the banksters, “I am the only thing standing between you and the pitchforks”…Pretty telling stuff..Here is the link. I will try and post the video here later. Mr. Black talks to Max in the second half of the show. This is a really good episode:
        http://maxkeiser.com/

      • lvent says:

        When you go to Max’s website gotta check out that trailer for the film Four Horseman at the top of the page. Looks like Max is going to be in the movie and the way he describes Wall Street, “It is like Sodom and Gomorah down there” Max is always spot on!! The latest Keiser Report is on the right side of the page if you scroll down a bit!!!! Looks like that movie is going to be pretty interesting. Can’t wait to see that one!!

    • yvonne says:

      Actually, it is fraudclosure 9-11! The terrorist used our own against us…your thoughts…

      • lvent says:

        yvonne, this is what they want to do and they are allowed to get away with it because there is soo much corruption. The fact that Fannie Mae or mortgage servicers are even being allowed to bring fraudclosure compaints when they were never assigned these loans is appalling..The NWO has infiltrated America and they are holding America hostage via there own dual idenitity members and there are many treasonists within..Have you noticed all the talk about turning the fraudclosures into rentals? That is part of the Plutocrats evil plan and they are using their perps, the Oligarchs to steal everything from all of us….The U.S. GOVERNMENT is allowing this..They want us to own nothing of value, just the debt they create out of thin air…..There are TRAITORS in our midst…posing as Americans….These are perilous times…..9/11 was the begining of the attempts to cover all of this up…Elliot Spitzer was on to this evil NWO HITLER PLAN and subpoenaed docs from Citi and Chase..All of those docs went down in building 7..on 9/11,,, These are perilous times.. We need to keep routing out these crooks by exposing them…Foreclosuregate is huge..This is war yvonne. The U.S. GOVERNMENT broke the social contract with all of us and now we must revolt….I am going to post the link to a great interview Max Keiser had with Professor William K. Black. Mr Black believes Mr. Eric Holder and President Obama are the gate keepers for these criminals…Mr. Black stated in this interview that Obama made a speech to the banksters after he was elected and said that “I am the only thing standing between you and the pitchforks….” What a slap in our faces….
        http://dailybail.com/home/william-k-black-on-the-latest-keiser-report-banking-rackets.html

        and after that you might need a laugh:
        http://dailybail.com/home/dave-chappelle-on-white-collar-crime-i-plead-the-fifth-video.html
        http://dailybail.com/home/george-carlin-video-the-truth-about-wall-street-and-washingt.html

      • lvent says:

        yvonne, George Carlin does a really good job of putting all of this in a nutshell, “It’s a big club, and we’re not in it.”

  4. qny81 says:

    Get the government out of our lives. Fannie Mae and Freddie Mac shred their notes. Keep that information if you are in the foreclosure process. In the meantime, check out presidential candidate Dr. Ron Paul – he wants to get rid of the Federal Reserve and the mainstream media are so scared (especially their bosses) that they are not mentioning the fact that Dr. Ron Paul is a clear favorite according to the applause he received on his answers in the Iowa debate. Check it out – they mention everyone BUT Dr. Paul.

    http://dailybail.com/home/jon-stewart-interviews-ron-paul-the-fed-has-a-little-thing-c.html

  5. Hell No, No More Bail-OUTS says:

    One adjective comes to mind: DISGUSTING

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