Fannie, Freddie say mortgage servicers triggered foreclosure crisis

[Joanne98]

Source: WP

Fannie Mae and Freddie Mac defended their role in the foreclosure crisis in prepared testimony to Congress on Wednesday, while at least one federal regulator said the mortgage giants had contributed to the problem.

Speaking to the Senate Banking Committee at a hearing on the national foreclosure debacle, Fannie and Freddie executives emphasized that they are not responsible for managing payments by borrowers on home loans or foreclosing on homeowners when they default.

These tasks, executives say, are the responsibility of mortgage servicers and law firms with which the companies contract.


"I want to underscore that Fannie Mae does not service loans. We rely on the loan servicing divisions of major banks and other financial institutions as the primary front-line operators and points of contact with the borrowers," said Terence Edwards, executive vice president for credit portfolio management at Fannie Mae. "We pay servicers significant fees during the life of a loan to work with borrowers. Servicers are required under our servicing contracts to help borrowers in trouble, not just collect payments."

Donald Bisenius, executive vice president of the single family credit guarantee business at Freddie Mac, made the same point. "Freddie Mac provides guidelines for the origination and servicing of our loans, and contracts with sellers and servicers to carry out these operations."



Read more: http://voices.washingtonpost.com/political-economy/2010/12/fannie_freddie_say_mortgage_se.html

[xchrom]

1. Ooooh! Very interesting. Nt

[MissMarple]

2. So who oversees the contracts, or are they just on automatic pilot?

[dodger501]

3. I have a "Libertarian" co-worker who has hammered this for months

They latch onto this as further proof that all government is corrupt, all government touches is bad, etc.
When I objected, I get 18 paragraphs (mostly cut & paste from Cato) on how Fannie & Freddie willingly and knowingly bought these toxic assets.
The poor innocent bankers didn't have a chance!

[bergie321]

4. It's even better

When they go off on the CRA. As if the mortgage mess was created because crafty poor people were defrauding the poor, defenseless banks.

[John Q. Citizen]

5. Bad government is bad. Of course, good government is good. So that's

about it.

[dixiegrrrrl]

6. "Freddie Mac provides guidelines for the origination and servicing of our loans"

Uh-huh.
But was anyone watching to make sure those guidelines were followed?
Not according to what I have been reading.