What Do Those Losses at Fannie and Freddie Mean?

Editor’s Note: While the courts hear arguments and decide this way and that about standing and real party in interest, the elephant in the living room is that we have highly publicized reports of LOSSES associated with more than $5 trillion in loans bought or guaranteed by Fannie and Freddie. That amounts to around 25 million loans more or less. So I ask myself, “Self, if those loans were bought or guaranteed by Freddie or Fannie, what’s left?”

If they were bought, did they keep them or sell them into the secondary market for securitization?

If they own them, why are they not at least nominal plaintiffs or beneficiaries in foreclosure sales?

If they guaranteed them, and they show a loss, doesn’t that mean they paid?

If they paid, it was presumably the loss or full balance of the loan, so which is it?

If they paid, what did they get in return?

If they paid, who owns the loan now?

If they report an “inventory” of foreclosed property, who actually is named as the owner and who gets the proceeds of sale?

If property is “inventory” were Freddie and Fannie involved on any level of the foreclosure or sale?

Did Freddie or Fannie get the benefit of any credit enhancements, insurance, credit default swaps etc.?

Who makes modification decisions for Fannie and Freddie?

Do some or all of these loans fall under the category of unsecured debt, the enforcement of which is subject to pennies on the dollar debt collection?


May 10, 2010, 4:46 am

<!– — Updated: 11:47 am –>

Ignoring the Elephant in the Bailout

From Gretchen Morgenson’s latest Fair Game column:

If you blinked, you might have missed the ugly first-quarter report last week from Freddie Mac, the mortgage finance giant that, along with its sister Fannie Mae, soldiers on as one of the financial world’s biggest wards of the state.

Freddie — already propped up with $52 billion in taxpayer funds used to rescue the company from its own mistakes — recorded a loss of $6.7 billion and said it would require an additional $10.6 billion from taxpayers to shore up its financial position.

The news caused nary a ripple in the placid Washington scene. Perhaps that’s because many lawmakers, especially those who once assured us that Fannie and Freddie would never cost taxpayers a dime, hope that their constituents don’t notice the burgeoning money pit these mortgage monsters represent. Some $130 billion in federal money had already been larded on both companies before Freddie’s latest request.

But taxpayers should examine Freddie’s first-quarter numbers not only because the losses are our responsibility. Since they also include details on Freddie’s delinquent mortgages, the company’s sales of foreclosed properties and losses on those sales, the results provide a telling snapshot of the current state of the housing market.

That picture isn’t pretty. Serious delinquencies in Freddie’s single-family conventional loan portfolio — those more than 90 days late — came in at 4.13 percent, up from 2.41 percent for the period a year earlier. Delinquencies in the company’s Alt-A book, one step up from subprime loans, totaled 12.84 percent, while delinquencies on interest-only mortgages were 18.5 percent. Delinquencies on its small portfolio of option-adjustable rate loans totaled 19.8 percent.

The company’s inventory of foreclosed properties rose from 29,145 units at the end of March 2009 to almost 54,000 units this year. Perhaps most troubling, Freddie’s nonperforming assets almost doubled, rising to $115 billion from $62 billion.

When Freddie sells properties, either before or after foreclosure, it generates losses of 39 percent, on average.

There is a bright spot: new delinquencies were fewer in number than in the quarter ended Dec. 31.

Freddie Mac said the main reason for its disastrous quarter was an accounting change that required it to bring back onto its books $1.5 trillion in assets and liabilities that it had been keeping off of its balance sheet.

None of the grim numbers at Freddie are surprising, really, given that it and Fannie have pretty much been the only games in town of late for anyone interested in getting a mortgage. The problem for taxpayers, of course, is that the company’s future doesn’t look much different from its recent past.

Indeed, Freddie warned that its credit losses were likely to continue rising throughout 2010. Among the reasons for this dour outlook was the substantial number of borrowers in Freddie’s portfolio that currently owe more on their mortgages than their homes are worth.

Even as its business suffers through a sour real estate market, Freddie must pay hefty cash dividends on the preferred stock the government holds. After it receives the additional $10.6 billion it needs from taxpayers, dividends owed to Treasury will total $6.2 billion a year. This amount, the company said, “exceeds our annual historical earnings in most periods.”

In spite of these difficulties, Freddie and Fannie are nowhere to be seen in the various financial reform efforts under discussion on Capitol Hill. Timothy F. Geithner, the Treasury secretary, offered a vague comment to Congress last March, that after some unspecified reform effort someday in the future, the companies “will not exist in the same form as they did in the past.”

Fannie and Freddie, lest you’ve forgotten, have been longstanding kingpins in the housing market, buying mortgages from banks that issue them so the banks could turn around and lend even more. After both companies overindulged in the lucrative but riskier end of home loans, they nearly collapsed, prompting the federal rescue. Since then, the government has continued to use the firms as mortgage buyers of last resort, to help stabilize a housing market that is still deeply troubled.

To some, the current silence on what to do about Freddie and Fannie is deafening — as is the lack of chatter about Freddie’s disastrous report last week.

“I don’t understand why people are not talking about it,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, referring to Freddie’s losses. “It seems to me the most fundamental question is, have they on an ongoing basis been paying too much for loans even since they went into conservatorship?”

Michael L. Cosgrove, a Freddie spokesman, declined to discuss what the company pays for the mortgages it buys. “We are supporting the market by providing liquidity,” he said. “And we have longstanding relationships with all the major mortgage lenders across the country. We’re in the business of buying loans, and we are one of the few sources of liquidity available.”

But Mr. Baker’s question gets to the heart of the conflicting roles that Freddie and Fannie are being asked to play today. On the one hand, the companies are charged with supporting the mortgage market by buying loans from banks and other lenders. At the same time, they must work to minimize credit losses to make sure the billions that taxpayers have poured into the firms don’t disappear.

Freddie acknowledged these dueling goals in its quarterly report. “Certain changes to our business objectives and strategies are designed to provide support for the mortgage market in a manner that serves our public mission and other nonfinancial objectives, but may not contribute to profitability,” it noted. Freddie said that its regulator, the Federal Housing Finance Agency, has advised it that “minimizing our credit losses is our central goal and that we will be limited to continuing our existing core business activities and taking actions necessary to advance the goals of the conservatorship.”

Mr. Baker’s concern that Freddie may be racking up losses by overpaying for mortgages derives from his suspicion that the government might be encouraging it to do so as a way to bolster the operations of mortgage lenders.

That would make Fannie’s and Freddie’s mortgage-buying yet another backdoor bailout of the nation’s banks, Mr. Baker said, and could explain the government’s reluctance to include them in the reform efforts now being so hotly debated in Washington.

“If they are deliberately paying too much for mortgages to support the banks,” Mr. Baker said, “the government wants them to be in a position to keep doing that, and that would mean not doing anything about their status until further down the road.”

It’s no surprise that the government doesn’t want to acknowledge the soaring taxpayer costs associated with these mortgage zombies. The truth about Fannie and Freddie has always been hard to come by in Washington, and huge piles of money seem to circulate silently around both firms.

Remember last Christmas Eve? That’s when the Treasury quietly decided to remove the $400 billion limit on federal borrowings available to Fannie and Freddie through 2012.

That stealth move didn’t engender much confidence in either the companies or their government guardian.

But because taxpayers own Freddie and Fannie, we should know more about their buying habits, as Mr. Baker points out. Unfortunately, if the government’s past actions are any indication of what we can expect, then don’t hold your breath waiting for the facts.

Go to Column from The New York Times »
Go to Freddie Mac Quarterly Report »

25 Responses

  1. Ideally every American should contact his elected officials in DC and ask for full access and details of his mortgage owned by Freddie or Fannie.

    Pay day | Cash advances

  2. @ zurenarrh,

    I’ll be shooting you an email tomorrow. I am also non judicial.

  3. Roxanna,
    Forgot to put my email addies in moderation-defeating protocol…email me at leftbehindchildATgmailDOTcom or mreggsATeggsistenseDOTcom if you want to compare notes…

    Seems like our situations are pretty much identical except that I’m non-judicial and it sounds like you’re judicial…

  4. Roxanna,

    Would like to compare notes by email–my address is leftbehindchild@gmail.com. Also mreggs@eggsistense.com. Not sure how far along you are in your case, but I got some goood info in pre-discovery just this week that you may find useful, at least in terms of the type of stuff you might want to look/ask for.

  5. @ zurenarrh,

    We have a similar situtation.

    Note: Countrywide
    *However, Fannie supposedly owns the loan.

    Btw, your analogy is right on.

    I wonder if another reason that Fannie isn’t pursuing this is because they know the mortgage is unenforceable because of the following:

    1. They lack standing to foreclose on behalf of the certificate holders who are the true parties of interest.

    2. The mortgage has been converted into an instrument not enforceable by foreclosure and us borrowers didn’t consent to the conversion of the mortgage.

    Either way, our most immediate adversary for right now is the servicer.

  6. Roxanna,

    I think the reason Fannie Mae isn’t the plaintiff is twofold:

    1. If Fannie Mae were to be named as plaintiff, people would be outraged, and justifiably so: “You mean I’m bailing out Fannie Mae so they can kick me out into the street? What the f$#k?”

    2. If Fannie Mae authorizes foreclosure in the name of the servicer, then borrowers’ suspicions aren’t aroused. That is to say, most people don’t think too much about the difference between a servicer and a noteholder and just know they pay, for instance, BAC Home Loans. So if BAC Home Loans names itself as the plaintiff, most people won’t think twice about it whereas if Fannie Mae were the named plaintiff, people would think “Now who’s this trying to take my house–I thought BAC Home Loans was my ‘lender’?”

    I think of the housing bubble as a game of hot potato gone bad for the big players. The hot potatoes, of course, were the mortgage loans that all involved knew would fail, so the originators passed the hot potatoes on to Fannie Mae as quickly as possible so as not to get burned. Fannie Mae didn’t want to get burned either, so they passed the hot potatoes on to investors. The investors weren’t aware there was a game going on and so got burned. And Fannie Mae made it look like they got burned so that the taxpayer would bail them out–we the taxpayers are ultimately the last ones holding the hot potatoes and have the worst burns. OK, not a perfect analogy, but still…

    I mean, why in God’s name should we bail Fannie out because of its “losses” and then they still want to take a bunch of houses? It’s insane–and ingenious…

    In my case, my servicer assigned the deed of trust and note to itself, while posing as MERS. So my county land records now say that my servicer owns my note. However, the Fannie Mae site says it owns my note–the site still says this months after the fake assignment, and that site is supposedly updated every month. So now I have a situation where two different entities claim to own my note. Who do I pay?

    But their trick is too clever. The mortgage follows the note, as we all know, So my servicer has admitted that Fannie holds my note, and of course Fannie says that. So the consensus is that Fannie owns it. Well, since the mortgage follows the note, my servicer has no power to enforce the note because Fannie owns it, not the servicer. We all know this is true despite what the fake assignment says.

    If they want to join Fannie to the action, they still have a problem, because after all, the county land records say my servicer owns the note. So that’s fraud–or attempted fraud, anyway. I guess you can’t argue fraud if you caught on to the fraud and worked to stop it. So no matter what they do, they’re screwed…at least, I hope so…

  7. @ PJ

    Thank you. Very interesting! I hope BAC is shaking in their boots. They have used many unfair tactics to avoid modifying loans.

    BAC declined me for HAMP and also the California Attorney General’s Settlement program that was awarded to Countrywide borrowers. BAC held back from me the very funds that were designated to save my home from foreclosure. And I KNOW my husband and I were eligible. We met all the criteria and have the income to support a modified lower mortgage payment.

    Oh well. I’m past the point of being sad and disappointed. I am ANGRY. That anger is fueling my efforts to frustrate matters for them in return. I might not save my home, but I’m not going to make it easy for them either. Every borrower who fell victim to the U.S. financial crime syndicate should fight back.

  8. 2 Roxanne, you might find this interesting…

    From Mortgage News…

    May 14, 2010
    Hamp Certification Process Poses Dilemma for Mortgage Servicers

    By Kate Berry

    Mortgage executives are balking at what amounts to a souped-up Sarbanes-Oxley Act for servicers.

    The Treasury Department wants companies receiving federal incentive payments for modifying troubled loans to sign an agreement certifying they are in compliance with the Making Home Affordable initiative’s more than 800 requirements.

    Among other things, the document says the servicer acknowledges that providing false or misleading information to Fannie Mae or Freddie Mac (which are helping the Treasury run the program) may constitute a federal crime.

    With a June 1 deadline, the executives are in a bind. If they don’t sign the certification, their companies could get kicked out of the program or lose the incentive payments earned for loan mods that have been completed. But if they do sign the document, they put themselves on the hook.

    Servicers are “taking this very seriously” because of “the risk of civil and criminal violations for the person signing the certification,” said Terry Couto, a partner at Newbold Advisors LLC.

    Some servicers are urging the Treasury to extend the deadline to June 30 or soften the language.

    The Treasury did not respond to questions for this story.

    Making Home Affordable is the umbrella program for the administration’s various initiatives to help troubled borrowers avoid foreclosure, of which the Home Affordable Modification Program is the largest and best known. Participation in the programs is voluntary.

    Although Hamp started more than a year ago, this is the first time companies are being asked to sign the certifications as part of an annual renewal process.

    On a conference call last week, servicers discussed problems with the specific language of the agreement, including the potential for criminal penalties and reputational risk.

    According to nearly a dozen executives, lawyers and consultants who took part in the call, the agreement is much broader than Sarbanes-Oxley, which requires executives to take personal responsibility for the accuracy and completeness of a company’s financial reports.

    Some servicers are urging the Treasury to add clauses found in the Sarbanes-Oxley law such as “to the best of my knowledge” or “in all material respects,” that would give an executive some legal leeway for any unintentional misstatements.

    Several servicers said they had no problem signing the agreement; others knew very little about it.

    Most were concerned that any investigation into servicing practices could uncover operational mishaps that servicers have been struggling with because of the deluge of inquiries and paperwork from defaulted borrowers.

    Bank of America Corp., the largest home loan servicer, is waiting for further instructions from Treasury, said Rick Simon, a B of A spokesman.

    “Certainly it is safe to say we have a team working on this,” he said.

    The biggest concern is that an executive could face criminal penalties after vouching that a servicer is in compliance with all applicable federal, state and local laws, and that the company took all actions necessary to implement the loan modification program, including providing training to employees and contractors.

    Executives also must certify they provided updated and correct information about borrowers’ records to ensure that systems maintained by Fannie, the Treasury’s compliance agent for the Home Affordable Modification Program, are accurate.

    Some servicers have developed “Sarbanes-Oxley-type teams to identify and remediate gaps between the Treasury requirements and their internal processes,” Couto said. “This unfortunately requires a significant and expensive effort.”

    Lawyers said that while executives signing the agreement are certifying they will not provide false or misleading information to Fannie or Freddie, it is impossible for them also to know if fraud or any other criminal behavior is taking place at their servicing shop that they are unaware of.

  9. @ PJ,

    Sorry PJ. I had a dyslexic moment on that last post where I addressed you as JP.

  10. @ M. Soliman,

    Yes, the whole thing is disgusting. They made so much money off of us all. I’m going to check my DOT for the word “if.”


    @ JP

    Yeah, I really wish Fannie Mae were out of the equation because I just don’t know how that will further complicate matters for us.

  11. 2 Roxanna… ditto, but think at least it is safe to go on the FM web site and see if they own your loan… I would think that many many millions of homeowners have done so.. possibly even people who are just interested in the abuse of their tax dollars…. but do what is best for you always.

    To tell you the truth it seems much easier to be going up against a “bailed out” bank instead of being sucked into the black abyss of FM and their clandestine “servicers”.

  12. Roxanna, on May 13, 2010 at 3:37 pm Said: I can’t find anything to answer my question – “Is Fannie Mae a party of interest who can enforce foreclosure?” Why isn’t Fannie Mae the plaintiff in these foreclosures?

    You see when Indy Mac gets its pink slip the Fed are trying to stop the run on the bank.

    Banks with the assets size of Indy Mac will have at least 250 to 1000 branches across the country. IMB had 30 or maybe 35, max. Where did they get their deposit base from?

    Look at the PSA and definition for the word Depositor. Americans were sucked into offering up their homes for collateral to fund new bank business units. These Enron style SPE’s paid astronomical Tax Deferred Dividends, all things considered.

    The Banksters could deposit five to ten times the amount of your note by forming private placements that raised there capital and risk based capital to double what it was for the past 50 years That was all done over a five years run. Wow!

    Someone said a Ponzi cannot be defended in court as the demand will eventually exceed total per capita for the entire world. Bank of Iceland, Bank of China, Scotland, lets see….Oh now Greece,

    So assuming you do not understand risk based capital, consider for every dollar wired and check written or debit card used (electronic) there must be cash set aside. Or, for every $100 million in assets a bank need roughly $2 M. You got it. Sick yeah?

    So when a IndyMac Bank is mandated to write down bad assets determined by regulators to be “toxic” they must pay down the loans on the books to meet minimum capital requirements.

    These loan loss reserves are calculated in the funkiest manner and do not come off the books. Instead, they actually get added back at anywhere from half to the entire value of the loans in question.

    This throws out of whack your minimum capital levels
    Assets Bse 100,000
    Liabilities .75,000
    Net Worth .25,000

    Net Assets 23,000
    RB Capital 2,000

    If $20 million were bad loans the bank may need to pay or “cap” that amount. If they cant raise it fast enough…like over the weekend…doors close.

    Here is how you fix the problem:

    Cash Infusion . . . . . .400,000.00
    Fannie Mae . . . . . 20,000,000.00

    Bail Out Funds. . ..20,400,000.00

    All those billion of dollars and it was Fannie Mae all the time…?Take them off the balance sheet and move them to Fannie Mae.

    Now wait a minute. One West Bank was hesitant to do this deal and immediately moved to get away from anything named Indy Mac Bank. And Fannie Holds the soured assets now with one swoop of the IOU. It’s like a credit or bid or Credit Bid! But, Indy Mac Bank is gone you see. And Bank One does not own the loan till it’s sold as an REO.

    So….who is foreclosing on you as the trust can only hold passive assets. Hey wait a second.

    For allowing One West to be the fall guy they get all kinds of perks while they put these nice REO homes on the books at full loan amount as a value AFTER THE FACT. This way they come off the Governments back one foreclosure at a time.

    That’s why the Administration wants so desperately to stimulate the economy – to help excite borrowing and too help homeowners. WAIT A MINUTE. THOSE HOMEOWNERS ARE NEW BUYERS AND THEIR PURCHASING YOUR HOME….AS A foreclosure REO.

    Note- Billions upon billions of Indy Mac Loans were held for sale. They were never sold and reclassified as loans held long term. Some of you are going after a WS Trust for loans never sold and that actually did belong to IndyMac Bank.. . . or FindyMac Bank now. (Clue-Look for the word “IF”on Deed of Sale)


  13. Hmmmm, let’s see…..taxpayers picking up the tab for massive mortgage fraud…….that’s a new one!!!!

  14. @ PJ,

    I haven’t contacted Fannie Mae at all because I will not acknowledge them as creditor. I never made a contract with them and was never notified that my loan was sold to them. I keep thinking that if I contact them, it will be seen as an admission that they are a creditor. I’ve seen so many others that, after being denied a modification by the servicer, attempt to seek modification or foreclosure assistance through FM. I’m not sure if this will come back to haunt them later on but I’m not going to risk it.

    I still find it curious that FM is not being named as plaintiff in these foreclosures if they supposedly own these loans. It certainly makes one wonder what they are covering up or why they haven’t come forward as a “party of interest” thus far.

    I guess time will tell. In the meantime, I hate feeling like a sitting duck.

  15. 2 Roxanna again… “Homepath”, “Mortgage Family” and a host of other’s are web page applications for GSE conduit Servicer’s that operate under the radar… they are the web version of information gleaming HAMP…

    NEVER NEVER log on to any site like this… if you must call , your first question is to confirm that the conversion is indeed being recorded… and your reply should be “thank you”… I will be requesting documentation on our conversation, please provide your name and employee Identification number… Next OK so & so, you have identified your-self as xyz.. employee number 123…. we are speaking today… look at clock, and my time EST, CT, what ever is …. and you are speaking to me from where… get time and place.

    IF that is to complicated… then when they say the conversation is being recorded “for quality purposes”…. say thank you I am also recoding this conversation for my own quality purposes and turn on your own recording device… trust me they will hang up… GSE conduit servicers have been and continue to receive complete annomity…

    Because they are not “bank’s” they are not required to file information on their performance with HAMP and all the other “carrot” programs held in front of the American Homeowner’s nose… just like Fannie that is not held to full disclosure in SEC filings…

  16. 2 Roxanna, sort of stuck in the same Limbo… with a commitment loan Obligation/Number for a now dissolved Fannie Mae MBS pool for a “JUMBO LOAN POOL”… , documented on FM’s web page… funny thing is the LOAN was not and never was a JUMBO LOAN… so it is apparent that the “high equity” was used under false pretenses and masked as a “Jumbo Loan”…. by switching the loan to value ratio…

    To all other’s FM is not obligated to anyone to answer a FOIA request, the POTUS, DODD & FRANK all others involved made sure of that immediately after the tax payer bail out and the Christmas Eve lifting on the CAP Fannie Mae can bilk the Treasury, aka the American Tax Payer for….

    Fannie Mae , if they answer will direct you back to your servicer/bank… which can provide information for the inquiring homeowner… just try doing that with a GSE/Fannie Mae conduit “servicer”… that operate under the radar… in fact some CEO’s from these entities are being and have been hired by Fannie Mae…. Better to keep the same liars in one room.

  17. I can’t find anything to answer my question – “Is Fannie Mae a party of interest who can enforce foreclosure?” Why isn’t Fannie Mae the plaintiff in these foreclosures? If the courts find that the servicers are not a party of interest, who comes after you next, Fannie Mae?

  18. Someone IS or WAS foreclosing on behalf of Fannie Mae. I found this:

    Page Two says, “Why does Fannie Mae have properties for sale? – While we work with our partners to avoid foreclosures, sometimes foreclosures are unavoidable. When they do occur on mortgages in which Fannie Mae is the investor, our goal is to sell those properties in a timely manner in order in minimize the impact on the neighborhood.”

  19. My FOIA request to Fannie Mae was denied. I appealed it and was denied again. FHFA, the conservator of Fannie Mae, said I was denied because FHFA does not have Fannie Mae’s records.

    Judicial Watch has sued FHFA over this FOIA issue and they point to a document in their complaint wherein it states that FHFA has in fact been given Fannie Mae’s records.

    I got some disclosure recently in my suit against my servicer which confirms what I already knew to a 99.9% degree of certainty, which is that my loan was sold to Fannie Mae less than 2 weeks after the loan closing.

  20. Fannie Mae-

    * the bank has told me my loan was sold to Fannie Mae, and Fannie Mae is the “investor” and “owner”.

    * The bank/servicer told me in wrting that my loan is part of a MBO and gave me the numbers of FNMA SS IO 3027.

    QUESTION 1) I have served several RESPA QWR’s upon Fannie Mae with zero responses in the last 12 months. CAN i hold fannie mae accountable pursant RESPA QWR violations as master servicer?

    QUESTIOn 2) how do i look up FNMA SS IO 3027 to find the pooling and service agreement, can’t find on the SEC search.


  21. It isn’t real money but counterfiet money that Fannie and Freddie are getting and slight of hand moving of bad debt off their balance sheets (don’t you wish you could just white out the debt from your balance sheet?)

    BUT they expect us to give up our “real Property” to pay back all the counterfiet money they lent us!

    I want the same deal that the banks are getting from the Feds: 0% interest, truckloads of counterfeit money handed to them.

    Has anyone seen this:
    Goldman Sachs and Helicopter Ben
    Submitted by Econophile on 05/12/2010 14:36 -0500

    From The Daily Capitalist

    Don’t expect a thank you note from Goldman Sachs or any of the other banks that had perfect trading days in Q1. “Perfect” means that they had no days of trading losses for 63 trading days.

    Goldman Sachs, which makes more money from sales and trading than any Wall Street firm, reported yesterday that it made at least $25 million trading every single day of the first quarter, the first perfect quarter in the company’s history. The company’s fixed-income, currencies and commodities business, known as FICC, and equities unit generate those returns by making markets for clients rather than betting the firm’s own money, Cohn said.

    They weren’t alone:

    Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Street’s revival. Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter. Citigroup Inc., the third-largest, doesn’t break out its daily trading revenue by quarter. It recorded a profit on each trading day, two people with knowledge of the results said.

    You may ask: how is that possible? Are they that good? The reason is that they are taking advantage of free money from the Fed:

    “The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics. “It’s a transfer from savers to banks.”

    The trading results, which helped the banks report higher quarterly profit than analysts estimated even as unemployment stagnated at a 27-year high, came with a big assist from the Federal Reserve. The U.S. central bank helped lenders by holding short-term borrowing costs near zero, giving them a chance to profit by carrying even 10-year government notes that yielded an average of 3.70 percent last quarter.

    The gap between short-term interest rates, such as what banks may pay to borrow in interbank markets or on savings accounts, and longer-term rates, known as the yield curve, has been at record levels. The difference between yields on 2- and 10-year Treasuries yesterday touched 2.71 percentage points, near the all-time high of 2.94 percentage points set Feb. 18.

  22. Thank you for this! I’ve been wondering these things myself.

    I believe Countrywide sold our loan to Fannie Mae from the gate because our Note and DOT were written on standard Fannie Mae forms. I should be served with a NOD soon and I’m wondering if it will be from BAC or FM. Time will tell.

  23. BSE, got the same info from both the “servicer” and confirmed on FM web site… The odd thing is the loan was a AAA high equity to loan obligation that the original lender (local community bank) held on to for year’s… not 4 year’s … for years…. we were never notified that in late 2006 it was sold into the secondary market… thats another story.

    Over this time continued to make payments to the “outsourse servicer “used by the community bank and woo la in late 2009 the “servicer” attempts to put the loan in default by not cashing checks, saying that payment coupons were not sent with check payment so they did not know how to allocate “payments”, even though loan number was written on check…. they were smacked down summarily from the top CEO to the GED equivalents in “mitigation services”

    It was then that we found out that “servicer” not the original lending bank sold the loan to FM, first by checking county records and getting copies of the assignment… and then confirming that FM actually owns the loan.

    So your question is correct… however in our case the “servicer” which is not a bank but an GSE conduit.. attempted to place the loan in default on behalf of a taxpayer bailed out entity Fannie Mae….

    Neil is absoulty correct on this FM & FM crap… the POTUS has sheilded them with protection from FOIA regulation and law, making it impossible for the homeowner out there to obtain any information pertaining to their loan.

    Each and every American should be contacting their elected officials in DC and demanding full access and disclouse of their mortgage owned by FM & FM.

  24. Interesting points. Freddie supposedly owns my loan.
    We can now assume Wells Fargo who claims to have loaned the money for my home scammed the government and the tax payer. . Some one needs to go to jail and it will not be me.


  25. Case where the insurance of the Mortgage Loans
    MBIA, sued


    the Seller and Servicer of the trust. They studies the loans and found out that over 30% were not eligible to be in trust. This fits with the SEC investigation reported today.

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