By K.K. MacKinstry/LendingLies
Anyone who is trying to find out information about the trust ownership of their loan, knows that if Fannie Mae or Freddie Mac are involved- your research hits a stone wall. Homeowners who have a mortgage not secured by the GSEs are better able to determine what trust their loan was allegedly assigned to. The GSEs who operate as quasi-governmental agencies are still private companies but have been able to evade public disclosures by claiming to not be federal entities.
Under current law, the Freedom of Information Act does not apply to Fannie Mae and Freddie Mac because, while they are under federal conservatorship, they are not federal agencies.
The days of the GSEs hiding behind an ambiguous status may come to an end. H.R. 1694 was introduced by Rep. Jason Chaffetz R-UT last week. Under the proposed bill, the GSEs would be required to accept and process FOIA requests from the public and release information to satisfy those request for as long as they remain under federal conservatorship. This would allow homeowners in litigation and foreclosure to have access to trust information and other loan information. You can be assured that the GSEs and private investors will fight all attempts to bring transparency to these opaque entities.
On March 28, 2017, the House Committee on Oversight and Government Reform requested a cost estimate from the Congressional Budget Office. The CBO estimated the bill would increase spending for Fannie, Freddie and the Federal Housing Finance Agency by $10 million over the 2018 to 2027 period. Revenues, however, would not be affected.
All the net costs would be covered by Fannie and Freddie because FHFA would assess the fees on the two entities to cover its costs. Both Fannie and Freddie are profitable operations and the government has fought to relinquish federal conservatorship. However, it can be predicted that Fannie and Freddie will attempt to revert back to publicly held companies rather than hide the fact that a majority of the loans it guarantees were never properly delivered to the trusts.
The increase in administrative costs wasn’t the only increase the Congressional Budget Office discovered. The office estimates that administrative costs would increase by $40 million in 2018 in order to research and administer FOIA requests.
This bill would only apply to the GSEs while they are under federal conservatorship, and the administration could have solidified plans for GSE reform. The Mortgage Bankers Association recently released its GSE reform suggestions that analyze suggestions for the best option for reform. Therefore, if this legislation is passed we highly suggest that readers immediately send FOIA requests immediately by certified mail to obtain the name of the trust that allegedly holds your mortgage.
Steve Mnuchin, has already stated that GSE reform is a priority of this administration. The MBA’s “Task Force for a Future Secondary Mortgage Market,” was created by big lenders and insurers in the industry, to offer a specific vision of the end-state of the GSEs, as well as transition steps to a post-GSE system. Predictably, the White Paper benefits the banks at the expense of the homeowner.
The paper breaks down specific areas for reform. It includes:
- Maintain the liquidity and stability of the primary and secondary mortgage markets through the establishment of a resilient and robust housing finance system, throughout the transition process to the end state.
- Replace the implied government guarantee of Fannie Mae and Freddie Mac with an explicit guarantee at the mortgage-backed security (MBS) level only, supported by a federal insurance fund with “appropriately” priced premiums (whatever that means).
- “Protect” taxpayers by putting more private capital at risk through expanded front- and back-end “credit enhancements” (requiring that the government and tax payer pay for the guarantee).
The chart below is a snapshot from the white paper and gives a quick view of keys factors in the MBA’s GSE reform plans, comparing how the GSEs operated before and after conservatorship.
The paper emphasizes the need for affordable-housing as a political requirement for bipartisan GSE reform. But in reality, the paper emphasizes the ability of the big lenders to step in for the GSEs and monopolize the profits, while having the federal government act as a guarantor only.
History demonstrates that big banks don’t do anything altruistic for homeowners and the plan would require a mandatory housing fee charged against the guarantors. Therefore, the banks would receive all of the financial benefits while saddling the government and homeowner with the risk and expense. It sounds like the type of plan the big banks would attempt to push on to an unsuspecting public.
It is likely that e-lending and e-documents would become the new standard so that the big banks can attempt to electronically manipulate a decade of defective loan documents through this system. This is disguised under the “preserve infrastructure” clause. The government and big banks have proven they are unable to administer responsible housing policies without resorting to fraud or protecting homeowners.
Homeowners and borrowers should vehemently oppose using big lenders that securitize loans or use e-signature loan products that can easily be manipulated and fabricated. Do yourself a favor and bypass the big banks. Credit unions, local banks and lenders that offer portfolio loans are an excellent alternative to having your loan backed by Fannie Mae or Freddie Mac.
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Filed under: foreclosure | Tagged: Fannie MAe, FOIA, Freddie Mac, GSE | 11 Comments »
