Even After Bailout, Freddie Mac Found A New Way to Screw Homeowners and the Economy For Profit

Revolting, particularly the timeline, via NPR/Propublica:

Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are “walled off” from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.

The bets paid off if homeowners were locked into horrific mortgages, despite the company's mission to make mortgages easier for average Americans. Note that this development was made in 2010: two years after taxpayers paid to bailout Freddie and Fannie. They were saved by us, and they continue to screw us. In the NPR/Propublica piece, Scott Simon, one of "the world's biggest mortgage bond traders," said that the revelation "shocked" him. Even more shocking: according to their reporting, the Federal Housing Finance Agency—the government tasked with overseeing Freddie Mac—knew about the trades. Both refused to comment. Read the full piece here.

AlterNet / By Julianne Escobedo Shepherd

Posted at January 30, 2012, 6:07am

Sign Up!
Get AlterNet's Daily Newsletter in Your Inbox
+ sign up for additional lists
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Election 2018