Mortgages

Government Report Says Fannie and Freddie Too Costly

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Government Report Says Fannie and Freddie Too CostlyA new report from the Federal Housing Finance Agency showed Fannie Mae and Freddie Mac, the two government-controlled home loan giants, suffered losses of $28 billion altogether in 2010, but that was down significantly from the $93.6 billion lost in 2009. However, the companies are still of major concern and could cost taxpayers even more in the coming year or two due to a large backlog of bad homes that were originated between 2005 and 2007.

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“While these past business decisions cannot be undone, each enterprise, under the oversight and guidance of FHFA as conservator and regulator, is actively seeking ways to minimize these credit losses,” the report said. “The enterprises’ foreclosure prevention efforts are designed to be commercially reasonable, consistent with the goal of conservatorship to minimize losses, and compliant with the Emergency Economic Stabilization Act of 2008 mandate that FHFA as conservator pursue programs that ‘maximize assistance to homeowners.'”

Together, Fannie and Freddie back more than half of the home loans in the U.S., the report said. In addition, they have helped consumers complete about 950,000 mortgage modifications and other foreclosure avoidance actions.

However, many critics have said government mortgage modifications are often too difficult for even deeply troubled consumers to qualify for and, as such, may not be as helpful as they were originally designed to be.

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