The big news out of Washington lately has been the showdown over the budget and the debt crisis. In its simplest terms, there’s been a huge dispute over what to do about the fact that the United States government is spending at an unsustainable level.
Which seems like a terribly inappropriate time for Fannie Mae to come crawling for yet another bailout. The Dallas Business Journal is reporting that Fannie Mae needs another $5.1 billion–that’s right, BILLION–in aid.
Fannie Mae, which has been operating under the federal government’s conservatorship, is seeking $5.1 billion from the Treasury Department to balance its books. Fannie Mae received $8.5 billion from the U.S. Treasury to wipe out its net worth deficit at the end of the first quarter. Including this latest bailout request, Fannie Mae and Freddie Mac have sought more than $170 BILLION in government support.
Keep in mind that Fannie Mae, the Federal National Mortgage Association, is the exact same entity that has foreclosed on thousands upon thousands of houses instead of working with borrowers on solutions that keep them in their homes. In many instances that I’ve seen, the homeowners may have gotten behind a month or two because of a lost job, but now, but now they’re working again and they’re willing and able to make their mortgage payment. But Fannie Mae would rather foreclose than work with them.
Now Fannie Mae wants its own “modification.” In reality, more like its 10th or 11th modification. Except that this “mod” isn’t just a reduction in interest or tacking a couple of months of arrears onto the end of the mortgage–they want $5.1 billion more dollars–in addition to the billions and billions they’ve already gotten. So while they refuse to work with you, they want a freebie from the government.
I know I’ve said this before on this blog, but I’ll say it again. People as me why I do foreclosure defense, since most people facing foreclosure “simply haven’t paid their mortgage,” as my critics are fond of pointing out. For starters, it’s usually not quite that simple. But more importantly, I just want everyone to play by the same set of rules–to be equal under the law. Why is it that a mortgage giant like Fannie Mae, which has been hemorrhaging cash for years, gets bailout after bailout after bailout from the federal government and never has to face any consequences for its mismanagement? But hardworking homeowners, who may have lost their job through no fault of their own, get almost no accommodation from this very same company?
I understand if Fannie Mae wants to “simply enforce its contracts” (as it like to point out). But in my opinion, they shouldn’t get to pick and choose which contracts get enforced and which laws get applied. Government sponsored entities (GSE’s) like Fannie Mae and Freddie Mac played an important role in the mortgage business, but it’s become clear that at least Fannie Mae is broken beyond repair. How many small businesses have gone under in the last five years because they lost money? Plenty. Any in many instances, Fannie Mae has foreclosed on those small business owners’ homes. Perhaps it’s time that Fannie Mae is simply put out of business as well.