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Freddie Mac (FMCC.OB) resisted allowing mortgage-borrowers to refinance to cheaper loans partly...

  • Friday, October 26, 2012, 5:46 AM ET
    Freddie Mac (FMCC.OB) resisted allowing mortgage-borrowers to refinance to cheaper loans partly due to concerns the move would hurt profits and prevent it from paying back its bailout, a ProPublica investigation finds. More aggressive refinancing from Freddie and Fannie Mae (FNMA.OB) could have helped an extra 9M people and saved them almost $75B in interest payments, economist Christopher Mayer estimates.
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    The author is missing the point that although Freddie and Fannie are in conservatorship, they are still shareholder owned. Concerns about profits and the ability to pay back shareholders is what they should be doing. More aggressive refinancing would have led to more capital needed from the government (taxpayers) and continued losses from Fannie and Freddie.
    Keep in mind that Fannie nor Freddie can stop anyone from refinancing. The borrowers wanted both to reduce their principle to do so. That is a very expensive road for us taxpayers to go down loaded with unintended consequences.
    26 Oct 2012, 06:52 AM Reply Like
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