Federal regulator investigating bonds sold to GSEs for fraud

July 13, 2010 by · Leave a Comment
Filed under: Legal News 

Glad to hear something is actually being done in this area after the taxpayers have been hosed from the subprime crisis.  It was not right that the loan originators basically let all lending standards go out the door to make fees while selling them to Freddie Mac and Fannie Mae.  If they followed the standards in place then it was our fault and not their’s on a technical level.

On a moral level this was obviously not okay but that is not how we run our society, we run it on incentives and loan originators operated under the incentives that were laid out.  What we need to figure out is if they did not follow those standards and committed fraud to make fees and bonuses.   If so, those money needs to be recouped and any crimes need to be punished to the fullest extent of the law.   We can not allow such lawless behavior in our country.  If you let criminals operate with a free hand then they tend to continue to commit crimes and even bring their friends into it.

Good job on the investigations, this was a huge debacle so many more should be coming down the pipe.

Reuters -The federal regulator of Fannie Mae and Freddie Mac on Monday said it is seeking to determine if issuers of private mortgage bonds are liable for losses suffered by the two housing finance giants.

The Federal Housing Finance Agency said it issued 64 subpoenas to “various entities,” asking for documents on the mortgage securities assembled outside the government-related home finance system.

Names of subpoenaed parties were not released, but the biggest private mortgage bond issuers are among the top Wall Street banks.

Fannie Mae and Freddie Mac  in the mid-2000s rapidly ramped up purchases of the so-called private-label mortgage-backed securities pumped out by Wall Street. The securities, including subprime mortgage bonds, represented some of the worst underwriting standards and helped trigger the credit crisis.


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