Freddie Doing Backdoor Bailout?
Today’s WSJ has an article about a new watchdog report criticizing dubious cheapo settlements Freddie and Fannie Mae entered into with BoA
Freddie Faulted on Mortgage Reviews by Nick Timiraos, WSJ Full Article
- A federal watchdog said Freddie Mac may have given up opportunities to recover billions of dollars in claims over defaulted mortgages and suggested that a January settlement with Bank of America
Corp. to resolve $1.3 billion in bad-loan claims was inadequate. - A senior FHFA examiner warned in September 2010, months before the Bank of America settlement, that Freddie “could be passively absorbing billions of dollars in losses” by not more aggressively reviewing defaulted loans that could be sold back to lenders, the report said.
- In its report, the inspector general suggested that Freddie hasn’t been
aggressive enough in reviewing loans and implied that the company was lax
because it wanted to preserve its business relationships with top customers like Bank of America. - As a result of the inspector general’s review, the FHFA has suspended similar
mortgage-repurchase settlements.
