foreclosure, will you come?

[FlyerQ]

Some did.

Fannie Mae isn't exactly rolling in black ink. ALL THEY DO is securitize mortgages.

Nah, if that was true they'd have been fine. They do something else that proved foolish.

"Fannie Mae and smaller Freddie Mac own or guarantee a massive proportion of all home loans"

..

"<Fannie> lent by creating mortgages and mortgage backed securities which it held on its own books."

http://en.wikipedia.org/wiki/Fannie_Mae

 

[denverpilot]

According to them (from their own website...)...

"We stand behind mortgage lenders – local and national banks, thrifts, credit unions, and other financial institutions in all 50 states – to securitize or buy the mortgage loans they originate, enabling them to replenish their funds so they can lend to other homeowners. Similarly, we work to keep funds flowing to support rental housing."

And their Charter...

"Fannie Mae was chartered by Congress in 1938 to support liquidity, stability, and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Our charter does not permit us to originate loans or lend money directly to consumers in the primary mortgage market.

Our most significant activities are securitizing mortgage loans originated by lenders into Fannie Mae mortgage-backed securities – which we call Fannie Mae MBS – and purchasing mortgage loans and mortgage-related securities for our mortgage portfolio. We obtain funds to purchase mortgage-related assets for our mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. We also make other investments that increase the supply of affordable housing."

Of course, if you really want to see how inbred and "fox guarding the hen-house" it all is, just read the titles on the list of the Board of Directors:

http://www.fanniemae.com/portal/about-us/governance/board-directors.html

Former chairman of the FASB, Credit Suisse, Morgan Stanley, Progressive, and the New York City Health and Hospitals former head, Ernst & Young, Diners Club, New York Life, JP Morgan Chase...

And the CEO himself...

"Prior to joining Fannie Mae, Mr. Mayopoulos was executive vice president and general counsel of Bank of America Corporation. Previously, he served in senior management roles at Deutsche Bank AG, Credit Suisse First Boston and Donaldson, Lufkin & Jenrette, Inc."

Those folks are in charge of a quasi-government agency tasked with funding banks. Seriously.

 

[FlyerQ]

According to them (from their own website...)...

"We stand behind mortgage lenders – local and national banks, thrifts, credit unions, and other financial institutions in all 50 states – to securitize or buy the mortgage loans they originate, enabling them to replenish their funds so they can lend to other homeowners. Similarly, we work to keep funds flowing to support rental housing."

And their Charter...

"Fannie Mae was chartered by Congress in 1938 to support liquidity, stability, and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Our charter does not permit us to originate loans or lend money directly to consumers in the primary mortgage market.

It was owning and insuring not securitizing that cost them... Other securitizers were smarter and sold the paper as quickly as it was manufactured to the likes of AIG.

 

[denverpilot]

It was owning and insuring not securitizing that cost them... Other securitizers were smarter and sold the paper as quickly as it was manufactured to the likes of AIG.

So, who should be out of business then?

 

[rpadula]

Unless you were to big to fail. Then you did ok.

Vikram did OK (although I suppose he got tired of the $1 salary). Headline says it all:

http://www.zerohedge.com/news/2012-10-16/vikram-pandit-bottom-line-over-200-million-90-stock-drop

 

[Bob Noel]

Yes, Noel, I understand the difference between ownership of the house and ownership of the mortgage to the house. That's the legal explanation.

It's not just the legal explanation. It's reality.

If banks were invested in the appreciation or depreciation of homes that they write mortgages on, I truly believe that we would not be having this discussion because the banking industry would never have been so careless in the first place.

Imagine what would happen if you got what you want. Do you think that banks should have say in how you maintain/upgrade your house? Can they force you to maintain it in a particular way? Could they prevent you from doing a particular change to the house?

 

[RJM62]

It's not just the legal explanation. It's reality.

Imagine what would happen if you got what you want. Do you think that banks should have say in how you maintain/upgrade your house? Can they force you to maintain it in a particular way? Could they prevent you from doing a particular change to the house?

Bob, many mortgage contracts do in fact include provisions regarding required maintenance, insurance, and upkeep; as well as prohibiting demolitions, modifications, and the like by the mortgagor without the lender's consent.

A relative of mine went through a bit of minor annoyance because of that when he built a shed (actually, more like a small barn) on his land. He didn't get a permit first, and when he was cited, the lender was notified and slapped his wrist for not getting their permission first, as well. Off the record, they also said he could build whatever he wanted as long as it was up to code and properly added to the insurance policy; but that technically, he was supposed to get permission.

Banks seldom inquire about, much less enforce these provisions, however, which I think reflects a common-sense assumption that most people won't deliberately reduce the value of their own property. For my part, I wouldn't have a problem with having to obtain permission from the lender to build an addition to my mortgaged home. As long as everything is done to code, I suspect few lenders would have a problem with something that increases the property's value, seeing as how they hold a collateral interest in it.

I have a lot more of an issue with the government telling someone what they can do with their property than I do with the mortgage holder doing so.

-Rich

 

[timwinters]

Call me when all these captains of industry, and congressmen start acting responsibly, and then I'll work up more anger at the individuals who walk away from their fiscal obligations to the bank and the treasury to provide for their family. One is protecting their wealth, the other is protecting kids, wives, husbands equity.

Great summary of an equally great post. You nailed it all.

 

[jtheune]

Bob, many mortgage contracts do in fact include provisions regarding required maintenance, insurance, and upkeep; as well as prohibiting demolitions, modifications, and the like by the mortgagor without the lender's consent.

A relative of mine went through a bit of minor annoyance because of that when he built a shed (actually, more like a small barn) on his land. He didn't get a permit first, and when he was cited, the lender was notified and slapped his wrist for not getting their permission first, as well. Off the record, they also said he could build whatever he wanted as long as it was up to code and properly added to the insurance policy; but that technically, he was supposed to get permission.

Banks seldom inquire about, much less enforce these provisions, however, which I think reflects a common-sense assumption that most people won't deliberately reduce the value of their own property. For my part, I wouldn't have a problem with having to obtain permission from the lender to build an addition to my mortgaged home. As long as everything is done to code, I suspect few lenders would have a problem with something that increases the property's value, seeing as how they hold a collateral interest in it.

I have a lot more of an issue with the government telling someone what they can do with their property than I do with the mortgage holder doing so.

-Rich

I'm curious about who the lender was because I've never seen anything like that in my mortgage contracts. Yes you have to have insurance but no to the other things you mentioned.

 

[ClimbnSink]

I'm curious about who the lender was because I've never seen anything like that in my mortgage contracts. Yes you have to have insurance but no to the other things you mentioned.

My mortgage had that language. The bank could hire and send in contractors to repair the house and I was on the hook to pay the contractors. I don't think anyone from the bank is checking but the language was there.