Fannie Mae, Freddie Mac give green light to foreclosures
To muddle the foreclosure issue just a bit further, Fannie Mae and Freddie Mac told real estate agents last week to resume selling foreclosed properties.
Why’s that significant? Fannie Mae and Freddie Mac — the government sponsored enterprises (GSE) that have underwritten the majority of mortgages in the nation — had about 240,000 properties set for foreclosure at the end of September. It was about that time that Fannie and Freddie called for a moratorium on foreclosures due to concerns about the adequacy of court filings.
We’re talking about the so-called “robo-signing” controversy in which servicers allegedly signed affidavits either without prior knowledge of foreclosure cases or without a notaries present. To make matters worse, there were questions over whether mortgages were properly transferred from the originating banks to the servicers in the first place — if that’s true, servicers might have a problem establishing they had standing to bring foreclosure actions in some cases.
Want to do some research about the seriousness of the potential lack of standing, improper securitization of mortgages, etc.? Click here for my commentary in The City Wire on a fighting foreclosure seminar put on in April by Legal Aid of Arkansas, here for an article I wrote for The Daily Record on that same subject and here for a First Arkansas News podcast featuring foreclosure fighter April Carrie Charney of Jacksonville, Fla., Area Legal Aid.
Before people start accusing Fannie and Freddie of turning into the unreformed Scrooge right before the holidays, bear in mind that the announcement doesn’t mean foreclosures will get back on track overnight. No, some banks are still investigating their own paperwork processes to make sure they’re following the letter of the law and there’s still a national investigation of foreclosure practices underway. That Foreclosure Task Force investigation includes all 50 state attorneys general, banking regulators, and the Federal Trade Commission, Department of Housing and Urban Development and the Department of Justice. The task force is expected to report on its findings in January.
Also, there’s the involvement of the National Association of Realtors (NAR) to consider. Lately, the NAR has blamed the moratorium on foreclosures for at least some slumping homes sales while encouraging the federal government to get foreclosures back on track. The NAR has also urged the mortgage industry to loosen lending requirements so more people can purchase homes.
That’s a novel argument as the Federal Housing Administration (FHA) and conventional lenders have tightened lending standards in reaction to the sharp uptick in foreclosures that began in earnest in 2007. The theory, of course, is that loose credit standards were largely to blame for the inability of homeowners to make their mortgage payments.
In short, the Fannie/Freddie announcement didn’t do much to answer one question a lot of people have — when will foreclosures get back on track?
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.