Fannie Mae and Freddie Mac a cesspool of Corruption and Waste

Fannie and Freddie Mae which would long have gone bankrupt after the Lehman crisis had it not been for the unlimited credit lines  from the US Treasury.These two firms which are now 80% owned by the US government have already lost a massive $160 Billion with the worst case scenario  estimated to run into a $1 trillion.Fannie and Freddie Mac are in the business of owning mortgages on US homes and own 50% of the US mortgage market.Their corrupt and wasteful practises are already well known.They spent obscene amounts of money in lobbying and paying lawmakers to relax regulation.The $200 million they spent on lobbying senators and congressmen went straight out of US taxpayers pocket.When the property market collapsed,the US taxpayers were forced into bailing out these two.”Protecting Taxpayers” never entered their mind as they went on spending sprees on Capital Hill.

Fannie, Freddie spent $200M to buy influence – Yahoo

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.But the political tentacles of the mortgage giants extend far beyond their checkbooks.

The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home.They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.

What is the PACE Program

Now what is funny is that these firms are preventing a tiny $100 million Property Assessed Clean Energy ( PACE) program ostensibly to protect taxpayers.The PACE program allows homeowners to install solar energy and adopt energy efficiency retrofits through a large upfront loan which is to be paid off through property taxes over a 20 year old period.This program would solve the problem of a large upfront payment and the loan would automatically transfer to any new owner.Since the energy efficiency and clean energy programs would raise the value of the homes,it makes a lot of sense.It is one of the most innovative ideas to solve the problem of a large initial capital cost required for clean energy.

Why Fannie and Freddie are opposing it

The reason given by these two home loan giants to oppose this program is that the municipal loan given to PACE properties  would be of a senior nature to the their home loans.What this means in layman language is that if a home owner defaults on his property payments,he would be obliged to pay the municipality first for the PACE loan before the Freddie/Fannie loan.After sinking $160 billion into an endless black hole,these companies have suddenly woken up tog get worried about the US taxpayer who has been sucked dry by their incompetence and ineptitude.These companies which are now a part of the government after having bankrupted themselves are now opposing the policies of that same government which wants to promote Green Energy.The real waste of taxpayer money is various arms of the government suing each other in court wasting time and money.

California sues Fannie, Freddie over clean energy – Reuters

California’s attorney general sued U.S. mortgage giants Fannie Mae and Freddie Mac on Wednesday for blocking a home clean-energy program he says will create jobs and stimulate local economies.The program, part of the $787 billion economic stimulus legislation last year, allows local governments to make loans to homeowners to cover the hefty upfront costs of installing solar panels and other energy-saving improvements.

Fannie Mae and Freddie Mac oppose the loans because the municipalities making them would repaid first if a property goes into foreclosure, before investors in mortgages securitized by Fannie and Freddie.”Right in the middle of this recession, this program is being strangled by these massive behemoths Fannie Mae and Freddie Mac,” California Attorney General Jerry Brown told reporters in San Diego.

Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case – Bloomberg

The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.