Monday, April 27, 2009

Fannie Mae Creates Housing Mirage With Bum Loans: David Reilly

This story is absolutely unbelievable, but you better believe it. This shows how some of our biggest lenders are not working to solve the problem, simply to kick the can down the road a few years.

Fannie mae started loaning money on an unsecured basis, the program is "Known as the “HomeSaver Advance” plan, Fannie used the program to provide “foreclosure prevention assistance to distressed borrowers,” according to its 2008 securities filing."

"Fannie funded $462 million in such loans during 2008. The company tells investors in notes to its financial statements, though, what it thinks the loans are actually worth.

Based on market prices, Fannie said the loans had a value of just $8 million. That’s right, the loans, which are in many cases just months old, were worth 1.7 cents on the dollar."

Remember, you, the taxpayer own this company - this is your money being thrown away. Things are not well in the mortgage market and nobody is doing anything to make them better - including the banks. We are being set up for a much worse bailout either by ignorance or on purpose.

Scott Dauenhauer CFP, MSFP, AIF