Congress to Fannie: You're Paying $500 Million for What?

I would guess that our nation's elected leaders – especially members of the GOP – woke this morning and saw the news in The Wall Street Journal that Fannie Mae is paying $500 million to buy $73 billion worth of servicing rights from the wobbly Bank of America. And then steam came out of their ears. Since Fannie is a ward of the Treasury that means the $500 million (more or less) is coming from – drum roll please – taxpayers. Can you imagine? Early Wednesday a Fannie spokesman told National Mortgage News that it is not buying any MSRs. (See the story on the NMN website.) However, servicing officials we spoke with believe the GSE is probably forcing B of A to unload the $73 billion of MSRs because the bank is doing an extremely poor job of managing the receivables. In other words, Fannie is facilitating the sale to a third party. (Heaven help Fannie if it's financing the deal.) The rumor mill says that third party could be IBM which never talks to the mortgage trade press. Never. Stay tuned.