The Irony of the GSEs and Foreclosures

Fannie Mae and Freddie Mac are wards of the government and ultimately control billions of dollars of delinquent loans. The executive branch (the White House) controls the GSEs (more or less) and would like to see struggling homeowners helped by their servicers (who answer to the GSEs.) But at the same time Fannie and Freddie – despite their conservatorship status – are still businesses and from what I’m told they are none-too-happy with the way some of their seller/servicers are handling foreclosures. In other words: the GSEs believe some of their clients are taking way too long to foreclosure. Sources say Fannie and Freddie will soon start “dinging” servicers that are taking too long to foreclosure. (And you can expect more ‘force-placed’ servicing transfers. See the Bank of America story on the National Mortgage News website.) As for helping struggling mortgagors, it sounds nice as a political statement, but if you don’t have the money, ultimately you will be shown the door…