Taxpayers to Benefit From Freddie Mac Foreclosures Investigation

by Simon Lindsay on Foreclosures

The huge number of Fannie Mae and Freddie Mac foreclosures contributed to the fall of the two mortgage giants and thus, authorities are interested in how these problems came about. The U.S. Federal Housing Finance Agency has announced that 64 subpoenas have been issued to a number of financial services companies that might have played some part in the fall of the two government-sponsored enterprises (GSE).

This news has significant bearing on taxpayers all around the U.S. Locally, Pennsylvania residents have welcomed the news, particularly those who have lost their homes to Pennsylvania foreclosures. The action of the agency is expected to bring taxpayers some relief once it gets to its conclusion.

The subpoenas were reportedly meant to get documents from these institutions related to mortgages that Freddie and Fannie purchased from Wall Street during the housing market boom. They are also designed to shed light on how thousands of properties ended in bank owned property list and foreclosure listings. Basically, what the agency aims to find out is how Wall Street was able to sell mortgage securities in private labels to investors despite the questionable nature of the loans contained in these packages.

According to real estate market analysts, once this question has been resolved, the two mortgage firms can force the financial institutions to buy the improper loans back. This will allow taxpayers, particularly victims of Fannie Mae and Freddie Mac foreclosures, to get some of their losses back. Analysts remind the public that it was the taxpayers who practically shouldered the financial responsibility when the government decided to bail out the two GSEs.

Most analysts have praised the agency's efforts to identify the parties responsible for the huge number of foreclosed homes on sale in the country that consequently led to the housing crisis that gripped the U.S. They claimed that the government agency does not only talk about helping taxpayers but has actually done something to support its talk.

The agency sent the subpoenas to firms that acted as trustees for loan pools or have serviced the loans in these packages. The government unit is reportedly seeking documents like property appraisals, loan files and mortgage applications. These documents are supposed to help the agency understand how the questionable mortgages were sold and whether they contributed to the Fannie Mae and Freddie Mac foreclosures crisis.

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