Loans

Washington, DC, United States (AHN) – The three-year investigation into whether mortgage giants Fannie Mae and Freddie Mac properly disclosed their exposure to risky subprime loans is about to end. Reports said that the regulators are near a settlement with the two companies.

A proposed settlement with the Securities and Exchange Commission reportedly includes no monetary penalties for the two companies. Also being considered is no admission of fraud.

Despite these terms, Fannie Mae and Freddie Mac’s possible agreement to a settlement are tacit admissions they had a major role in the housing market crash, observers said.

The observers added that it would also be an awkward moment for the two mortgage giants because the government overseer of Fannie and Freddie filed a lawsuit last week against 17 big financial companies for luring the two to purchase troubled loans. The charges are similar to the accusations that the SEC made against Fannie and Freddie that the two companies misled investors.

The investigators are not keen on imposing a fine on the two mortgage giants because of their weak finances, with the government infusing more than $100 billion into the two companies since they came under government control in 2008.

Beginning Oct. 1, the two firms are scheduled to reduce the size of loans they buy from lenders, which would force future borrowers to enter into more expensive and difficult-to-get large loans.

The old limits of $417,000 for single-family residences were hiked in 2008 in some high-cost housing markets to boost the economy. The limits reached $729,750 in some areas, but by October the cap will go down to $625,500.

Other major lenders such as Bank of America, Wells Fargo and JPMorgan Chase have stopped accepting new applications to ensure that those in process would reach the Sept. 30 deadline.

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Government-controlled mortgage buyer Fannie Mae is seeking additional federal aid after posting a narrower $3.46 billion loss in the third quarter. Fannie Mae also said it was likely that the foreclosure mess will have a negative impact on its loans.

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An editorial in the Dallas Morning News said that Fannie Mae and Freddie Mac must be made to compete in the secondary mortgage market like every other private firm, with their own skin — not that of taxpayers — in the game. Although Fannie and Freddie didn’t cause the mortgage crisis, each stoked the inferno with wink-and-a-nod assurances that the government would bail out risky mortgage loans. Allowing the two operations to keep one foot in the private sector and the other in federal coffers tempts another crisis.

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photo credit: respres

Today is a special day for many people, the Government and banking institutions can’t make up their minds and the markets are out of control!

But, many people in debt and other financial stress face the various serious business of foreclosure on their homes. To prevent that from happening many will turn to refinancing home loans to bail them out of a bad situation.

One major problem is that there are many companies offering refinancing home loans, trying to cash in on the ever increasing refinancing home loans market, but not all these refinancing home loans actually benefit the emotionally and financially distressed homeowner who is on the brink of losing everything. (more…)