Fannie Mae and Freddie Mac Give the Nod to Foreclosures
Fannie Mae and Freddie Mac Give the Nod to Foreclosures
To confuse the already fuddled crisis, Fannie Mae and Freddie Mac have given the nod to foreclosures. Speaking to realtors recently both said that they would be resuming sale of foreclosed units.
These announcements of the two have great significance. They are Government Sponsored Entities or GSE and have contracted the bulk of the mortgages of America. At the close of September it had on its foreclosure list 240,000 houses. It so happened that due to disclosures Fannie Mae and Freddie Mac joined other banks in putting on hold its foreclosures due to faults in court filings.
It refers to the exposure of robo-signings wherein servicers are said to have inked affidavits without the signatory knowing about the contents; notarization was also not properly done. Questions arose over the servicers having the proper authority to foreclose. It poses the question of legal standing.
The declaration by Fannie Mae and Freddie Mac does not mean that foreclosure operations will kick off overnight. Some of the banks are continuing to probe into their own documentation problems to ensure they have abided by the law.
The national investigation on these issues is also underway. All the 50 attorneys general have set up Foreclosure Task Force including in it banking regulators, the Federal Trade Commission, HUD and Department of Justice. It will not be before next January that the findings will be released.
The National Association of Realtors (NAR) is also a force to contend with. They are blaming the ban on foreclosures for the recent slump in sale of residential houses. It is asking Washington to put back foreclosures on the tracks once again. NAR is urging the mortgage industry to be less stringent on their lending conditions so that more potential buyers can close deals.
The Federal Housing Administration (FHA) as well as other traditional lenders has tightened their lending standards as a reaction to the latest twist in the foreclosure crisis that started in full force in 2007. It is being argued that the loose credit policy had led to the failure of the borrowers to be current on their mortgage payments leading to mass defaults and the present crisis.
The announcement by Fannie Mae and Freddie Mac fails to answer the question everyone is asking actually when will the stalemate end and foreclosures begin to run again?