Financial News Story of the Day – Fannie Mae and Freddie Mac Ordered to Reduce Legal Fees
Fannie Mae and Freddie Mac were ordered to cut costs associated with their legal fees. So far, the companies spent $109 million of your dollars since the bailout. Fannie and Freddie are the government housing programs that grew to become giants in the industry, guaranteeing mortgage loans with low down payments that were unlikely to be approved by private lenders. The idea was more affordable housing for the masses, until the housing bubble imploded and left the agencies in need of their own bailout to the tune of $150 billion. In case you’ve forgotten who paid for that bailout, it was sadly also you. The government is slowly attempting to reduce the role of Fannie and Freddie in the housing market, which probably means they’ll get rid of 3.5% down FHA loans over the next few years. It’s an expensive lesson for us all: government, don’t get involved in free markets or your people suffer. 4 years into the downturn and we still haven’t recovered from the worst recession (depression?) in U.S. history.
Excerpt: “The inspector general’s report says Fannie and Freddie has paid legal expenses for Mudd, Syron and the other four former executives sued by the SEC, but it did not provide the amounts. The report did say that Freddie has paid about $10.2 million in legal expenses for an unspecified number of officers and directors since September 2008.
The total legal expenses to be paid by the two companies ultimately could far exceed the $109.6 million specified in the report.” (source: HuffingtonPost.com)
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