News Report: Freddie Mac Bet Against Homeowner Refinancings

Posted by Orb Staff on January 30, 2012 No Comments
Categories : Mortgage Servicing

10825_freddie_logo News Report: Freddie Mac Bet Against Homeowner Refinancings Freddie Mac has reportedly invested billions of dollars in betting against the ability of homeowners to refinance their mortgages.

According to an investigation by NPR and ProPublica, the government-sponsored enterprise (GSE) spent the past two years increasing its investment portfolio via mortgage securities that brought in higher revenue if homeowners with higher interest-rate loans could not qualify for refinancing.

The NPR-ProPublica report noted that Freddie Mac's investment strategy was not illegal. However, it appeared to contradict comments made before Congress by Freddie Mac CEO Charles Haldeman that the GSE was ‘helping financially strapped families reduce their mortgage costs through refinancing their mortgages.’

Freddie Mac did not provide any comment for the report. However, Alan Boyce, a former bond trader at Soros Fund Management LLC, questions the conflict of interest in Freddie Mac's actions.

‘Freddie Mac prevented households from being able to take advantage of today's mortgage rates – and then bet on it,’ Boyce says.

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