This article not prepared by City Weekly Staff
Once again, the government has announced help for folks who are having problems paying home loans! Woo-hoo! If you have a loan guaranteed through Freddie Mac and Fannie Mae, you might be eligible for reduced or suspended mortgage payments for up to one year as of Feb. 1. If your application gets approved for this program through your lender, you will eventually have to pay the money back, but hey, anything helps, right?
“Fannie” and “Freddie” have gotten a lot of press in the past few years. Fannie Mae was created in 1970 and is an acronym for the Federal National Mortgage Association. Freddie Mac stands for the Federal Home Loan Mortgage Corporation and was created in 1938 during the Depression to help get home loans rolling again during a terrible world financial crisis by giving local banks with federal monies to finance home mortgages. Basically, the two entities set up and helped standardize loan guidelines for borrowers. They bought and sold mortgages on the open market and, wow, did they buy a whole lotta bad mortgages. You’ve heard the stories … the $800,000 loan given to a married couple who were seasonal farmhands making $1 an hour, with no savings or other income? That kinda bad loan. They got press because in 2008, both entities had to be put under conservatorship by our government and basically our government bailed them out of their really bad loan investments.
During the “crash” of 2008, Freddie Mac stock prices fell to less than $1 per share, and had dropped to 50 cents in 2010. Not until 2011 did anyone get charged with misdoings connected to Fannie and Freddie. The CFO of Freddie Mac committed suicide in 2009 as the public got wind of the shenanigans. Now we’re hearing that presidential candidate Newt Gingrich got money from Freddie Mac and Fannie Mae. This is odd because I’m old enough to remember him talking smack about these companies’ years ago. In a Republican debate in December, Gingrich was called out by one of his rivals for taking at least $1.6 million in consulting fees from Freddie Mac. According to The Washington Post in 2008, Roy Blunt (R-Mo.), Bob Bennett (R-Utah), Barack Obama and Hillary Clinton, John McCain (R-Ariz.) and the Republican National Convention also received monies from the big Fs. Fannie Mae and Freddie Mac didn’t take sides on the Republican or Democratic fence.
As I understand what’s come down now, Freddie and Fannie are controlled now by our government, through the approval of their overseers/regulators (the Federal Housing Finance Agency). Our government is directing them to give homeowners who have been unemployed for up to a year a break on their mortgages.
On the flip side of this announcement, anyone who has already lost their home to foreclosure won’t benefit from the new plan. And many homeowners will never benefit from any of these government-sponsored help programs because their mortgages were never Fannie Mae or Freddie Mac guaranteed. Call your lender or the company you make house payments to and they will be able to tell you if your loan might qualify. If your lender tells you to stop making payments so you can go late on your mortgage, hang up immediately! n
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About The Author
Babs De Lay
A full-time broker/owner of Urban Utah Homes and Estates, Babs De Lay serves on the Salt Lake City Historic Landmark Commission. A writer and golfer, you'll find them working as a staff guardian at the Temple at Burning Man each year.
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