Fannie, Freddie, Fraud, Say Federal Investigators
Federal investigators have charged the heads of Federal Mortgage giants Freddie Mac and Fannie Mae with fraud, claiming they hid the true details of issues and defaulted mortgages prior to and during the Real Estate meltdown.
The SEC (Securities and Exchange Commission) has charged Freddie Mac head Richard Syron, and Fannie Mae’s Daniel Mudd with misleading the government about the risky sub-prime mortgages they held in 2006 and 2007 before the bubble burst in 2008 when the two agencies were seized by the Bush Administration. Mudd and Syron dispute the lawsuit, saying the Feds knew everything about what was going to happen, and what the sub-primes would lead to. The suit claims Freddie and Fannie claimed they had 4.8 billion in sub-prime or high risk mortgages on their books, about .02 percent of their portfolio, when in reality is was 43 billion, or about 11 percent. So far their bailout has cost over 150 billion, and it could go higher. Lance Kenmore of the Tri Cities Real Estate Update on Saturday mornings has been predicting there will be more fallout from Fannie and Freddie before their affairs are returned to “normal.”