Current Weather
The Spy FM

Freddie Mac Didn’t Harm Homeowners, Inspector General Says

Filed by KOSU News in US News.
September 26, 2012

In January, NPR and ProPublica reported on a potential conflict of interest at Freddie Mac, a mortgage giant sponsored by the federal government. The stories noted that even as Freddie Mac was writing rules making it harder for homeowners to refinance their mortgages, it also was stepping up investments in securities that gain when homeowners remain stuck in high-rate loans.

Today, a federal Inspector General released a report that evaluated those investments and concluded they were just “a small portion” of the portfolio held by Freddie, formally called the Federal Home Loan Mortgage Corp. Moreover, the inspector found “no evidence” that Freddie “obstructed homeowners’ abilities to refinance their mortgages in an effort to influence” the profitability of the investments, known as inverse floaters.

The NPR and ProPublica reports underlined the potential for a conflict within Freddie Mac. On one hand, the government-sponsored enterprise holds investments that make money when homeowners are unable to refinance. And on the other hand, it has a public mission to make homeownership more affordable. The stories did not assert that Freddie had specifically changed its refinance policies to boost the value of its inverse floaters.

The inspector general’s examination, which relied on the word of the Freddie employees it interviewed, found no evidence of improper collusion between Freddie’s investment side and its mortgage-credit side.

It also said the Federal Housing Finance Agency, which oversees Freddie Mac, made “ambiguous” public statements about the investment strategy. Those statements “could have been more clearly articulated,” it said.

The inspector general’s report was requested by Sen. Robert Menendez (D-NJ). [Copyright 2012 National Public Radio]

Leave a Reply

12AM to 5AM The Spy

The Spy

An eclectic mix of the Spy's library of more than 10,000 songs curated by Ferris O'Brien.

Listen Live Now!

5AM to 9AM Morning Edition

Morning Edition

For more than two decades, NPR's Morning Edition has prepared listeners for the day ahead with two hours of up-to-the-minute news, background analysis, commentary, and coverage of arts and sports.

View the program guide!

9AM to 10AM The Takeaway

The Takeaway

A fresh alternative in morning news, "The Takeaway" provides a breadth and depth of world, national and regional news coverage that is unprecedented in public media.

View the program guide!

Upcoming Events in your area (Submit your event today!)

Streaming audio and podcasts

Stream KOSU on your smartphone

Phone Streaming

SmartPhone listening options on this page are intended for many iPhones, Blackberries, etc. with low-cost software applications available to listen to our full-time web streams, both News on KOSU-1 and Classical on KOSU-2.

Learn more about our complete range of streaming services

We're perfecting the patient experience - Stillwater Medical Center