Fannie and Freddie are not having bad financial institution loans bought back

Toxic mortgage properties were part of the housing market withering up. A loan lender or bank would lend a mortgage to a customer and sell the debt as an asset. Some bank loans went to individuals that wouldn’t have qualified with basic scrutiny, and some people’s mortgages went sour because of circumstances. Fannie Mae and Freddie Mac were sold a lot of these loans. When the loans went bad, those corporations went poor. Part of the law governing these transactions mandates that if the buyer wants to sell the assets back, the vendor has to do agree, but lots of the sellers are refusing. Article source – Bad bank loans to Fannie and Freddie not being bought back by Personal Money Store.

If the purchaser requests the seller must buy bad loans back

Getting a bundle of bad finance loans back from a company that has been damaged by buying them would seem fair. In fact, laws were passed that guaranteed loans had to be bought back by the seller if the loans in question went bad. A great deal of those mortgage securities that went bad were bought by Freddie Mac and Fannie Mae. The law is on the side of the two mortgage giants. However, the troubled corporations are not getting the pay-backs that are owed.

Sale of bad debt not getting tackled

There have been a fair amount of the poor mortgage properties that aren’t getting repurchased. Freddie and Fannie have been asking for a refund from the businesses that sold the mortgages to them, according to USA Today, and about $11 billion worth is being sold back. Of that $11 billion, a lot of it is going nowhere right now. A full 3rd of the loan refunds are 90 days delinquent. Those aren’t the only corporations that bought those securities. Other lending options were backed by the Federal Housing Administration and the Veterans Administration.

Banks are self beating by not really repurchasing these resources

The bank and loan company industry is really hurting itself when the lending options are refunded. Fannie and Freddie are technically in government conservatorship. They are being propped up by tax dollars, which companies and individuals have to pay. That means that the longer the mess drags on, the more everybody has to pay, including bank executives and shareholders.

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USA Today

usatoday.com/money/economy/housing/2010-09-15-fannie-freddie_N.htm