Mortgage Giants Leave Legal Bills to the Taxpayers

[alp227]

Source: The New York Times

Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.

The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating.

Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller.

Late last year, Randy Neugebauer, Republican of Texas and now chairman of the oversight subcommittee of the House Financial Services Committee, requested the figures from the Federal Housing Finance Agency. It is the regulator charged with overseeing the mortgage finance companies and acts as their conservator, trying to preserve the company’s assets on behalf of taxpayers.

Read more: http://www.nytimes.com/2011/01/24/business/24fees.html?_r=1&partner=rss&emc=rss&pagewanted=all

[xchrom]

1. Recommend

[ixion]

2. We, The Taxed to the Gills, get to cover everything... the illegal wars

people whose paychecks we pay trying to put us in jail for smoking a joint, we pay to have hundreds or thousands killed on a daily basis. We finance Wall St. We feed the MIC, and (in this case) the Law Vertical. There is no bill too large for us to get stuck with at the behest of our leaders, apparently. :grr: :argh:

[Swagman]

3. the 'working man' (woman) pays for everything. These people have no conscience

Next they will want our blood.

[lunatica]

4. We pay to bail Wall Street out so they can reject loaning us our money

The Middle Class is a circular firing squad. It works out very nicely for them. To them that's a win/win.

[naaman fletcher]

9. and,

give themselves record-breaking bonuses.

[customerserviceguy]

5. This is another unpleasant side effect

of all the frivolous lawsuits being started by ambulance chaser lawyers who have tried to overturn foreclosures, with people who didn't have a ghost of a chance of ever paying off their underwater mortgages, secured by liar loans.

[No Elephants]

7. Please step away from CNBC.

[customerserviceguy]

23. I don't get beyond basic cable

This is from 20-plus years of experience watching real estate markets from inside the title industry, that I haven't worked in since 2005. When someone of my experience got laid off, it was a sign that the bubble was finally starting to burst. All the foreclosure activity is the continuing colapse of that bubble, and we're not fully out of this recession until it stops.

I'm not talking about sloppy foreclosure work where the wrong house is targeted, or the person really made their payments, but the lender is too stupid to figure that out, or any other legitimate claim that a borrower has. I'm talking about lawyers collecting fees from people, offering to throw a monkey wrench in the foreclosure process, when everybody involved knows that the person can't afford to pay the underwater mortgage, anyway. Those properties need to come back on the market, and be sold for a market price, to establish the floor that we need to fully heal from the Great Recession.

If you think that prolonging that recession is a good idea, then we simply disagree.

[Myrina]

11. Yes, of course, those silly people who wanted a HOME ...

... how dare they?!? The entire decline of Western Civilization is their fault for believing in the "American Dream". :eyes:

[customerserviceguy]

24. What was silly about them

is they believed all the BS they were fed by "Flip This House", and the realtwhores and mortgage lenders who were just concerned with today's commissions, and didn't care what was going to happen to everybody as they were pumping air into the bubble.

[Hassin Bin Sober]

14. Bullshit!

The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted

[customerserviceguy]

25. Then we've got a lot more of this wasted money to come

Hold on tight, the final cost of the Fannie/Freddie fiasco is going to do to the Federal budget what BP did to the Gulf of Mexico.

[Demeter]

18. they more than tried--they succeeded

Foreclosure fraud is real and illegal, and finally getting the proper attention it deserves.

[Commie Pinko Dirtbag]

19. You forgot the welfare queens in Cadillacs. -nt

[dixiegrrrrl]

21. " accounting irregularities that occurred years before the subprime lending crisis erupted.

BEFORE.
And as most people know by now, sub-prime loans were the TIP of the fraud iceberg.
It has since been proved through numerous courts and suits that Fannie and Freddie were among many many
of the Mortgage holders who were defrauded by the banks.
So, ironically, on the one hand, Fannie/Freddie are being sued for some parts of the mortgage mess and they are also suing the banks for other parts of the mess.

One example...of many:

"Fannie Mae and Freddie Mac have issued 64 subpoenas to JPMorgan Chase, demanding access to original loan files from WaMu's (now owned by JPMorgan Chase) so they can be assessed for misrepresentation. Analysts estimate that Fannie and Freddie could be owed as much as $42 billion in un-securitized loans they bought".

http://www.daytonabeachrealestateattorney.com/2010/10/foreclosure-gate-mortgage-investors-now-suing-bundling-banks.shtml

[Buddha2B]

6. But of course, the Right Wingers will be happy?

All those fees paid to elite lawyers will trickle down right?? :P

[No Elephants]

8. Another "great" semi-privatized mess.

[Hubert Flottz]

10. Torches and pitchforks anyone?

Another day another fucking.

[lonestarnot]

12. Hey! My fucking toilet paper cost me $17.49 cents + tax. Do they want me to send a couple rolls?

Fucking bastards!

[Raschel]

13. So we pay their legal costs for them to defend themselves against us?

[drm604]

15. K&R

:kick:

[sarcasmo]

16. Credit Unions only folks. spread the word.

[SteppingRazor]

17. I hate to throw in with the "government is too big" crowd but...

you know government is too big when one part of the government is spending millions of dollars to defend against lawsuits brought by another part of the government.

[LiberalEsto]

20. They also screwed their employees badly

My husband worked at Fannie for 17 years. Much of his retirement savings was in Fannie stock.
One day the executives sent out a memo ordering employees not to sell their stock until further notice.
Then the execs themselves sold their Fannie stock and got good prices on it just before the stock value dropped to next to nothing.

The employees were left with virtually worthless stock. One guy my husband knows lost over $1 million because of this stock manipulation by the higher-ups at Fannie Mae. And so went the retirement money of a lot of present and former Fannie workers. Screwed, sort of like the unfortunate workers at Enron.

[Rage for Order]

22. Well at least Franklin Raines made $90 million while he was CEO

Let's remember the big picture folks, and not get bogged down in little details like $132 million + in legal fees for which we're picking up the tab.