Nov 07
17
Yesterday, Fannie Mae had a big conference call to discuss changes to their accounting. Earlier in the week, Fortune Magazine accused them of trying to hide losses in the changes. Unfortunately, the conference call was sufficiently unclear that CNBC had to call them back and make them explain it better:
First, they said the Fortune article was inaccurate, and they were in fact trying to be more transparent, not the other way around. Secondly, they break it down like this: When loans reach a certain stage of delinquency, Fannie is allowed to buy them back and attempt to modify them so that they will get out of delinquency.
Now, I have been critical of Fannie Mae (and to a lesser extent Freddie Mac) for years, since before the accounting mess of 2004. That’s no secret. But trying to modify loans so that people can keep their home or get out from under it is a good thing in my book. It is very important to note that we are not talking about sub-prime loans here: Fannie is legally prohibited from touching subprimes. And so if we are worried that Fannie has more bad loans on the books than we know about, there must be a bigger than known problem in the realm of conforming loans too.
And as for the follow-up, CNN has this item on Cleveland called “Fixing foreclosure’s ground zero: Community groups are joining hands with their former foes to help keep the city’s residents from losing their homes.”
