Unfortunately, the investors are not naive. This is basically paper laundering. It has to stop because it is attached to fraudulent documents coast to coast.
By J. Guggenheim/Lendinglies staff
Fannie Mae and Freddie Mac have separately announced sales of non-performing loans this week. Offsetting these toxic mortgage securities target smaller investors, including nonprofits and minority- or women-owned businesses who can’t afford to take the hit when they realize they bought defective repackaged securities the big lenders now avoid.
In 2017, through both Fannie Mae and Freddie Mac, the Treasury guaranteed 70% of all new mortgage lending. The taxpayer’s total exposure to housing is unfathomable, at over $6trn, or 30% of GDP, but it is hidden off the government’s balance-sheet. Reform is long overdue but until then- keep repackaging defective merchandise and selling it off to the highest bidder.
The Senate Banking Committee, is considering a draft proposal to replace them with multiple privately capitalized firms, whose equity holders would suffer first during any slump. The government would maintain an insurance fund, supported by fees…
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