Freddie Mac and Fannie Mae

Hi

This is about one area where spending cuts must be made. Not just cuts but eliminate the program(s) altogether.
As a brief explanation how this program works, they are mortgage holding, insuring and guaranteeing entities. Both were created by the person this blog is named after, President Jimmy Carter. When an individual goes to purchase a house he(she) negotiates a selling price. In almost every instance the buyer must borrow money to pay the price, hence a mortgage. The correct legal term is a Bond and Mortgage, the Bond is actually an IOU, and the Mortgage is an instrument which describes the collateral for the loan. This is filed with the keeper of records and serves as notice for the world that a lien exists on the property. The mortgage contains both the names of the lender and borrower. In order for the bank t make more money and more mortgage loans the Bond and Mortgage is then sold to a third party. Enter Fannie and Freddie, they buy the paper. this is not recorded because the bank who sold the paper to Freddie or Fannie agrees to service the loan for a fee. The borrower never knows that the paper is sold.
Here is where the problem comes in. Freddie and Fannie use the power of the government guaranty to force the bank to make what are referred to as sub-par loans. This means loans to people who probably can never pay them off. The theory was that low income people can achieve the American dream of home ownership. The whole scheme is based on a constant inflation in the value of real estate. The bubble burst, real estate did not appreciate and now people are in a financial bind. The borrower owns a house, subject to a loan, but the loan is worth more than the house. He walks away or the bank forecloses. Either way the government(read U S taxpayer) foots the bill. This is akin to a Ponzi scheme in that it must inevitably fail. Only now the taxpayer gets the bill.
Both Freddie and Fannie are operating at a loss and require more taxpayer money to keep the program working. I say, enough. Eliminate the program and cut all funds to both Freddie and Fannie. Cut taxpayer losses and privatize both. Taxpayers have had enough of this federal government butting in and trying to direct our lives. Can anyone show me where entities like Freddie and Fannie are authorized in our Constitution? This is a program which must be cut and both political parties must get serious and do what is good for America. If not, vote the bums out.

We do have good federal employees, our brave military men and women. Please remember them in your pryers.
GOD Bless