At the same time, Freddie placed $5 billion worth of bets that pay off if homeowners stay stuck in higher interest-rate loans. The concern is that in recent years, Freddie has been changing the rules to make it more difficult for homeowners to refinance. Some prominent economists estimate that upward of 10 million homeowners are being unfairly blocked from refinancing because of unnecessary restrictions, fees and other frictions within the mortgage industry. Lawmakers are interested in exploring the matter because millions of homeowners are frustrated that they can't lower their mortgage payments by qualifying for today's interest rates - the lowest on record.
SCRUTINY FOR MAC MAC
Robert Menendez, D-N.J., had sent a letter to the inspector general, saying: "If Freddie Mac stood to benefit from homeowners being trapped in above-market interest rates, are such transactions consistent with their mission?" Report Prompts Calls To End Freddie Mac's Conflict Of Interest Jan. We'll know more when the evaluation is completed."
The inspector general for the Federal Housing Finance Agency, which oversees Freddie Mac, issued a statement saying: "We currently have an open evaluation on capital markets, which encompasses this issue. senators are expected to probe Freddie Mac's investment practices at a hearing on Capitol Hill on Thursday.įreddie Mac, based in northern Virginia, is the taxpayer-owned mortgage giant whose public mission is to make homeownership more affordable for Americans.īut a recent investigation by NPR and ProPublica, a nonprofit newsroom, showed that the company, which was chartered by the federal government, has made $5 billion worth of investments that benefit when homeowners are blocked from refinancing their current mortgages to take advantage of today's lower rates.įreddie Mac is one of the gatekeepers that gets to set the rules by which homeowners are allowed to refinance.
In December, Freddie Mac CEO Charles Haldeman (from left), FHFA acting Director Edward DeMarco and Fannie Mae CEO Michael Williams testified on Capitol Hill about the Federal Housing Finance Agency's performance.Ī federal Inspector General's office confirmed Wednesday it is looking into Freddie Mac investments that act as bets against homeowners being able to refinance.