Fannie Mae

enterprise Freddie Mac in 1970, which was similar to Fannie Mae. The two mortgage associations enjoyed the privilege of government guarantee. They converted mortgage into bonds through asset securitization on market for sale, which attracted investment banks and other financial institutions for purchase. A question raised as why banks sold their mortgages to those people with low credit and high risk of default, but the real question is what should they do without loaning money to these people. If other banks did that but a “moral” bank did not, the “moral” bank might lose chance of gaining profits and eventually be eliminated in the competition. Even though they knew it is a trap, they still wanted to jump in for that little chance of survival. The investment banks would also buy the mortgages from lenders and sold bonds to investors through CDO. Under the collateralized debt obligations (CDO), a huge amount of investors without recognizing the risk they have taken. Since then, mortgages held by Fannie Mae and Freddie Mac increased dramatically from to exceeding the In the rapid expansion of mortgage, the two companies was being irresponsible and ignored to the quality of every single asset, which incurred heavy losses from the subprime crisis. 2) It was not only Fannie Mae and Freddie Mac’s fault but also related to lenders and homeowners’ careless reaction on the mortgage loan. The lenders acted as agents between homeowners and Fannie Mae/Freddie Mac, who dealt with…

pushed people into subprime loans when they were not able to afford them. Incentives for homeowners to avoid responsibility were created by states not allowing mortgage holders to go after homeowners when the defaulted on their mortgages. To remedy these factors the government could increase regulation on the mortgage industry and revamp tax credits on mortgages (Pozen, ch. 1). The “Federal National Mortgage Association (Fannie Mae)” and the “Federal Home Loan Mortgage Corporation (Freddy Mac)”…

In 1970, 32 years after the creation of Fannie Mae, the U.S. government chartered Freddie Mac. However, the company became shareholder-owned, while keeping its government perks. The company doesn’t pay income taxes, have credit lines with U.S. Treasury, and can borrow at a low price because lenders assume the government will help them if they get in trouble. Investors knew Freddie Mac as “Steady Freddy” due to its predictable earnings. During their statistics-filled speeches, bankers used to…

the ensuing crisis is influenced by who you ask but, a case can be made for the most apparent events that did impact the crisis. The names Fannie Mae, Freddie Mac, CRA (Community Reinvestment Act 1977), and AIG are just a few among all the conceivable notions. A Lost Beginning Where the 2008 Financial Crisis truly begins is hard to pinpoint. The numerous agencies and regulations involved all played a key role at different times and even those not directly involved, way…

The business scandal that occurred at Fannie Mae Chocolate Industry was when they manipulated accounting to collect millions of dollars in underserved bonuses and deceive investors. They were fined for 400 million dollars. Fannie Mae struggled to emerge from an $11 billion accounting scandal.The penalty that was given for them was the largest penalty ever in a accounting fraud case.The company also agreed to limit the growth of its multibillion-dollar mortgage holdings. Fannie Mae never admitted…

principal and interest on mortgage-backed securities. Freddie Mac is a government chartered corporation (1970) established to purchase mortgages and mortgage- related securities. It issues bonds and securities in secondary markets. Secondary market is a very important player in the mortgage business. It provides liquidity in the market. Let us assume that a bank wants to sell one or more mortgages but no one else wants to purchase them. That is where any of the three above-mentioned public…

In his essay “The Mansion: A Subprime Parable,” Michael Lewis reported that most Americans tend to desire houses they cannot afford. They start blaming rating agencies and mortgage brokers because they find themselves financially underwater. But according to Lewis claim, the lending business didn’t create this desire. The people did. He explains that most people want a house that reflects how well they are. They think that they will control the house but the truth that the house controls every…

“The collapse of the United State economy in the 1930s forced government to enact a housing program – part of President Franklin Roosevelt’s New Deal program”. (Macionis, p. 325, 2013) The New Deal program allowed public housing policies; which provides financial grant to homeowners and builders. Originally conceiving this ideas seems to be a good answer for urban housing problematic but this plan didn’t flourish with serious inadequacy. More than a decade ago, there were a flood of…

The two-story home had the "New" symbol stating that the Fannie Mae approved repair contractors had performed certain repairs. The agent provided many bright images and a text into the listing. However, there was a kitchen drawer and bathroom vanity cabinet that were left open. The exterior images showed a gorgeous brick two-story home with a side entrance to the three car attached garage and a gigantic front yard. The huge backyard was surrounded by trees and shrubbery with a large brick…

District Court dismissed the charges against the three Fannie Mae top officials ruling that there was no evidence to suggest that they intended to deceive anyone (Fiderer 2014). Effects and consequences According to Woiceshyn 2011, making an ethical or unethical decision is not a serious issue for anyone. The problem with making such a decision is the effect it has on their lives and that of others. The unethical decision made by the management of Fannie Mae affected the management and a lot…