Freddie Mac in 2010 and 2011 bet against the very homeowners they are suppose to be working for. An investigation recently revealed that the company has spent billions of dollars to invest in security packages that provide the company with heaps of cash when homeowners are unable to refinance their properties.
The problem stems from the fact that Freddie Mac is also responsible for regulating refinance requests, which in turn has allowed the company to deny refinance packages to homeowners, thus leading to a huge conflict of interest.
Speaking to NPR one exeacutive at a firm that trades in mortgage-backed securities said:
“We were actually shocked they did this,” and “It seemed so out of line with their mission, out of line with what Congress wanted them to do.”
An ex-bond trader adds:
“Freddie Mac prevented households from being able to take advantage of today’s mortgage rates—and then bet on it.”
What makes the company’s bets even more ridiculous is that they could very well be wiped out if a mass refinancing program being pushed by President Obama makes it’s way into law. Under that plan which is said to put billions of dollars back in consumer’s pockets Freddie Mac would be forced to allow for refinancing at today’s lower rates which in turn would wipe out billions of dollars they have spent on their scam.
In a laughable response to the situation Freddie Mac representatives says they keep investment heads “walled off” from mortage regulators.
Do you think Freddie Mac is once again gambling with the U.S. economy over a few billion dollars?