A federal regulator issued 64 subpoenas to mortgage-lenders Monday, an attempt to find out if government-backed banks were deceived while buying securities.
The Federal Home Loan Mortgage Corp. (OTCBB:FMCC) , Freddie Mac, and the Federal National Mortgage Association (OTCBB:FNMA) , Fannie Mae, set the tone in the mortgage business by buying bundled loans from banks, which allowed banks to make more loans.
With a combined portfolio of $225 billion in private label-securities alone, the loans Fannie and Freddie chose to buy can dictate to banks what loans are acceptable to write.
The Federal Housing Finance Agency, which regulates the two banks, is now trying to ascertain if other mortgage lenders deceived Freddie and Fannie during the years preceding the financial crisis, The Washington Post reported Monday.
In a regulatory filing, Freddie claimed it was owed $4.8 billion and it was having little success getting lenders to pay up. Freddie Mac and Fannie Mae suffered huge losses in the housing market collapse and have since been propped up with $145 billion in federal bailout funds. The banks are considered "government-sponsored," because, although they are private companies, their mission, endorsed by Congress, is to keep home ownership as affordable to Americans as possible.
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