Oops, Fannie and Freddie Did It Again: They Deny Buying Subprime Loans While Having a 30% Subprime Market Share
March 7, 2002
FM Watch: This is a classic example of Fannie and Freddie's habit of speaking out of both sides of their mouths
WASHINGTON D.C -- Fannie Mae and Freddie Mac are both denying and leading the subprime market. According to data from last year compiled by National Mortgage News, Fannie Mae bought $13.3 billion in subprime loans last year, more than any other lender. Freddie Mac purchased approximately $7.5 billion, making it second only to Fannie.
FM Watch released a report last month, Fannie Mae and Freddie Mac: Failing the American Dream in the Nation's Cities, that analyzed HUD's HMDA data. The data showed that Fannie Mae and Freddie Mac are actually lagging private institutions in serving minority homebuyers in 97 of the 100 top African- American markets, and 87 of the 100 top Hispanic markets. The only loans included in the survey were conventional, conforming home purchase loans. Typically, 11% of such loans can be considered subprime.
By way of rebuttal, Fannie Mae and Freddie Mac offered the following:
- "The FM Watch report is a distortion of our records because they're comparing us to a market we don't compete in -- the sub-prime market." Wynn Yerby, director, Fannie Mae Alabama Partnership Office, Birmingham, AL "Minority homebuyers untallied," Montgomery Advisor, March 4, 2002
- "Fannie Mae spokesman (Bob) McCarson took exception to the group's numbers, saying that they include the private sector's subprime and manufactured housing lending statistics, two areas in which his organization does not lend. He also refuted FM Watch's claim that the GSEs receive a governmental subsidy." "Freddie and Fannie take heat from lobby group," Indian Country Today, February 26, 2002
- Spokesmen for Fannie Mae and Freddie Mac ... say FM Watch's figures -- based on U.S. Home Mortgage Disclosure Act data -- exclude small lenders, a substantial amount of their business, and include subprime loans, which the two agencies avoid. "Mortgage firms boost minority service; But competitors criticize Fannie Mae, Freddie Mac," Milwaukee Journal Sentinel, February 24, 2002
- They (Freddie Mac spokeswomen Sharon McHale and Fannie Mae spokeswoman Janice Daue) both said the FM Watch study relies on statistics that don't apply to their operations. "To make it appear that Fannie Mae doesn't lead (the industry) in lending, FM Watch throws in high-cost subprime loans and lenders we don't do business with," Daue said. "They're judging us against loans we're not even buying." "FM Watch Blasts Fannie, Freddie In Lobby, Media Campaign," Dow Jones Newswire, February 11, 2002
"This is a classic example of Fannie and Freddie's habit of speaking out of both sides of their mouths," said FM Watch Executive Director Mike House. "When they can't justify their failure to lead the market in serving minority and low income families, they resort to distorting their facts. It's time for Congress to strengthen oversight of the GSEs -- someone should be holding them accountable."
Source: FM Watch