Home >> News >> Government >> Lawmakers Target Fannie, Freddie Over ‘Questionable’ Practices
Print This Post Print This Post

Lawmakers Target Fannie, Freddie Over ‘Questionable’ Practices

Mortgage giants ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/ fell under heavier scrutiny Tuesday as two separate bills emerged from Congress that targeted their eligibility to receive taxpayer funds for certain uses.

[IMAGE]

A minibus bill cobbled together by House lawmakers would slash spending from several federal agencies and limit a hike in conforming loan limits to the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory (FHA), implicating the GSEs by extension.

House lawmakers drafted the language for a stopgap spending measure to resolve funding needs for the federal government and avoid a shutdown for the remainder of the fiscal year ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a step in the direction of an agreement reached by ""White House"":http://www.whitehouse.gov/ officials and member of Congress earlier this year.

The stopgap spending measure included an amendment that would once more elevate thresholds for conforming loans backed by the FHA.

The amendment notably excludes Fannie Mae and Freddie Mac. The GSEs recently fell under scrutiny for $13 million in bonuses for 10 senior-level executives.

Conforming loan limits fell for federal guarantors across the board in early October when Congress allowed the $729,750 upper threshold to expire, returning to $625,500.

[COLUMN_BREAK]

""The bill does not increase the maximum loan limits for Fannie Mae and Freddie Mac,"" the summary said. ""These entities have been under public scrutiny for their questionable businesses practices and use of billions in federal bailout funds, some of which have been used for extravagant management bonuses.""

A summary report of the bill, proposed by ""Rep. Hal Rogers"":http://halrogers.house.gov/ (R-Kentucky), also hit housing in another wave of cuts by doling out only $37.3 billion for HUD - approximately $3.8 billion less than the federal department reached last year and about $4.7 billion shy of ""President Barack Obama's"":http://www.whitehouse.gov/administration/president-obama proposed budget for next year.

Earlier Tuesday the head of their federal regulator, the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA), ""Edward DeMarco"":http://www.fhfa.gov/Default.aspx?Page=67, appeared before the ""Senate Banking Committee"":http://banking.senate.gov/public/ to address concerns from lawmakers that executive bonuses smacked of excess.

Another House committee made headlines Tuesday by voting to approve legislation that would substantively trim bonuses for GSE executives.

The ""House Financial Services Committee"":http://financialservices.house.gov/, helmed by by ""Rep. Spencer Bachus"":http://bachus.house.gov/ (R-AL), voted to pass H.R. 1221, or the Equity in Government Compensation Act, by a 52-4 margin.

The bill would slash multi-million-dollar bonuses ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô $5.6 million for Fannie Mae's CEO, $5.4 million for Freddie Mac's ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô by fixing both of their compensation levels at $218,978.

""These lavish compensation packages and bonuses are unfair, unreasonable and unjust to the taxpayers whose assistance is the only thing keeping Fannie and Freddie afloat,"" Bachus said in a ""statement"":http://financialservices.house.gov/News/DocumentSingle.aspx?DocumentID=269004.

""Today the Committee approved a bill to stop rewarding the executives of these bailed out companies,"" he added. ""Never again should Americans be forced to send their hard earned tax dollars to be wasted on multi-million dollar pay packages for Fannie and Freddie executives.""

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
x

Check Also

How Vacancy Impacts Home Sales

According to a recent report, vacant homes stay on the market for longer, and sell for less, than occupied homes. Here's where those price gaps are largest.

GET THE NEWS YOU NEED, WHEN YOU NEED IT.

With daily content from MReport, you’ll never miss another important headline in originations, lending, or servicing. Subscribe to MDaily to begin receiving a complimentary daily email containing the top mortgage news and market information.