FNMA, Corruption and Personal Responsibility. Where Have All The Grown-Ups Gone?

Many folks reading this article today are probably fellow Realtors who are well aware of the further eduction requirements that must be undertaken in order to remain licensed by the state. For those with real jobs, let me explain that we must complete eight 3 hour courses every two years here in Arizona. This morning was just such a course. Sometimes, the subject and the lecturer are so interesting that the time just flies by. At others, the subject matter is so dry that even the most entertaining speaker in the world, can not make it interesting. Today was such a day. However, in amongst the drudgery, a few nuggets came to light that make it worthwhile.

It wasn't the fact that Franklin Raines, after inflating the reports of FNMA's profitability, was able to enrich himself to the tune of $90 Million in unearned bonuses. Nor was it the fact that his lawyers negotiated the return of a paltry $5 million of his ill-gotten gains. Nor was it the fact that he voluntarily returned his stock options: never mind that they had been rendered worthless by his pitiful leadership. It wasn't even the fact that he was not imprisoned for his deeds. I've come to expect that from the denizens of Washington, D.C.. It was the fact that, despite all the shenanigans, the mis-management, the misguided rules and regulations imposed by a clueless congress; we have learned nothing.

Had a foreclosure? You can get a new home loan after three years. Bankruptcy? No Problem. Only a two year wait. The Fannie Mae Homestep program for their REO properties has a "no appraisal necessary" component. Most likely because none of their properties would actually appraise in the real world. Their solution, therefore, is to finance their over-priced turkeys in house so long as you are able to come up with a 3.5% down payment. Mind you 2% of that can be gifted. In reality, the buyers are in no way "buying" a home. They have not invested in anything. The are glorified renters. This is one of the many reasons people have walked away from their homes. They had no vested interest. Apparently, some genius thinks it's a good idea to do it all again to see if the results differ. And we all know what that is the definition of.

The culmination of the sorry times in which we live is demonstrated by an article that most of us have read. It is entitled "cash for keys". This is the latest fiasco in which lenders, prior to taking a property back, bribe the owners with cash to not trash the property on which they are delinquent. That's right. Rewarding people for doing exactly what any decent, upstanding citizen should do. It has come to this. It does not bode well for the future.