Mortgage giant Freddie Mac failed to refer nearly 58,000 foreclosed homeowners who owed $4.6 billion on their guaranteed loans, thereby neglecting its chance to seize properties from those who defaulted on mortgage payments, a government report alleges.
Furthermore, Freddie Mac eliminated any possibility of recovering deficiencies when the enterprise failed to refer a large number of foreclosed mortgages to the appropriate department for collections, the Office of Inspector General for the Federal Housing Finance Agency said.
Interestingly enough, most of these foreclosed mortgages were associated with properties in states where Freddie did not pursue deficiencies, but where Fannie Mae did — with some success.
“It’s a fairly small number in the scheme of things,” explained Cato Institute director of financial regulation studies Mark Calabria.
He added, “But I think it reinforces the current nature of mortgage finance policy, which is not to hold borrowers responsible. This isn’t just about Freddie, but it’s also about these borrowers sticking it to the taxpayer.”
Real estate investors and other borrowers that stopped repaying their loans while keeping current on their bills were among those not pursued, according to the report.