Freddie Mac has again entered the spotlight as a new report claims the government-sponsored enterprise betrayed American homeowners after placing multibillion-dollar bets that will pay off if homeowners remain shackled by costly mortgages with interest rates well above current rates. In a scathing new revelation of their investigation, National Public Radio (NPR) and ProPublica, an independent investigative news service, uncovered multibillion-dollar investments made by Freddie in late 2010 that will pay off only if homeowners remain trapped in high-interest mortgages.
In effect, while the taxpayer-owned mortgage giant is helping consumers secure mortgages, at the same time it is making those mortgages more difficult to refinance.
Not only do these investments clash with Freddie’s public mandate, the report also found that the company has substantially inflated the size of its investment portfolio. Under provisions stipulated in a 2008 bailout contract — which along with its cousin Fannie Mae granted ownership to taxpayers — Freddie is supposed to be reducing its investment portfolio; however, the NPR-ProPublica report unveiled that the company’s new securities have infused greater volatility in its portfolio.Continue reading on thenewamerican.com