City Leaders Call On Fannie Mae To Stop Sale Of Delinquent Mortgages And Work W Local Government On Alternatives
City Leaders Want Federal Agencies to Sell Troubled Mortgages to Non-profits, Not Speculators
Nationwide – On Thursday, February 4th, local elected officials and community groups across the country will call on Fannie Mae and Freddie Mac to prioritize the bulk sale of delinquent mortgages to non-profit housing agencies as opposed to Wall Street investors.
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Rallies and press conferences will be held in New York City, San Francisco and several other cities. Local elected officials in a number of additional cities will be issuing press statements to the media.
Specifically, these local leaders are telling Fannie and Freddie:
Don’t sell any mortgages in our cities and states to Wall Street investors. Meet with city and state representatives and attempt to work out sales of these loans to mission-driven non-profits.
This move comes as Fannie Mae and Freddie Mac have each announced February sales totaling over 10,000 mortgages and nearly $3 billion in Unpaid Principal Balance (UPB). Community leaders are worried that these federal agencies are poised to hand these homes over to Wall Street for bargain basement prices, instead of to non-profits that would focus on keeping homeowners in their homes and expanding affordable housing.
HUD, Fannie Mae and Freddie Mac have each begun to hold some small, geographically concentrated, auctions – they say to help non-profits compete. And in November HUD held several non-profit-only auctions. However, the size of these pools is tiny. It continues to be the case that over 90% of the mortgages that have been auctioned by Fannie Mae, Freddie Mac and HUD are going to Wall Street hedge funds and private equity firms. In November 2015, Fannie Mae sold 7,000 loans to Fortress Investment Group and Goldman Sachs.
While deemed “bad debt” by the sellers, most of these homes are still occupied and sit in communities where homeownership preservation and affordable housing is sorely needed. The group of elected officials speaking- out on Thursday want these loans sold to “good actors” with a commitment to loan modifications with principal reduction and the creation of affordable housing.