Freddie Mac looking at insane losses with its $5.
6 Trillion (yes with a big fat "T") exposure has decided that with foreclosure rates this high, they cannot afford to take it anymore.
With a move that is on one hand wise considering the situation and severity of the crisis is quickly proving why we cannot trust government to be involved in free-markets.
If you recall, first the politicians forced Freddie Mac into loan provisions allowing for unworthy borrowers, then when that nonsense got out of control they could not handle the fallout.
Now, Freddie Mac has stated that it will let bad borrowers rent their homes after foreclosing on them? Sure, this sounds like a wise temporary solution, but it just goes to show you how the law of unintended consequences really works.
So, basically Freddie Mac is now in the home rental business with dead beat borrowers? Amazing indeed - and we are to foot the ultimate bill for all this? Not only that but now our government is guaranteeing the growth of Freddie Mac.
Oh sure, it's better to have properties occupied rather than vacant, otherwise they deteriorate, no doubt, but this is scary stuff.
Fannie Mae has some 20,000 foreclosures with 6,300 pending eviction notices, while Freddie Mac is hovering at about 8,500.
If these foreclosed tenants stay up with their rental payments, they may have a chance to qualify for a modified loan later? My question is why on Earth did these people who could not pay get loans in the first place, this is nuts! These people that couldn't afford homes should have been renting in the first place, and who needed government for that? Private enterprise was doing just fine before the government intervened! Beware of Big Government and Government Intervention in Free-Markets, it is always a disaster waiting to happen.
Think on this.