Fannie Mae Research Paper

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Freddie Mac Scandal (Fannie Mae) Scandals come in many different forms in this world. You can have the largest of scandals that include Enron tying to financial aspects, to little scandals of a cheating spouse. The Freddie Mac Scandal was large enough to make the headlines because it dealt with the mortgage housing in the whole entire US history. Anyone from the late 1990’s to the early 2000’s that owned a house can remember the Fannie Mae and Freddie Mac names, both for good reasons and bad. Originally known as the Federal Home Loan Mortgage Corporation, Freddie Mac was chartered by Congress in 1970 as a private company with a public mission to stabilize the nation’s mortgage markets for affordable housing. Freddie Mac (and its…show more content…
OFHEO, its regulator at the time, later found that it had misstated earnings by $5 billion between 2000 and 2003. The interesting twist in Freddie Mac’s restatement is that, in most cases, the earnings were underreported. In response to the revelation of fraud at Freddie Mac, OFHEO launched an investigation of Fannie Mae and, in 2004, found it had overstated earnings between 2000 and 2003 by $6.3 billion. OFHEO reported serious accounting, disclosure, and management issues that led to the GSEs’ misstatements. Freddie Mac paid a $125 million penalty in 2003 and a $50 million fine in 2007. Fannie Mae paid a $400 million civil penalty, one of the largest penalties in an accounting fraud…show more content…
According to Moody’s Analytics’ it could take them over 15 years to pay back the taxpayers in full. The government continues to play a key role in the day-to-day operations. Freddie Mac and Fannie Mae were flawed companies that made several bad decisions, and taxpayers should never have to pay the bill for any financial institution’s greed. This just goes to show you that trying to cut corners and do a quick fix with mortgages will not end well for borrowers or for investors. The types of rates still are available today but people are more aware of the consequences unlike the time s of Freddie Mac

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