Fannie Mae & Freddie Mac Latest Casualties in Foreclosure Crisis

Washington, DC The National Community Reinvestment Coalition (NCRC) said that the governments takeover of Fannie Mae and Freddie Mac was unavoidable as a direct result of the failure of Congress and the Administration to address the ongoing foreclosure crisis. Earlier intervention to stem the foreclosure crisis would have been a more efficient and equitable use of taxpayer dollars. In addition to avoiding the collapse of financial institutions, doing so would have allowed millions of working families to maintain their homes. While the decision to avoid the collapse of Fannie Mae and Freddie Mac was critical to prevent potentially catastrophic consequences for the credit markets, doing so will not resolve the foreclosure crisis and its ongoing impact on the credit markets and the economy. The complexity and cost of shoring up Fannie Mae and Freddie Mac including putting the taxpayer at risk for hundreds of billions of dollars will be far greater than would have been intervening to assist homeowners to stay in their homes. While the intervention to rescue Fannie Mae and Freddie Mac may temporarily help the credit markets, the prospect for millions of additional foreclosures leaves many more financial institutions vulnerable to failure. The fact that continues to be ignored is that financial institutions are failing because families are losing their homes, said NCRC President & CEO John Taylor. Congress and the Administration should focus more attention on helping homeowners saddled with unfair and deceptive loan products. In addition to failing to stem foreclosures, Congress and the Administration also have not enacted an anti-predatory lending law to ensure this debacle does not occur again. Financial institutions had already acknowledged more than $470 billion dollars worth of losses even before the failure of Fannie Mae and Freddie Mac, yet even these dramatic events have not been sufficient to trigger legislation to protect the American public. Reckless and irresponsible lending behavior is the cornerstone of the current market crisis, said Taylor. He continued, If were not dealing with the how we got here, then well surely get here again.