Sunday, October 16, 2011 – 07:25 p.m.
Wells Fargo dumping bad mortgages on U.S. taxpayers?
Say it isn’t so.
With all the increasing anger at financial institutions this little tidbit of news comes at an awfully bad time and is likely to piss even more people off.
Wells Fargo Bank, a major California lender, has been absolutely entrenched on refusing to modify mortgages of many existing customers needing help, and has instead chosen to foreclose and kick homeowners onto the street.
Why, has been the looming question for some time now.
However it has now become clear that, unlike many banks, Wells Fargo’s loan portfolio consists of mainly Fannie Mae, Freddie Mac and HUD guaranteed loans.
This means the U.S. Taxpayer backstops any loan loss to the bank and thus the federal guarantors must repurchase the mortgages back from the bank after foreclosure.
This is even occurring at the same time that the same U.S. Taxpayers front the bank virtually interest free money at the Federal Reserve.
The current rate for federal funds, or money loaned to banks, is set at an annual rate of just 0.25%.
Talk about greed and selflessness.