Fannie and Freddie Don’t Own Your Loan

Posted on June 6, 2014 by Neil Garfield

The problem with the site whose link appears below is that it is not authoritative. But we can treat it as though it was authoritative. The principal point is that even where Fannie and Freddie have “purchased” a loan it was for the express purpose of resale into the secondary market the trusts. In most cases Fannie and Freddie served as master trustees, which mean that the usual trustee arrangement applied to the underlying trusts in what they call the “secondary market.”

If they followed the usual plan, the banks committed fraud — they took the money but never gave it to the trust. And they issued bonds to themselves as street name nominee for investors (but in actuality as though they had themselves funded the trust), with which the loans were passed on to Fannie or Freddie and then they “purchased” the loans (without consideration) but the bonds were worthless because the trust that issued them never got any money to do ANY deal.

In short Fannie and Freddie are nominees or conduits with no real interest in the loans EVER. The fact that they are almost ALWAYS guarantors in situations where the loan was processed by them (there are many instances in which Frannie and Freddie closing forms are used but the loan was never sent to Freddie or Fannie),

So in one case for example the statement that Fannie was the investor from the start is only an indication that Fannie was a conduit for investment dollars collected from the secondary market as a result of sale or resale of the loans, of the bonds or both. There is no scenario under which Fannie and Freddie remains the “investor.”

http://www.mortgageloan.com/mortgage-loan-modification/who-owns-my-mortgage

Is the loan look-up site the real thing?

Sort of! https://ww3.freddiemac.com/corporate/

Yes it is legitimate and the client should have already given their social security number or at least the last 4 digits. But remember just because it is listed on the website of Fannie or Freddie does not actually mean that they own the loan. It only means that they have guaranteed the loan or the mortgage bond that was issued by a trust whose trust beneficiaries advanced money for the origination or acquisition of the loan.

There are circumstances under which Fannie and Freddie buy loans using cash or mortgage bonds for which they are the master trustee of a trust. But they don’t ever keep them. So the listing on the site is not dispositive of exactly what the status of the loan is, the ownership of the loan or the loan balance. In fact it doesn’t even establish the loan existence.

A witness from Fannie or Freddie should be interviewed as to the status of this particular loan and whether or not the agency is acting as the master trustee, guarantor or some combination of the two. The other possibility is that they actually own it by virtue of an actual purchase some of which transactions did occur between 2008 and 2009.