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.”

Is the loan look-up site the real thing?

Sort of!

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.

Fraud Stoppers Chain of Title Analysis (COTA): The Only Source for Loan Level Data and Trust Information for all GSE loans including Fannie and Freddie Mortgages

In the realm of mortgage loans, there has been much confusion and controversy surrounding the ownership and control of these financial instruments. The prevalent assumption is that mortgage giants Fannie Mae and Freddie Mac are the ultimate holders of these loans. However, a closer examination reveals a different reality. Fraud Stoppers Chain of Title Analysis (COTA) emerges as the sole source providing comprehensive loan level data and trust information, debunking the notion that Fannie and Freddie truly own your loan.

To understand this issue, it is crucial to grasp the mechanics of the mortgage market. When Fannie and Freddie “purchase” a loan, it is typically with the intention of reselling it in the secondary market. In most cases, they act as master trustees, executing trustee arrangements for the underlying trusts in what is known as the “secondary market.” Herein lies the potential for fraudulent practices committed by banks.

In the conventional process, the banks receive funds but fail to deliver them to the trust. Furthermore, they issue bonds to themselves, assuming the role of street name nominees for investors. These bonds are then used to transfer the loans to Fannie or Freddie, who subsequently “purchase” the loans without providing any consideration. However, the bonds turn out to be worthless, as the trust that issued them never received any funds to complete any transaction.

This reveals that Fannie and Freddie function as mere nominees or conduits, lacking any genuine interest in the loans. Their role as guarantors is almost ubiquitous in cases where loans are processed through them, even though instances exist where loans never reach Fannie or Freddie despite the use of their closing forms. This raises doubts about their claim of being the initial investors.

When Fannie is mentioned as the investor from the beginning, it merely indicates that Fannie served as a conduit for investment capital collected from the secondary market through the sale or resale of the loans or bonds. Under no circumstance do Fannie and Freddie retain the status of “investor” in any transaction.

To shed light on the actual ownership and status of a loan, relying solely on a loan look-up site linked to Fannie or Freddie is insufficient. While the site provided by Fannie ( is legitimate, its information does not definitively establish ownership of the loan. It merely indicates that Fannie or Freddie has guaranteed the loan or the mortgage bond issued by a trust, where the trust beneficiaries have advanced funds for the loan’s origination or acquisition.

There are scenarios in which Fannie and Freddie acquire loans using cash or mortgage bonds, acting as master trustees for the corresponding trusts. However, they never retain these loans for long. Consequently, the information displayed on the website does not determine the loan’s true status, ownership, or outstanding balance. It fails to establish the very existence of the loan itself.

To obtain accurate and reliable information about a specific loan, it is imperative to interview a representative from Fannie or Freddie. By engaging with a witness familiar with the loan, it becomes possible to discern whether the agency is serving as the master trustee, guarantor, or some combination of the two. Alternatively, it may be the case that Fannie or Freddie has genuinely acquired ownership through a direct purchase, as some transactions occurred between 2008 and 2009.

In conclusion, the prevailing belief that Fannie Mae and Freddie Mac own mortgage loans is often flawed. The authoritative source for loan level data and trust information is the Fraud Stoppers Chain of Title Analysis (COTA). Through meticulous examination of the intricate mortgage market mechanisms, it becomes clear that Fannie and Freddie are mere conduits, lacking any real interest in the loans. By understanding the limitations of

loan look-up sites and seeking information directly from Fannie or Freddie representatives, borrowers can obtain accurate insights into the status, ownership, and balance of their loans.

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