Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry.
At Fannie Mae, top executives were told it was necessary to develop "underground" efforts to buy subprime mortgages because of competitive pressures, although there were growing risks and borrowers often didn't understand the terms of the loans, documents show.
The House Committee on Oversight and Government Reformwhich has the documents, is holding a hearing now underway to discuss Fannie and Freddie's downfall. The companies were seized by the government three months ago after nearly collapsing in the wake of billions of dollars of losses on mortgages.
In a memo to former Freddie chief executive Richard Syron
and other top executives, former Freddie chief enterprise risk officer David
Andrukonis wrote that the company was buying mortgages that appear "to target
borrowers who would have trouble qualifying for a mortgage if their financial
position were adequately disclosed."
Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry.
At Fannie Mae, top executives were told it was necessary to develop "underground" efforts to buy subprime mortgages because of competitive pressures, although there were growing risks and borrowers often didn't understand the terms of the loans, documents show.
The House Committee on Oversight and Government Reformwhich has the documents, is holding a hearing now underway to discuss Fannie and Freddie's downfall. The companies were seized by the government three months ago after nearly collapsing in the wake of billions of dollars of losses on mortgages.
In a memo to former Freddie chief executive Richard Syron
and other top executives, former Freddie chief enterprise risk officer David
Andrukonis wrote that the company was buying mortgages that appear "to target
borrowers who would have trouble qualifying for a mortgage if their financial
position were adequately disclosed."
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