I was posting about liquidating Fannie and Freddie assets ,not foreclosures.
You see,there has been a multitude of bad mortgages sold to Fannie and Freddie by the big banks and mortgage brokers that borrowed seed capital from the big banks to write bad mortgages.
If there was a systematic liquidation of Fannie and Freddie current mortgages what should happen is this.
A list compiled of mortgages from different areas and different originators.
Done on a percentage basis.
The originators and the homeowners would be notified of the auction of the mortgage.
Then the homeowner could shop for a new mortgage to purchase the old mortgage and the bank could purchase the old mortgage if they wanted to.
These banks are supposed to be in business to lend money and there is no good reason they could not pay up to full face value other than the fact they know which mortgages were written underhandedly.
Fannie has over 3 trillion dollars in assets and 242 billion in debt.
That means the mortgages could sell for under 10 cents on the dollar and Fannies debt would be paid.
At this point in time basically bad mortgages are sold at a discount.
If this proposed auction started with performing mortgages for sure it would take less than half a trillion dollars worth to clean up Fannies debt and get the stock back to having some value.
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