Government Places Freddie, Fannie Under Investigation
- Sep 30, 2008
About three weeks after being seized by the U.S. Department of the Treasury and put in conservatorship, beleaguered housing mortgage lenders Freddie Mac and Fannie Mae revealed that they have been notified of new investigations that are underway. Late last week, the two entities received federal grand jury subpoenas from the U.S. Attorney’s Office for the Southern District of New York, and they were put on notice by the U.S. Securities and Exchange Commission’s Staff of the Enforcement Division that it would be conducting its own inquest. The government appears to be bound and determined to discover the intricacies of what facilitated the collapse of Freddie Mac and Fannie Mae. The two lenders have a lot of explaining to do, but not just to the U.S. District Attorney and the SEC, as news emerged last week that the FBI is looking into possible fraudulent activity at the financial institutions. Neither Freddie Mac nor Fannie Mae would comment on the investigations; although, both entities noted in press releases that they would give the feds their full cooperation. Official queries aside, loans continue to be made, particularly in the multifamily sector. “It’s business as usual,” a Freddie Mac spokesperson told CPN. “We are still in the market and doing as much as we can–and more.” Two weeks ago, Johnson Capital announced it had closed a $55 million seven-year fixed-to-float loan with a 6.11 percent interest rate through Freddie Mac’s Acquisition-Rehab program on behalf of Berkshire Property Advisors for the purchase and upgrade of Keswick Park Apartments, a 406-unit multi-family property in the suburban Washington, D.C., town of Crofton, Md. Over 95 percent of the apartment units that Freddie Mac finances are for low- to moderate-income renters.