If you gave someone $72.2 billion to keep them afloat, you would probably want to know how they plan to save money in the future.
The Federal Housing Finance Agency and Freddie Mac don’t agree with you. Both the government-sponsored enterprise and its regulator redacted this very information in an Office of Inspector General report released Tuesday.
So what was blacked out of the report? Oh, just how much money Freddie could save if its mortgage servicers complete a certain amount of modifications and short sales.
The problem is the inspector general concludes Freddie didn’t implement this plan in its entirety and that its oversight of mortgage servicers failed to address widespread problems before the robo-signing scandal spiraled out of control.
But more importantly, this sort of potential cost savings should be available to the public, considering taxpayers gave the GSE $72.2 billion through the third quarter.
The FHFA OIG gave an explanation:
“This report includes redactions requested by the Federal Housing Finance Agency and/or the Federal Home Loan Mortgage Corporation (Freddie Mac). According to them, the redactions are intended to protect from disclosure material that they consider to be confidential financial, proprietary business, and/or trade secret information. They claim further that the redacted information would not ordinarily be publicly disclosed, and, if disclosed, could place (Freddie Mac) at a competitive disadvantage.”
Freddie’s only competitor these days is Fannie Mae, which has drawn $116.1 billion in bailouts.
The inspector general reassures us Freddie Mac is in “an excellent position” to achieve the redacted goals of saving an undisclosed sum of money if some secret number of modifications are done. It goes on to claim servicers completed “substantially more loan modifications last year” when data from the FHFA indicates otherwise.
Modifications on Fannie and Freddie loans in the first three quarters of 2011 dropped to just short of 251,000 from more than 455,000 mods completed in the same period in 2010, according to the FHFA.
This isn’t the first time a federal regulator decided to redact potentially crucial information tied directly to foreclosure problems at a major financial institution. The Office of the Comptroller of the Currency and the Federal Reserve blacked out whole pages of the servicer agreements with third-party auditors for the ongoing foreclosure reviews.
“We are very pleased that the latest Federal Housing Finance Agency-Inspector General’s report acknowledges the important strides Freddie Mac has made, particularly with the nation’s biggest servicers, toward minimizing credit losses during the worst housing crisis since the Great Depression,” Freddie said in a statement sent to HousingWire.
But like previously redacted information and still hazy details on the wider foreclosure settlement, there remains no bar to gauge how well these changes worked. Once, again, the public is being asked to turn a blind eye.
jprior@housingwire.com
