Fannie and Freddie As Local Government Money Laundering Bailout Machine
WSJ had an interesting piece today about Fannie Mae and Freddie Mac quickly becoming the country's two largest home sellers, which shouldn't be too surprising since there are FHA bailouts to handle and obviously way too much inventory just lying around unused. But that wasn't the interesting part, this is:
Once they take homes back, Fannie and Freddie must not only cover the utility bills and property taxes, but they are also relying on thousands of real-estate agents and contractors to rehabilitate homes, mow lawns and clean pools. Fannie took a $13 billion charge during the second quarter just on carrying costs for its properties.
Wait a second... The federal government, through Fannie and Freddie, is on the hook for property taxes on foreclosed homes? Isn't that basically a municipality bailout the roundabout way using federal funds sunk into crap properties that probably should never have been built in the first place? And why the fuck are they paying utility bills on bankrupt and vacant properties? Let the new owners hook that shit up, idiots.
In gangster-ridden Chicago, Fannie might try a different method to get foreclosed homes to at least bring in some kind of cash by renting. Call me crazy but doesn't that mean the government is still on the hook for property taxes? Maybe Fannie is a different sort of landlord than the one I rent from but I can't say I've ever heard of a renter having to cover property tax (at least directly):
Fannie, for example, is testing an effort in Chicago where it will rent vacant foreclosures rather than list them for sale.
Such a "lease-and-hold" approach could make sense in certain markets where "you believe the supply will take a long time to absorb, but there's going to be an increase in employment going forward," says Douglas Duncan, chief economist at Fannie Mae.
Doesn't Fannie know the operating lease is about to be dead? What then? No one wants assets that border on liabilities except, of course, for the idiot loan sharks of the government who don't know when to take the crackpipe away and say enough is enough.
Glad that unlimited bailout is working out in our favor.