barney frank

More and more lawmakers are declaring the federally funded HAMP mortgage modification program a failure. Rep. Spencer Bachus (R.-Ala.), the ranking Republican on the Financial Services Committee (at left in photo), thinks he knows why. Bachus delivered a letter to committee chairman Barney Frank (D.-Mass.) requesting an investigation of allegations by a former Fannie Mae employee who claims that Fannie Mae runs HAMP to improve its balance sheet, rather than to help homeowners. The former employee, Caroline Herron, is suing Fannie Mae for terminating her after she asked for reform in the program.

They're just starting now?

More than a year ago, the Obama administration promised to lay out the future for Fannie Mae and Freddie Mac, the two mortgage finance enterprises the U.S. government took over in 2008, after massive losses and a shareholder stampede to sell left them insolvent. Today, Treasury Secretary Timothy Geithner came to Capitol Hill today to unveil that future.

What will Geithner do, nearly two years after the financial system crumbled, leaving the two hobbled agencies to prop up the mortgage markets? Will Treasury get rid of the agencies entirely, and get government out of the mortgage business, as some conservatives have demanded? Or maybe follow the National Association of Realtors' proposal and the keep the two giants going as government agencies, since along with Ginnie Mae they're really the only reason it's possible to get a mortgage right now? Something in between?

We'll have to wait a little longer for official answers.

Next Tuesday, March 2, was a date I'd eagerly marked on my calendar. The House Financial Services Committee, chaired by Rep. Barney Frank (D-MA), was supposed to hold a hearing on "Housing Finance and the Path to Reform, Part 1-Government and Stakeholder Perspectives."

To translate that for the rest of you, Frank's committee was going to have a serious, public talk about the future of Fannie Mae and Freddie Mac. And it had invited two very special guests: Treasury Secretary Tim Geithner and U.S. Department of Housing and Urban Development Secretary Shaun Donovan.

So I was disappointed, but not surprised, to get an email yesterday announcing that the hearing had been "postponed to a date and time to be announced later." Yet again, the Obama administration has wiggled out of an obligation to tell the American people exactly what it envisions the home finance system of the future will actually look like.

A housing smackdown is coming to Capitol Hill.

Rep. Barney Frank (D-Mass.) has set March 2nd as the date for the first hearing on the future of housing finance. Though sweeping in scope, the review will surely center on the uncertain future of Fannie Mae and Freddie Mac.

It won't be an easy ride for the embattled Fannie and Freddie. Frank, chairman of the House Financial Services Committee, recently declared that the two troubled mortgage giants should be wiped out and replaced, according to news outlets including Bloomberg News. Republicans, too, are calling for drastic changes.

The high-stakes hearings are likely to shape the role of the federal government in the housing market going forward. Considering that almost every home loan written today is guaranteed by Fannie, Freddie, or the Federal Housing Administration, Congress is about to decide nothing less than the future of housing.

A perfect storm is coming in the housing market. Millions of mortgages are in default or foreclosure, mortgage rates are firming and mortgage issuers are significantly raising both borrower requirements and fees. The Federal Reserve, which has been propping up the housing market by buying mortgage-backed securities, says it plans to stop buying at the end of March. The $8000 first-time and $6500 homebuyer tax credits are scheduled to end for mortgages that close after June. Meanwhile stocks are up and economists talk about the recession being technically over, which might be true, but for how long?

We're in big trouble and, so far at least, nobody seems to have a plan.

And then there's the mystery of Fannie Mae and Freddie Mac, those Government Sponsored Entities that House Finance Committee chairman Barney Frank says have effectively become policy tools of the federal government and ought to be reorganized to reflect that. Yet, in the Fiscal Year 2011 federal budget released this morning there is no sign of Fannie and Freddie's combined $7.2 trillion total corporate debt and mortgage obligations.

"What the Hell is going on? " I asked my friend Jack, the world's smartest mortgage banker.

You won't have Fannie Mae and Freddie Mac to kick around anymore, at least if Rep. Barney Frank has anything to say about it.

As chairman of the House Financial Services Committee, Frank is certainly in a position to influence the decision about what will happen to these two mortgage companies now under conservatorship with the U.S. government. And a dramatic change in the roles of Fannie and Freddie is something that even Republicans agree with.

Today's big news from Congress – the House passage of major financial reform legislation – shouldn't overshadow an important hearing Rep. Barney Frank's Financial Services Committee held earlier this week on how to minimize the damage wrought by the failures of the old order. In the face of evidence that Treasury's Making Home Affordable loan modification program is aiding only a fraction of borrowers in trouble on their mortgages, several experts who testified told federal regulators what they're going to need to do now to stop the foreclosure disaster from getting uglier. Read on for the prescription: