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Monday, October 19, 2009

The Washington Post some time ago reported that the Freddie CEO fired their risk managers in 2004 when they were warning the Freddie CEO that subprime loans were already showing sign that they were not going to be paid back. This was a message that the Freddie CEO didn't want to hear since it affected revenues and his bonus. Is this FHA appointment like putting the fox inside the chicken coop? I’m sure that Mr Ryan, a 27-year veteran of Freddie was great at securitization, derivatives and other ‘financial weapons of mass destruction’ to parapharase Warren Buffet.

FHA Set to Hire Freddie Mac Official

The Federal Housing Administration plans to tap Bob Ryan, a longtime Freddie Mac executive, as its first chief risk officer, according to an internal Freddie Mac e-mail obtained by The Washington Post.

Ryan, a 27-year veteran of the McLean-based mortgage finance company, oversees the pricing, securitization and credit-portfolio functions within the single-family credit guarantee business. His last day at Freddie Mac will be Oct. 23, according to the e-mail from Donald Bisenius, an executive vice president at the company.

The FHA confirmed that Ryan will fill the newly created chief risk officer position but said his start date has not been determined.

FHA Commissioner David H. Stevens has said that the chief risk officer will oversee a division devoted to managing and mitigating risk to FHA's insurance fund. The agency insures loans so that private lenders are protected against default-related losses.

As FHA's volume of loans has exploded, some lawmakers have raised concerns about whether the agency has the resources or policies to track risk or weed out abusive lenders.

On Friday, the Inspector General of the Department of Housing and Urban Development, which includes FHA, said the agency lacks the ability to ensure that lenders meet its requirements.

The report also said that FHA did not obtain or consider negative information on lenders from other HUD offices, follow up on whether the required fees or documentation were collected, or properly dispose of lender application files containing personally identifiable information.

-- Dina ElBoghdady

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