I know we’re all supposed to believe that Fannie and Freddie had nothing to do with the financial crisis and it was all greedy Wall Streeters and 1-percenters. But this morning the Wall Street Journal has a big story on how million-dollar homes aren’t being foreclosed on as quickly as cheaper homes. Here’s the paragraph that tells you what you need to know about what happened and what is happening with the housing market:
There are several reasons why holders of large mortgages are able to stay in place longer. A key factor is that banks tend to keep larger mortgages on their books, while smaller mortgages are more likely to be bundled into securities and later resold to investors with backing from Fannie Mae and Freddie Mac. Fannie and Freddie, the government-controlled mortgage giants, have set strict foreclosure timelines and will fine mortgage servicers that are found to be needlessly delaying the foreclosure process.