You won't beleive this article

Check out this article in Bloomberg about what Fannie Mae did last year. They gave unsecured loans to troubled homeowners to get them current on their payments. 462 friggin million dollars down the tubes. That's nearly half a billion pissed away so Fannie could keep the books looking a little better a little longer. Oh dear, this just keeps getting better and better........ The article also states that Fannie is losing 56% on loans when it forecloses.

Here's the good bits from the article.

Give money away. That was a solution to the housing crisis mortgage giant Fannie Mae hit on last year.

Faced with growing numbers of homeowners unable to make mortgage payments, Fannie decided to fund loans to borrowers that were instant losers.

The point was to buy time. Even though those loans resulted in a $453 million loss, they helped keep troubled homeowners from defaulting. That meant Fannie for now didn’t have to make good on loan guarantees that may have cost it as much as $2.4 billion.

Known as the “HomeSaver Advance” plan, Fannie used the program to provide “foreclosure prevention assistance to distressed borrowers,” according to its 2008 securities filing.

The plan entailed Fannie funding loans to help distressed borrowers get current on their mortgage payments. Fannie said there were about 71,000 advances made in 2008 with an average value of $6,500.

Fannie funded $462 million in such loans during 2008. The company tells investors in notes to its financial statements, though, what it thinks the loans are actually worth.

Based on market prices, Fannie said the loans had a value of just $8 million. That’s right, the loans, which are in many cases just months old, were worth 1.7 cents on the dollar.

Now let me see if I have the logic of this plan straight. The idea is to loan money to people who can't pay thier loans. So that they can pay thier loans with the new loan... Huh??? On what planet is that a good idea?