Fannie and Freddie Mae are the latest big-ticket lenders to take out $1 billion or more in loans from the Federal Emergency Management Agency (FEMA), and the bank is now the first big name to go to the bailout fund.
On Wednesday, Wells Fargo said it would get $1.5 billion in Fannie &.
Mae loans to pay off its $2.3 billion mortgage guarantee for the company, and that Bank of American is to get $500 million to help it avoid default on its $7 billion mortgage.
But what are Fannie loans and how much are they worth?
Wells Fargo is a big name in the financial services sector, having built up a portfolio that includes mortgage lending, credit cards, and payday loans.
Fannie Mae, the government-sponsored enterprise that runs Fannie, is a subsidiary of the mortgage giant Fannie.
It’s also one of the largest financial institutions in the United States, and has been the focus of government scrutiny in recent years.
A decade ago, the agency fined Fannie for misappropriating the proceeds of some of its mortgage-backed securities and charged it with lying to regulators about how much it borrowed from the government.
As part of the settlement, Fannie is required to sell some of the company’s assets and is required by the settlement to pay $1,500 to Wells Fargo.
“Fannie and its subsidiary Bank of Americas will be repaid through the Federal Deposit Insurance Corporation (FDIC), the Department of Justice, and the United Auto Workers for the cost of the FDIC and DOJ civil enforcement action,” Wells Fargo wrote in a press release Wednesday.
According to the press release, “BofA is the largest mortgage lender in the country, with a market capitalization of $30.7 trillion, and its $1bn loan is part of a $1 trillion capital improvement plan that the bank has been completing since January of 2017.”
The Fannie loan will be used for loan-maxing and collateralization purposes, according to the release.
The announcement comes as Fannie has been under fire from some lawmakers and regulators over its loan guarantees.
During a hearing on Capitol Hill last month, Rep. Barney Frank (D-MA) said Fannie should be “put to sleep.”
“You are not going to be able to borrow from Fannie if they don’t have a good product,” Frank said.
“If they are lending to people who are in the real estate business, they should have a product.”
Feds probe Wells Fargo and other big banks over $1 BILLION loan guarantee settlement The $1 bill for Wells was announced Wednesday at a press conference held by the House Oversight and Government Reform Committee, which is chaired by Rep. Peter DeFazio (D) of Oregon.
In a statement, Reps.
Elijah Cummings (D, MD), John Conyers (D., MI), Adam Schiff (D/CA), and Al Green (D+TX) said the $1b loan is a “good first step” and is intended to help Fannie “avoid a default that could result in billions in losses for the taxpayer.”
Fannie also will receive $500m to help pay off $7B of its $3.4 billion mortgage insurance guarantee.
Borrowers will receive the loans by Oct. 17, 2020, according the press conference.