I'm coming to you today from the Mortgage Bankers Association convention in San Fran (I know, jealous, right?). But for this group of convention partyers, the party is clearly over — and what remains is to figure out how to clean up the "Animal House"-style wreckage left behind.
I was able to grab James Lockhart, FHFA Director (aka OFHEO) last evening for an interview by the bay. I asked him if Fannie Mae and Freddie Mac were doing enough to help troubled borrowers and was a little surprised to hear an emphatic "No."
He said the two giants, who are two of the biggest investors in U.S. home loans, are not writing down principal nor are they doing enough modifications.
The two new CEOs, appointed under the conservatorship, refused repeated attempts for an interview, even though they'll be headlining the opening session here this morning.
But I bumped into an MBA type here on my way to Starbucks, who told me he was chatting up a loss mitigation type from Freddie during one of the closed sessions over the weekend, and this Freddie guy said part of the trouble is that in a full 45 percent of the delinquencies, they're finding nobody home.
That's right. 45 percent!
These folks have either up and left or never lived in the homes to begin with. They're just walking away and frankly have no interest in modifications. That leaves the banks and investors holding the bag, which you could say is kind of poetic justice, given how the mortgage bankers caused much of this mess with their loosey-goosey lending.
But we all know that when the banks are left holding the bag that means the taxpayers are left holding the bag, since we're now all one big happy freeloading family.
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