The sins of the past are visited upon us all…

From The Wall Street Journal, Nick Timiraos (01/30/2010)

Accountants at Fannie Mae and Freddie Mac are auditing mortgage files to uncover loans with improper documentation about a borrower’s income, and then forcing banks and savings and loans to buy the loans back.

Freddie required lenders to buy back $2.7 billion of loans in the first nine months of 2009. Fannie Mae won’t disclose its figures, but the mortgage trade publication Inside Mortgage Finance said Fannie made $4.3 billion in loan-repurchase requests in the first nine months of 2009. One result is that banks are underwriting mortgage loans even more carefully than they were last year, which can further slow the lending process.

So, in the end, not only did the American taxpayer have to foot the bill for the sins of the lenders, now would-be American homebuyers are being held up by the increased demands of the lenders on new loan applications – demands caused by their reaction to their own past sins.

You never seem to see stories on the news about the hardships of being a fat cat banker, just about the hardships that they caused for others – investors that they lead down the primrose path and now would be borrowers who are being held up by their new rules. Yet not a single banker has ever been shown being thrown out of his McMansion by the sheriff. What a shame. That would make a great perp-walk video for the news. Instead they troop up to Capital Hill, say a few meaculpas and walk away with enough cash to pay obscene bonuses. Talk about people who are the bottom of the litter box!

What can the little guys do? For one they can stop bowing and scraping to these fat cats and go join a credit union and borrow for their mortgages there. The credit unions are the only ones who not only didn’t engage in most of the suspect practices of the big banks, but they are also still lending while the fat cats sit back and count their bailout money and tell would be borrowers to go to hell. Can’t get a loan from the credit union? Well, maybe you should thank them for having the sense to turn you down, rather than make a bad loan to you and get you into even more trouble.