"Fannie and Freddie Do Not Originate or Service Loans"

Statement from corporate representative of the spokesperson for Fannie and Freddie in Congressional hearing:

“We don’t originate loans, and we don’t service loans. Rather, Freddie Mac provides guidelines for the origination and servicing of our loans, and contracts withsellers and servicers to carry out these operations. Institutions conducting these activities with respect to Freddie Mac loans represent and warrant to us that they are following our contractual requirements. Failure to fulfill these obligations creates a liability for either the originator or the servicer, including the possibility that they will be required to repurchase the loan. Freddie Mac actively requires repurchases of mortgages sold to us in violation of representations and warranties, as appropriate. We pay the servicing industry about $5 billion per year to service our mortgages.”

http://www.freddiemac.com/speeches/pdf/FM_statement_SBC_foreclosure_hearing_12_1_10.pdf

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