U.S. Sen. Bob Casey has condemned mortgage giant Freddie Mac for making investments that only pay off if homeowners cannot refinance their mortgages.
On his way to Washington, D.C., Casey of Pennsylvania made a stop at 30th Street Station in Philadelphia.
“At the same time, the same entity that says it’s engaged in practices that will help people get back on their feet, its investment practices are in conflict with that,” Casey said Monday.
The investments by Freddie Mac came to light in a joint investigation conducted by NPR and ProPublica, which reported that Freddie Mac — a government backed company — made investments in 2010 and 2011 in bundles of mortgage interest payments. Those securities are profitable only if homebuyers are unable to refinance their loans.
A general tightening of mortgage rules since the financial crisis, contributed to by the mortgage giants, has made it more difficult to get home loans.
Freddie Mac and partner Fannie Mae have a mission statement to stabilize the mortgage market and make home loans and homeownership more accessible.
President Barack Obama has said mortgage refinancing is a key strategy to revive the housing markets and the U.S. economy.
“I think the president and his administration should take action to end this practice or to put it into practice another strategy that will somehow mitigate the damage that’s already been done,” said Casey.
Read NPR’s report on Freddie Mac’s investments.