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FHFA to States that Uphold the Rule of Law: Drop Dead

•, Yves Smith

If you had any doubt that the ongoing coup by bankers and their allies was proceeding apace, the latest story from Shahien Nasiripour of the Financial Times should settle all doubts.

The pink paper reports that Fannie and Freddie’s regulator, the FHFA, plans to punish impose surcharges on borrowers in states like New  York because foreclosures take longer there. This is the excuse, erm, rationale:

US borrowers in states where home foreclosures are costly and time-consuming will have to pay more for their mortgages, the top housing regulator has proposed.

Lenders originating new loans in New York, New Jersey, Illinois, Florida and Connecticut will be forced to pay US-backed mortgage giants Fannie Mae and Freddie Mac up to 30 basis points extra for their credit guarantee, the Federal Housing Finance  Agency said in its proposal.

The fee would probably be passed on to borrowers. The agency said the surcharge would compensate for the increased cost of repossessing homes in the five states, costs ultimately borne by US taxpayers.

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