Did Freddie Mac bet against homeowners seeking to refinance?

By Elliot Njus, The Oregonian

Taxpayers bailed out Freddie Mac and its sister mortgage giant Fannie Mae to the tune of about $185 billion, so naturally a January report suggesting Freddie may have conspired against homeowners seeking to refinance raised hackles. But a government watchdog reported Wednesday the problematic investments it cited were simply a prudent hedge.

Investigative journalism nonprofit ProPublica and NPR alleged in a joint report Freddie was investing in a derivative that would pay off more if mortgageholders kept paying high rates. At the same time, it was making it more difficult for borrowers to refinance into lower rates.

On Wednesday, the watchdog said there was no evidence of collusion. Some reports suggested Freddie had been cleared of all charges, but the report does admits the investments may have created an incentive for Freddie to keep borrowers in their current loans. From The Wall Street Journal developments blog:

The report explained that Freddie had retained the inverse floater positions because there was stronger demand for other securities. …

While Freddie Mac’s trading unit could, in theory, misuse internal data and interfere with refinancing, the inspector general found “no evidence of collusion” between those sides of Freddie Mac’s operations. [more]

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The Biz Beat Atlanta’s economic recovery 46th best in U.S.

by David Markiewicz

Metro Atlanta’s economy continued to rebound in the second quarter, but its rate of recovery, like that of the nation as a whole, slowed, a new study shows.

The area ranked 46th overall among 100 metro areas measured in the Brookings MetroMonitor index of economic recovery.

Brookings analyzed four areas: percent employment change; percentage point change in unemployment rate; percent change in gross metropolitan product; and percent change in house prices.

Metro Atlanta mostly went backwards in those measurements in the second quarter of 2012 compared to the first quarter.

— Employment grew 0.2 percent in the second quarter, down from 0.7 percent growth in the first quarter.

— Output grew 0.7 percent, the same as in the first quarter.

— The unemployment rate increased slightly after declining in the first three months.

— Housing prices continued to fall in the second quarter, but by 3.7 percent, compared to 4.1 percent in the first quarter.
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