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The Demise of Fannie & Freddie: Lizzie Borden Took An Ax...

Wikipedia photo Oak Grove Cemetary, Fall River, MAOak Grove Cemetery on Prospect Street, Fall River, MA is the final resting place of a suspected (though never convicted) killer. 

"Lizzie Borden took an ax," the ditty goes, "and gave her mother forty whacks.  When she saw what she had done, she gave her father forty-one."

Another famous Massachusetts resident, Congressman Barney Frank, may soon preside over the dismembering and demise of another famous couple with whom
he's intimately involved--Fannie Mae and Freddie Mac.

As in the trial of Lizzie Borden, the public will widely believe Congressman Frank to be culpable in the demise of Fannie and Freddie, despite his protestations to the contrary.

The 1977 Community Reinvestment Act, which had served well until Congressman Frank and the Clinton administration reinvented it, was turned inside out.  (REALTORS will recall from their ongoing education that the bill outlawed redlining, the wholesale designation of particular geographical communities as poor credit risks.)  Compliance is required by the act.

Compliance with the act was redefined by Frank & Company.  An October 6, '08 editorial in Investors Business Daily sums it up:

On Frank's and Clinton's watch, the Community Reinvestment Act was changed to force the issuance of bad loans. Banks would be rated on the number of loans, not on their soundness. Fannie Mae and Freddie Mac were then encouraged to buy them up. It was all about affordable housing, even if the housing was unaffordable.

When former Treasury Secretary John Snow pleaded for Frank to support Fannie and Freddie reform, Frank responded: "These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Demise of Fannie MaeThe demise of Freddie MacFannie Mae and Freddie Mac are on the chopping block

If Congressman Frank has his way, (and that's likely in the present political climate,) the two GSEs might as well have side by side plots in the Oak Grove Cemetary in Fall River, MA.

Lizzie Borden took an ax...



I'm Mike in Tucson, your preferred Tucson, AZ Mortgage lender.
Mike Jones (Tucson Mortgage Company, LLC): Loan Officer in Tucson, Pima County, Arizona
Think of me as your Tucson mortgage expert.

Call me if I can help you with a purchase or refi mortgage;
(520) 349-9090

Oak Grove Cemetary photo courtesy Wikipedia

Comment balloon 55 commentsMike Jones • April 15 2009 08:20AM


Of course, the question is, Is Frank seeking to bury Fannie and Freddie?  Or, is he making an end run around a "Blue Ribbon Panel" to investigate Fannie and Freddie by burying the evidence????


Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 11 years ago

I am sure before this is all over and done everyone will feel like they got more then 40 wacks

Posted by Eric Reid (Renaissance Realty Group of Keller Williams Atlanta Partners) over 11 years ago


40 whacks with an axe...  That's where we got the term "axe murderer."  It isn't pretty!


Check out Bloomberg's exclusive this morning: 

Say Goodbye to Fannie, Freddie as Housing Collapse Wrecks Profits, Status

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

Very well, Mike. First I wanted to say "hey, don't pick on Massachusetts" (with a wink:)), but then I can only nod my head sadly.

Posted by Joanna Szwyd (StoneHouse Properties) over 11 years ago


We love Massachusetts!  Thanks for commenting.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

Mike - flawed policies that were never completely veted are a major cause of this train wreck . Time for the spotlight to shine on how this was allowed to happen.

Posted by Claude Cross, Charlotte NC Homes For Sale (Homes By Cross, Inc. ) over 11 years ago


Click the two links in the post.  There's plenty of evidence; it's just being ignored by the media.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

Nobody mentions that the one person still driving the ship was the one helping it sink a few years back. Why is Congressman Frank still in office?

Posted by Home Loan Search.Online (Home Loan Search Online) over 11 years ago


I doubt there's a Member here who will be able to resist reading this post. Chop Chop :)


Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) over 11 years ago

Hi Mike - Love the analogy, and your graphics! This really is a sad state of affairs we face, although sometimes I would rather play ostrich.

Posted by Karen Cooper, Helping Homeowners w/Home Loans in 27 US States (Karen Cooper | Sr Retail Loan Originator ! NMLS # 223305 | 360 Mortgage Group LLC Austin Texas) over 11 years ago

Always love your posts!! What a way to deliver my morning chuckle! Hopefully I'll see you around town/BNI events in the near future.

Posted by Richa Singh (Exit Realty 1st Choice) over 11 years ago


I'll be at BNI Professional Partners today at 11:30.  We meet at the Amber Restaurant on Tanque Verde near Sabino Canyon Rd (just west, on the south side of Tanque Verde)


It will be interesting to see how this plays out.  Keep you head out of the sand.  :)


LOL!  Thanks for stopping by to comment.

Integrity Funding,

Please sign your comments so I don't have to search my memory banks...  They're getting old.  :)

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

I'd LIKE to keep my head in the sand...but instead, I'll be on a bus headed to our State Capitol to discuss a few things near and dear to my heart with my elected officials.

Posted by Karen Cooper, Helping Homeowners w/Home Loans in 27 US States (Karen Cooper | Sr Retail Loan Originator ! NMLS # 223305 | 360 Mortgage Group LLC Austin Texas) over 11 years ago

If we take the politicians and CNBC commentators who said the same thing as Barney Frank said, and threw them out of Congress and off television, then it would become very quiet. Why don't we take the 2000 pound gorilla in the room which makes cowards of politicians, lack of required public funding for elections, and susceptibility to lobbyist and their large corporations for the obscene amount of money it takes to get elected. Let's outlaw paid for commentators acting as shills, but then what would Jon Stewart do for humor? If we are at a point where one President, or one Congressman can wreak this much damage then we are in a sorry state. I don't believe that is true. A pox on both their houses, and big thank you for the internal corruption of both Fannie and Freddie.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) over 11 years ago

Although I know you are completely serious and I cannot say that I disagree, I did find it funny that you were able to make the parallel between Lizzie and Freddie--and I don't mean Freddy Krueger. Nice analogy!

Posted by Melissa Zavala, Broker, Escondido Real Estate, San Diego County (Broadpoint Properties) over 11 years ago

Thanks...  Mike for your insight..

Posted by Donna Paul, Long Island Home Specialist,All About Real Estate (Keller Williams Realty Gold Coast) over 11 years ago

Hi Mike!

You lost me, I'm confused. I do know one thing, a lot more people in Washington need to feel those 40 wacks. Thank you for the interesting read, and history lesson! :)



Posted by Lisa Udy, Logan Utah Realtor ( Platinum Real Estate Group) over 11 years ago

oh typical washington politics.  This group has a need and this bunch of people are honest.  Let's combine them, bring them down to our level then say how bad they are for doing what we said they should do.

Posted by Matthew Rosov, Certified Mortgage Planning Specialist (Amerisave Mortgage Corporation) over 11 years ago

hmmm....so if Fannie/Freddie die...no more HVCC?  Rita

Posted by Rita Bradley, Valuation Consultant in Orange County California 949-916-3263 over 11 years ago

Hi Mike: I can't stand Barney Frank - how on earth could Massachusetts elect him anyway!


Posted by Matt Listro, Your Credit Repair Expert (National Credit Fixers - Matt Listro) over 11 years ago

Great post - thank you.

Posted by Alice & Jim -- Team Hayes Realtors, Double the Service - Double the Care! (Loveless Realty) over 11 years ago

We elect Barnie Frank because we love him and think he does an excellent job - as do many others.

With a name like mine I've long been aware of Lizzie Borden.  When I was 10 or 11 I ran all the way home from an antiques shop where I had purchased an autograph book with a Elizabeth or Lizbeth Borden autograph or maybe even Lizzie - I don't remember.  The period was right but in the end we decided it wasn't the infamous Lizzie.  It was quite the thrill for a bit though.


Posted by Elizabeth Bolton, Cambridge MA Realtor (RE/MAX Destiny Real Estate Cambridge, MA) over 11 years ago

Barney Frank is a big reason that Fannie & Freddie are in so much trouble aand that bumbling idiot doesn't have the stones to admit it.

Posted by Mike Russell, Overland Park Kansas Real Estate (Mike Russell & Associates) over 11 years ago

Mike - You caught my attention with the title here.  I have always disliked the name Lizzie for that very reason. 

Posted by Jason Crouch, Broker - Austin Texas Real Estate (512-796-7653) (Austin Texas Homes, LLC) over 11 years ago

Mike, Legalized murder... maybe justifiable??  The jury is still out on what to do with all of this.  Great post.

Posted by 1~Judi Barrett, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) over 11 years ago

Hey there Mike,

Do we honestly think that Massachussets, is representative of the entire US population??  Come now...they make mistakes too!  B Frank, whether beloved, loved, or otherwise, is clearly a blowhard and an idiot!  However, he is VERY representative of the bigger problems...We have people voting on issues that have no business voting ON the issues, becuz they are NOT relateable!!

Do you really think, the average John Deere worker cares what Barney Frank, or the wealth of Massachussets has to say?? I personally CANNOT STAND musicals, and recently watched 1776 again...and probably hadnt seen it for 18 years or so...Very interesting...got another taste of old world, backwards thinking from it!  Just like today!  The unrealistic views come from the coasts, and not that of the working families or men & women of this country, and they continue to follow us like gum that wont leave your shoe! 

Very interesting post Mike!  Keep up the good work! 


Posted by Darin Osenberg (Funky Quail Vintage) over 11 years ago


Wowzers!  Looks like I stirred up a hornet's nest here.  Liz, thanks for sharing your story.  Matt, I try to separate personal likes and dislikes in politics, and instead focus on who's telling me the truth, and who's blowing smoke.  Click the link to Congressman Frank's protestation above, and you'll see smoke.  Read the linked editorial from IBD, and you'll see facts.  I believe that if I mess up, I should fess up and fix it.  I vote for people who demonstrate that philosophy.  Darin,  you make a good point.  Thanks for commenting.  :)

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

So sorry my friend!  No worries! 

Wish I was in Tucson instead of Wisconsin!  :)


Posted by Darin Osenberg (Funky Quail Vintage) over 11 years ago

Mike: I really enjoyed what you did with this post ~ and congratulations on the feature.

Posted by Sandy Childs, Realtor - Spartanburg, SC (Keller Williams Realty) over 11 years ago

Mike... You HAD ME at Lizzie Borden.  GREAT job of weaving her tale in with our good old Bud, Barney.  :)    He's put the AX to MANY a folks also, hasn't he?

Posted by Kat DeLong, Realtor DRE#01235311, Lake Arrowhead Real Estate ( (LakeView Realty Enterprises, Inc) over 11 years ago

They are perfectly viable... right?  Have they failed yet?  He must be right.  I gotta go murder an axe...

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) over 11 years ago

Barney Frank is a complete IDIOT! He is a snake in the GRASS! He talked about how solid both comapnies were in 2005 and 2006 and that there is NO worry what so ever about whether they are making good decisions.  Obviously, we all know better!  People in the US should be outraged at our lawmakers. They are all a bunch of LIARS, IDIOTS, PARASITES, and most importantly LAWYERS!


Posted by Jeff over 11 years ago

Great article, but has everyone forgotten why Fannie and Freddie are needed? Without the liquidity the provide to the mortgage industry housing will never comeback in value or at least be depressed for a long time. I remember the days when lenders ran out of money for home loans. It was not a pretty sight and made home buying a very stressful process.

And as for Barney Frank, that big gas bag needs to retire. If any one in big business ran thier business like Old Barney they would be accused of fraud and insider trading. Barney Frank and the entire lot of Washington elite need to go. They have better pensions, better health care and only have to work one term to earn a pension for life. What the heck is going on, we must be stupid to put up with this.

Posted by Greg Uttal over 11 years ago


Term limits and tax reform are a crying need.  We're not demonizing FNMA and good old Freddie, we're pointing out the fact that Frank is looking to deep six them.


Don't hold back; speak your mind!  What gets my goat is that he can say one thing then, and another now, and not mind the contradiction.


I have no idea what you're talking about!  :)  Congrats on your upcoming 400K in the Rain.


I love telling a good story; isn't that what we all want?  A little entertainment with our news?


Thanks for saying so.


You've just got to get yourself down here!  All the best.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

What is truly amazing is there are people that still vote for these characters. I mean there is the problem. How can he convince folks to still vote for him.

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) over 11 years ago

Oh, dear, politics again. I like Barney Frank and apparently the district that keeps re-electing him does, too. This new Bill O'Reilly theory that the regulations under the Community Reinvestment and Development Act are responsible for the present crisis is one of the most amazing stretches of right-wing fantasy in a very elastic period.

Posted by Ann Heitland, Retired from Flagstaff Real Estate Sales (Retired from RE/MAX Peak Properties) over 11 years ago

Barney Frank and Chris Dodd should be in jail.  But does any one understand, care, or know.  They don't realize how guilty these people are.  The mantra is "Rich Evil Republican Business Men", or "Bush"!

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 11 years ago

The idea that everyone must own a home is absurd, but Realtors make a lot more money when they sell homes than when they rent them.

The disdain for investors by banks+Realtors is sad.

Forcing banks to make risky (charity?) loans is idiotic.

If it isn't Freddie and Fannie, it would be some other outfits which will have to provide liquidity to the market.

"Crowdfunding" anyone? That is, allow people to invest their retirement accounts in real estate. The $8 trillion in American retirement accounts could provide plenty of liquidity, and hopfully keep the booms and busts in check.


Posted by Lee Ali (Las Americas Real Estate) over 11 years ago

I feel like I have had way more than 40 whacks since this market turned. It has been a sincere struggle but I am hanging tough because I am tenacious and love what I do. I think Barney Frank stinks and that's being polite...*shaking head in disgust*

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (RE/MAX Realty Affiliates) over 11 years ago

Mike, You are missing Frank's head er head stone...

Your building consultant for life in Brentwood, TN

Posted by TeamCHI - Complete Home Inspections, Inc., Home Inspectons - Nashville, TN area - 615.661.029 (Complete Home Inspections, Inc.) over 11 years ago

Great analogy.  Keep the ax away from me, I am scared of axes...perhaps it is because my sister cut my finger off with an ax.  But, hey lucky for me she didn't take the whole hand.

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate over 11 years ago

CW Lawsuit,

Feel free to come back and comment if you want to leave your  name, but I don't allow anonomous comments.  Thanks for taking the time to comment.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

Good post as always, thanks for your insite.  I agree Frank is a jerk...how the H____ did they vote him in!

Portsmouth NH Real Estate

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) over 11 years ago

Great Post Mike!

My understanding is that only loans held by Freddie Mac qualify for at least one of the Government's New Housing Bailout Initiatives. Any thoughts/speculations on what happens if Freddie is axed? Perhaps more foreclosures than currently projected? More bank Owned Properties?

Here's a thought: It wasn't long ago there was a lot of talk about banks really wanting to get it in real estate business, right?. Even though many banks claim they do not want to be in the real estate business because they are in the lending business, they seem to have restricted their lending and they are now stepping up on their foreclosures.

Here's a happy thought: Maybe Barney could be made (or elect himself) Real Estate CZAR. Next he could help create a merger of Freddie and Fannie, and the nperhaps get those interest rates moving up again to offset the additional loses the banks are about to get slammed with, namely Credit Card defaults.

Any ideas on when will we get a transparent view of the real trouble banks are in?

Posted by Jay Rogers - Charleston Homes For Sale Realty over 11 years ago

Great analogy Mike.  We need some blood spatter analysis of this mess but we do KNOW that it was lack of over sight. 

A little historical perspective:  from George Washington's time until the great depression, there was a banking and credit crisis about every 10 to 15 years.  Then after the depression smart regulatory rules were put in place that worked for 50 years.

Then at the behest of the financial industry some of the threads of the regulatory curtain were removed and we had the S&L crisis of the 80's.   We continued removing thread by thread good regulation until now.

Restoring good regulation and sticking to them will work and all will be well.

I believe Lizzie was convicted of murder.  I don't hear too many "law makers" talking about criminal prosectution for fraud.   THEY COOKED THE BOOKS for a long time at F & F.  Fully amortized time in jail is what should happen.

In the mean time, lets do great work for our clients and guide them to safe harbors.

Posted by Bill Burns over 11 years ago

I'm not a fan of Barney Frank, and I'm sure that he's skirting his responsibility in this mess. But the bigger issue in my view is the complete lack of interest in determining how this all happened. Each political side blames the other, and as long as there isn't an investigation, we'll just go on blaming each other and calling each other "extremist," as a way to avoid listening to the arguments. We need a responsible media and a independent investigation at least to explain to us folks who aren't experts exactly what happened and why. It seems to me that the issues have been deliberately obscured. The entire world financial system was brought to the brink, and none of us has been told why and who is responsible. In the meantime, trillions has been spent (supposedly) to keep us from collapse. It is truly the worst scandal I've ever heard of.

Posted by Diane Schubach over 11 years ago

I learned about redlining and steering etc., like we all did. They were test questions. I never, never

 asked how this law came about...starting with Jimmy Carter and then refined by Bill Clinton. And no

instructor ever expanded on it (Maryland and Florida licenses).  I did stand up, though, at an

office meeting:  I said the greatest growth in the mortgage industry was in the subprime market.

And that they were giving loans to people with a track record of not paying their bills.

Another agent said, "Elizabeth! It's the American Dream to own a home".  Shame on me and it

was the end of the conversation.


Posted by ELIZABETH VALLANCE (Long and Foster Real Estate Services Inc) over 11 years ago


Great read...!!! Thanks,   Fran

Posted by Fran Gaspari, "The Title Man" - Title Insurance - PA & NJ (Patriot Land Transfer, Inc.) over 11 years ago

Barney Frank must have been right that Fannie and Freddie were just fine.  They haven't failed (nevermind the hundreds of billions of dollars in the hands of the man behind the curtain) yet. 

Of course, you need to remember that Barney Frank has never held a real job.

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) over 11 years ago

Barney Frank?  You mean the one responsible for taking a good idea like the Hope For Homes Program that was alotted $300B by congress and turning it into a completely unworkable program full of unreasonable fees and rules that make it virtually impossible to qualify for?  The one that was designed to help 400,000 or so people, but so far has helped exactly 1 (ONE) person to rework their mortgage?

Say it ain't so, Mike - not Good Ol' Barney!!!

Posted by Kent Simpson, Real Estate Is About People (Realty One Group Mountain Desert) over 11 years ago

No, No, NO! Where's our letter-writing? Where are our phone calls to our representative?? Where are our emails (yes, emails) to President Obama? http://www.whitehouse.gov/CONTACT/  Mike, want to set up another challenge? I'm daring you to do it. :)


Posted by Sherry Siegel, Managing Broker, EcoBroker, ABR (BrokersGroup, serving Sequim and Port Angeles) over 11 years ago

Who is going to investigate Barney boy? When is this bozo going to be prosecuted? Sorry, can't say anything nice about this guy and his past polices.  Not to mention how he wouldn't answer that college kids question this week - talk about paranoid!

Posted by Lyn Sims, Schaumburg Real Estate (RE/MAX Suburban) over 11 years ago

So much of our industries problems go all the way back to the first days that our government ran in the red.  Since then it has been attempts to shore up our economy with voodoo and misdirection.  The financial system is being run by a small group of people for the benefit of very few.  Wall St. controls the Fed, Treasury and Congress.  It has paid off all of our elected officials to look the other way.  The only way to solve this problem is to look at it like it was your family problem.  You wouldn't spend your  way out of it.  The current crisis was created by Bernacke and his lot, now we look to them to fix it?  Fool me once only!

Posted by Dale Terry over 11 years ago


I couldn't agree more!  Thanks for commenting.

Mike in Tucson

Posted by Mike Jones, Mike Jones NMLS 223495 (SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) ) over 11 years ago

Mike - congrats on the feature and another great post!

 Lots of complacency on the 'normal' folks side.  Ignorance in history lessons. Lack of education in civics, common sense, personal responsibility, corruption in the name of power, lack of pride and principles, .. etc, etc... that's what rules now...and the saddest thing of all is that our academia (the future of our country) is totally taken over by this kind....

Voting in 2010 will be one of our best weapons!

With smiles,


Posted by Bo Kociuba, Realtor - Mustang, Yukon & OKC Metro 405-812-1572 (McGraw Realtors ) over 11 years ago

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