Frannie Mae, Freddie Mac Costing Taxpayers Billions

If Frannie Mae and Freddie Mac haven’t already become cursed names in the average American household, perhaps they will now. The Obama Administration says that the companies need yet an additional $92.2 billion to cover losses on mortgage investments. This assistance is, of course, after the companies have already received $78.8 billion in federal aid, and is expected to take affect before September of 2011, though no timetable has been established.

Though the government had initially pledged $100 billion per company in bailout money, that number has been doubled—and may increase, given that losses continue. In fact, a Pew analysis has shown that federal subsidies for the two companies could reach as much as $290 billion this year, or even a whopping $389 billion between now and 2019.

Freddie Mac alone has reported a $9.9 billion quarterly loss. That said, the company has certainly been trying. With over 24,620 loans modified within the first quarter and the aid of over 10,500 through repayment plans, something is getting done.

Still, consider that, just for a little perspective, these companies have already received more than the Department of Homeland Security, the Department of Transportation and the Department of Labor combined. Perhaps it might be more effective for the government to give housing loans to people directly?

The housing crisis continues, with yet another record of foreclosures set in April. Both Frannie Mae and Freddy Mac ended their foreclosure moratoriums on March 31, contributing to the 342,000 homes that were either repossessed or given notices of default or auction sales in April.

Will throwing more money at these failing companies prevent May from setting another dismal record? The likely answer is no. We’ll just have to wait and see.