WASHINGTON Still kicking after disbanding its board, the lobbying group FM Watch accused Freddie Mac on Tuesday of being a government-sponsored commercial bank.
By extending a $2.5 million line of credit this month to the online lending exchange LendingTree Inc., Freddie has performed the same function as a private bank by offering a corporate finance service, according to a press statement released Tuesday by FM Watch, a vocal critic of Freddie and Fannie Mae, the two government-sponsored enterprises that control the secondary market for mortgages.
If there is a clearer example of noncharter activities than this, I havent seen it, said Mike House, executive director of FM Watch, in the statement.
A Freddie spokeswoman said the claim that the line of credit is beyond our mission doesnt hold water. Investing in LendingTree supports our mission of lowering costs and making the mortgage process more affordable to borrowers, she said. It also makes the process simpler for lenders.
FM Watch said the LendingTree credit line backs up a report the group issued last week asserting that Fannie and Freddie have undertaken a conscious and concerted effort to expand beyond the boundaries established by their charters.
The 41-page report, GSE Mission Creep: The Threat to American Consumers, cites what the group calls examples of Fannies and Freddies venturing into primary mortgage markets.
The report said Freddie is working with Wendover Financial Services Corp., a loan servicing provider owned by Electronic Data Systems Corp., to make Freddies automated underwriting products available to real estate agents, who in turn could use them to help customers apply for mortgages. The resulting loans are bought by Freddie or by Lehman Brothers, an investment banking firm, the report says.
The recent barrage of provocative FM Watch press releases came in the midst of reports that the group, which had refused to identify the members of its roughly 12-person executive committee, may be in jeopardy.