Michele Bachmann is BFFs with Freddie Mac and Fannie Mae

Michele Bachmann may rail against Freddie Mac and Fannie Mae, but it’s only because she’s BFFs with them. That’s Best Frienemies Forever. And her current relationship status with these two federally subsidized programs don’t stop her from taking advantage of them at every turn. She just doesn’t want YOU to take advantage of them.

Recent documents examined by the Washington Post reveal that Michele Bachmann and her husband Marcus Bachmann took out a $417,000 mortgage for a new home purchase back in 2008 that was backed by Freddie Mac and Fannie Mae.

Yes, it’s the same Freddie Mac and Fannie Mae that Bachmann demanded be dismantled during a House Financial Services Committee hearing. And get this, she gave that speech just WEEKS after “she and her husband signed for a $417,000 home loan to help finance their move to a 5,200-square-foot golf-course home, public records show” (WaPo).

This is how her plan to “rob the bank just before blowing it up” worked:

The Bachmann’s needed to finance $666,999 (no kidding) out of $760,000 home purchase. However, for Freddie Mac and Fannie Mae to purchase a mortgage from a mortgage servicer (AKA a bank like Wells Fargo), it must conform to Freddie and Fannie loan limits, which for 2008 was $417,000 for a single-family home in a “general” area.

Considering the Bachmanns would not have qualified for a Freddie and Fannie backed loan if they requested more than $417,000, they likely faced two possible scenarios.

Using Wells Fargo’s terms, their first option would have been a “jumbo-loan” type of situation:

Jumbo Loans (No backing from Fannie Mae and Freddie Mac)

Features

  • Mortgage amounts in excess of the conforming loan limit ($417,000) set by Fannie Mae and Freddie Mac
  • Also known as non-conforming loans
  • Typically carry higher interest rates

Who is this for?

  • Homebuyers who need financing to purchase a property with a higher appraised value, and can handle larger monthly payments

Their second option would have a combination of a first mortgage that would keep their request under $417,000 and a second mortgage or line of credit to finance the rest.

Blended Jumbo Loan

Features

  • A Wells Fargo first mortgage up to the conforming loan limit ($417,000), along with a Home Equity second mortgage (or in the case of the Bachmanns, a secured line of credit) to cover the rest of your purchase.
  • May have lower monthly mortgage payments than a regular jumbo loan for the same total loan amount

Who is this for?

Buyers who want a jumbo loan amount with a lower monthly mortgage payment

Guess which one they chose?

They chose the one that financially benefitted them the most. That’s reasonable. But it financially benefitted them because of the programs that Freddie Mac and Fannie Mae offer to middle and low income homeowners. These programs were created by Congress in order to make mortgages available to more people with low and moderate incomes.

Apparently Michele Bachmann believes that her $174,000 salary from Congress, plus her husband’s salary which has not been disclosed, plus their assets which range between $862,018 and $2 million qualify them as in the low to moderate income level.

In her own defense, Michele Bachmann had this to say to the National Press Club:

Now unlike all of you, who I’m sure pay cash for your homes, there are people out there like myself who actually have to go to a bank and get a mortgage. And this is the problem. It’s almost impossible to buy a home in this country today without the federal government being involved. Whether it is with the FHA, whether it’s with Fannie, whether it’s with Freddie, it’s almost impossible to buy a home…What’s important is that we do dismantle a number of these federal programs that everyone agrees are clearly out of control.

As we’ve shown, it’s not at all impossible to buy a home without the federal government being involved. Just choose the option that is not backed by Fannie and Freddie Mac. Simple enough?

I will agree with her on one thing and that is that these programs are out of control. If she can get federal money when she doesn’t even need it, then absolutely these programs are out of control.

Bachmann Defends Using Federal Loan Program