Industry Watch

INDUSTRY DIGEST

September 18, 2005

Freddie Mac agrees to seek millions from ex-CEO, CFO

Freddie Mac, the mortgage reseller recovering from an accounting scandal, will assist federal regulators in their effort to recover millions of dollars in benefits and bonuses paid to two of its former executives, under terms of a settlement made public last week by the Office of Federal Housing Enterprise Oversight. The second-largest U.S. buyer will seek recovery of severance benefits and stock awards it gave to the two, including $24.4 million received by former Chief Executive Officer Leland C. Brendsel.

Under the settlement, Freddie Mac agreed to provide documents and otherwise help the regulatory agency in its investigation of Brendsel and former Chief Financial Officer Vaughn A. Clarke, who were forced out by the company's board in June 2003. The company also agreed to seek recovery of $750,000 in departure benefits from Clarke. In addition, the regulator agency has been seeking restitution of $3.8 million from Brendsel and $537,000 from Clarke.

Fewer people could afford home in Los Angeles in July

Housing affordability in July fell to a record low percent in Los Angeles County and remained near that level in California as prices hit all-time highs in many areas.

Two months ago, 14 percent of county households could afford a home priced at the median $543,890, said the California Association of Realtors. A household would need to earn at least $126,370 to qualify for a traditional 30-year fixed rate loan.

Locally, affordability fell 3 percentage points from a year ago and 1 percentage point from June. The county's previous record low affordability was 15 percent, first reached in June and July of 1989 and tied this May and June. Statewide affordability also declined 3 percentage points from a year ago but remained unchanged from June.

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