Taxpayer alert: Fannie Mae ready to bust a move

Taxpayer alert: Fannie Mae ready to bust a move

Fannie Mae, the quasi-government mortgage investor at the epicenter of America’s historic real-estate crash, is about to make another costly move – literally.

The Washington Post reported that Fannie plans to relocate and consolidate its downtown offices, even as the controversial agency faces a reorganization by Congress.

The new Class-A office space that Fannie will occupy at 15th and L streets Northwest could run more than $70 per square foot, according to data compiled by commercial broker CBRE. Comparable leases cost half that in Northern Virginia, where vacancy rates have skyrocketed. By Fannie’s own estimates, the moving costs alone would be $160 million.

Using CBRE’s comparisons, a 15-year lease in D.C. could cost Fannie $750 million more than renting cheaper digs across the Potomac River.

Alternatively, Fannie could save hundreds of millions by using a sale-leaseback of its existing office on Wisconsin Avenue NW. A renovation-in-place also could be more economical than moving.

U.S. Sen. Mark Warner, a Democrat from Virginia, questioned Fannie Mae’s fixation on downtown real estate during a recent Senate banking committee hearing.

“They seem to be acting as if they assume the status quo is going 30 years forward. I think that is at best an uncertain assumption, and I’m not sure the taxpayers are getting full value on,” Warner said.

Committees in both the House and Senate have voted to wind down Fannie Mae.

Fannie spokesman Maureen Davenport defended the 15th Street move as a “great value.”

The firm, which has received nearly $200 billion in taxpayer support, remains under federal control after being placed in conservatorship by the Federal Housing Finance Agency.

As “government-sponsored enterprises,” Fannie Mae and Freddie Mac played a pivotal role in the real-estate bust that sent Wall Street reeling in 2008.

“They funneled securities laced with high-risk mortgages into major financial institutions. When house prices … dropped in 2007, these mortgage-backed securities became unsellable and the financial crisis quickly followed,” political analyst Michael Barone wrote this month.

Read more by Kenric Ward at Watchdog.com.

 

Kenric Ward

Kenric Ward

Kenric Ward is a national correspondent and writes for the Texas Bureau of Watchdog.org. Formerly a reporter and editor at two Pulitzer Prize-winning newspapers, Kenric has won dozens of state and national news awards for investigative articles. His most recent book is “Saints in Babylon: Mormons and Las Vegas.”


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