Mortgage Lobbying Big Business

If you want your issues to be heard, if you want to promote or kill legislation, if you want to keep a close watch over the regulations that Congress considers, you have to pay to play.

“It is important to have your voice heard,” said Doug Duvall, spokesman for Freddie Mac, the Government Sponsored Enterprise that spent more than $8.8 million on federal lobbyists last year. “We are a unique company. We are a Fortune 50 company that was created by Congress and owned by shareholders. So we have to make sure people understand our role, and not just our role, but our important mission for the country.

“Legislation certainly affects the way we do business, and it is important for us to continue to educate people about our unique place,” Duvall told MortgageDaily.com in an interview.

Lobbying is a big business in Washington. The Center for Responsive Politics, a nonpartisan group based in Washington, found that federal lobbying $2.45 billion in 2006.

“We know from nearly 25 years of following the money in U.S. politics that at a minimum contributions buy access to members of Congress,” Sheila Krumholz, the center’s executive director, said in a statement.

Then Fannie Mae presumably has a lot of access after spending $10.1 million last year, according to the center.

Fannie didn’t respond for an interview request, but it is a safe assumption that many of the issues Freddie pays lobbyists to handle are similar if not identical to Fannie’s issues.

Duvall said over the last few years, the GSE’s have been paying lobbyists to “closely monitor” a number of issues, including GSE reform — brought on in the wake of GSE accounting problems and allegations of mismanagement — predatory lending regulation, terrorism risk insurance, FHA reform, flood insurance and potential changes in the subprime mortgage market.

The CATO Institute, a Washington think tank, wrote in a report that the GSE’s spend so much money on lobbyists “to enjoy the best of both worlds, in a gray area of quasi-private and quasi-public institution.”

“The GSEs claim to be private companies when they engage in extensive lobbying activities, which a government agency would be heavily criticized for,” the institute said in the report. “Yet their lobbying is a clear instance of using benefits that accrue from government sponsorship to fund activities designed to maintain the continued flow of government largesse.”

An analysis by the Center For Responsive Politics shows that among mortgage companies, Countrywide Financial spent the most on lobbyists in 2006 with $735,050 followed by Washington Mutual, ($723,000) ABN AMRO ($400,000), Ameriquest Capital ($240,000) and Internet lender Lending Tree ($60,000).

Only Lending Tree responded to requests for interviews.

“Lending Tree maintains a fairly low-key presence in Washington to monitor issues of concern to both consumers and the lending and real estate industries,” spokeswoman Rebecca Anderson said in an e-mail.

Congress has been criticized for not taking more steps to curb problems and abuses in the subprime mortgage industry. The lax oversight was influenced by the amount of money the industry spent on lobbying, according to one organization that tracks money in politics.

Common Cause, a government watchdog group, estimated that between 1999 and 2006, the mortgage industry spent $187 million on lobbyists.

“As consumer and housing advocates successfully pushed for more state regulation of mortgage lenders, the industry went on the offensive,” the group said in a report.

“Congress should have stepped in years ago to pass comprehensive pro-consumer legislation to curb mortgage lending abuses,” Common Cause Executive Vice President Jon Goldin-Dubois said in the report. “The fact is the subprime mortgage lending industry was able to escape scrutiny for so long in part because of its … lobbying clout.”