Tag Archives: trees

What If . . . Fannie and Freddie Imploded?

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photo by US HUD

So, I was spending some quality time with the Federal Housing Finance Agency Office of the Inspector General’s most recent Semiannual Report to the Congress. The Federal Housing Finance Agency (FHFA) is the regulator of Fannie and Freddie as well as their conservator. Essentially, the FHFA calls all of the shots for the two companies.

It got me to wondering, does the Office of the Inspector General really have a handle on whether Fannie and Freddie are in good shape or not? The report opens with a Snapshot of OIG Accomplishments. The Snapshot contains the following categories:

  • OIG Investigations Monetary Results
  • Judicial Actions
  • Hotline Contacts
  • Audit and Evaluation Reports Issued
  • White Papers Issued
  • Office of Compliance and Special Projects Reports Issued
  • Nonmonetary Recommendations Made
  • Regulations Reviewed
  • Responses to Requests Under the Freedom of Information Act

As I read through the report, I had the distinct feeling that I had got lost among the trees of bureaucratic oversight and had lost sight of the contours of the Frannie forest.

I want to know one thing — are the two companies solvent and will they be solvent for the foreseeable future? The OIG’s Snapshot is pretty backward facing and focuses on a lot of pretty minor issues, like counting hotline contacts, instead of focusing on the fundamentals.

I know, I know — if we can measure something, then we want to share it with the world, but the Snapshot actually decreases my faith that OIG and FHFA are taking care of the entire forest and not just a few of the trees they were able to measure.

That being said, the report does get  to some of the important issues later on. It acknowledges that

Since September 2008, FHFA has administered two conservatorships of unprecedented scope and undeterminable duration. Under HERA,the Agency’s actions as conservator are not subject to judicial review or intervention, nor are they subject to procedural safeguards that are ordinarily applicable to regulatory activities such as rulemaking. As conservator of the Enterprises, FHFA exercises control over trillions of dollars in assets and billions of dollars in revenue, and makes business and policy decisions that influence and impact the entire mortgage finance industry. For reasons of efficiency, concordant goals with the Enterprises, and operational savings, FHFA has determined to delegate revocable authority for general corporate governance and day-to-day matters to the Enterprises’ boards of directors and executive management. (10)

The OIG clearly understands what is at stake in the conservatorships. But as I read the remainder of the report, I did not see sufficient emphasis on the range of risks that Fannie and Freddie face, such as hedging risk and operational risk. Hopefully, someone at the FHFA is paying sufficient attention to the range of risks the two companies face. If not, we can expect a new type of crisis down the pike.

Money ‘n Trees

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tree fallen on house

Money quoted me in 4 Things to Know Before You Prune a Tree. It opens,

It turns out money does grow on trees. Mature specimens can add 10% or more to your property value, according to Greenwich, Conn., arborist and tree appraiser Scott Cullen. But trees can cost big money, too—if a giant oak falls and crushes your garage during the next big storm, for example. Here’s what you need to know about maintaining the trees on your property.

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Understand insurance coverage

In urban and suburban neighborhoods, it’s common for trees to grow along property lines. As a general rule, the owner of the property where the tree meets the ground is the owner of the tree—and responsible for it, says real estate attorney and professor of law at Brooklyn Law School David Reiss. If you own an obviously diseased and dying tree that falls and damages a neighbor’s house or, worse, hurts someone, you could be financially liable for the damage. But in general, if it’s a healthy tree that has been routinely cared for and inspected by a professional, the owners of the property that gets damaged by your tree will likely be covered by their own insurance for damage to their buildings or vehicles.

Know your right to prune

Just as leaves and branches that fall on your land are yours to clean up, regardless of whose tree they came from, you also generally have the right to trim any part of a tree that’s on your property. So if a limb from your neighbor’s tree is bringing squirrels onto your roof or dropping walnuts onto your new car, you are within your rights to have the limb removed. You can’t cut it beyond your property line, however, and if any trimming you do were to kill the tree (or render it unstable or unhealthy), you could be liable for paying its owner for lost value.

In any case, living by the letter of the law is rarely the best solution when it comes to neighborhood relations. Discuss tree issues with all parties involved before anyone fires up a chainsaw, says Reiss. If a tree is yours—in other words, if it leaves the ground in your yard—it’s essentially your tree and your responsibility to keep properly maintained and pruned. Even if you technically aren’t responsible for shaping the limbs over on the neighbor’s side, the increased cost for doing that while a tree guy is on site is well worth the good relations it will engender. If the tree trunk splits the property line, discuss the needed tree work and ask your neighbor to split the bill.