Baghdad Bob of Freddie Mac Merits Mention As Mideast Erupts
For a brief time in April 2003, Saddam Hussein’s charismatic Information Minister, Mohammed Saeed al-Sahhaf, became a worldwide pop-culture icon. During the invasion of Iraq, al-Sahhaf faced reporters on the roof of a Baghdad hotel. All around him, columns of smoke billowed and sirens blared. Glide bombs shook the earth. American and British coalition forces poured into the city.
Denying reality, al-Sahhaf insisted: “There are no American troops in Baghdad!” The next day, Baghdad fell. But al-Sahhaf’s gift for bombastic metaphors and outrageous superlatives eclipsed his mendacity. He’d gained the nickname “Baghdad Bob.” (The British called him “Comical Ali” – a spoof on another of Saddam’s ministers ominously nicknamed “Chemical Ali.”)
More than two decades later, as troubles in the Mideast again mount, a government-sponsored purveyor of equal talent can be found much closer to home. Like Baghdad Bob, he, too, deserves to be featured on memes, fan pages, coffee mugs and T-shirts.
Unlike Baghdad Bob, he’s still on the job. His name is Scott Reuter. The results of his handiwork are buried in a portfolio of more than $2.2 trillion in mortgage-backed securities purchased by the U.S. Federal Reserve. While no one was paying attention, America’s central bank became Fannie and Freddie’s biggest customer. More on Reuter in a minute.
Since 2023, government-backed mortgage giant Freddie Mac has maintained a nonpublic and growing list of words it has expunged from appraisal reports with the help, and potentially the coercion, of vendors. The censorship has turned many appraisal reports into misleading gibberish and eliminated salient facts about properties that serve as collateral for trillions in taxpayer-backed mortgages. The distorted reports have been relied on by underwriters, lending institutions and ultimately purchasers of mortgage-backed securities – now largely the Federal Reserve.
Initially under the pretext of removing perceived “problematic” words and phrases somehow related to DEI, employees at Freddie Mac soon expanded the word ban to eliminate words that could cause any form of “transactional friction.” This friction is the very point of the appraisal, which serves as a consumer protection and a safeguard of the U.S. taxpayer – the deep pocket of last resort in the arrangement. It also serves as a bulwark against home-price inflation.
Freddie Mac has incentivized or arm-twisted vendors to incorporate textual analysis into third-party software. Independent real property appraisers are hired by lenders uniquely for their independence. They become the eyes and ears of the lending institutions. The appraisers have no relationship with Freddie Mac or the mortgage giant’s promiscuous big sister, Fannie Mae.
Freddie Mac’s answer to Baghdad Bob, the aforementioned Scott Reuter, has been the public face of the appraisal tampering. Because Freddie Mac’s unpublished list of banned words and phrases has been built into pre-approved third-party underwriting software, investors in mortgages purchased or guaranteed by Fannie and the Federal Housing Administration have also been affected by the doctoring of appraisals. This was the point all along.
The censorship has turned appraisers’ observations on such things as markets, submarkets, sales trends and school districts into gobbledygook by expurgating basic words in the English language. This wasn’t an accident. Appraisers report that some of the banned words are known to them. They include “good,” “bad,” “high,” “low,” “strong,” “weak,” “slow,” and “rapid.” Banned are other words and terms, much of the censorship clearly designed to mask economic realities relating to the properties being appraised. Banned words include “crime,” “school district” “neighborhood,” “blight,” “student,” “preferred,” “up-and-coming,” “well-kept,” “graffiti” and “desirable” and many puzzlingly innocuous phrases like “convenient to,” “walking distance” and “demographer.”
Ironically, Freddie Mac’s own public advice to home buyers uses many of the words and phrases that the mortgage giant requires to be censored from third-party appraisal reports. The difference? Freddie Mac executives want to push through loan originations to please their political bosses in Washington and members of the housing lobby – the lenders, Realtors and homebuilders. The housing lobby has wanted nothing more than to eliminate independent appraisers.
The bowdlerization and misrepresentation by omission have meant basic observations like, “The appraised property has a high-gabled roof with two dormers” or “The property is located in the Houston Independent School District” or “The property contains an abandoned home covered in graffiti” are excised from reports. The results have created a form of “liar loan.”
Appraisers are kept from opining on neighborhood characteristics that influence value: the perceived efficiency of local government, response times for police and fire, crime rates, the performance of school districts as demonstrated by standardized test scores and levels of deferred maintenance and property abandonment.
Since Freddie and Fannie can blacklist appraisers and punish the lenders who hire them, the censorship has real teeth. The twins can also blacklist the software developers who create appraisal software which requires the use of forms licensed to them by the mortgage giants.
The appraisal tampering is an example of nongovernment actors working with individuals in government, like Sandra L. Thompson, the mortgage twins’ Biden-era federal regulator, to promote censorship of a class of citizens uniquely engaged for their independence. Months into the Trump administration, the tampering is still going on.
This is just one way Freddie and Fannie have been subverting market processes in recent years. Perched outside government but operating with the implicit support of government, the inner workings of the mortgage giants have increasingly come to resemble those of a criminal enterprise. They act as political fixers. The twins have always operated with little accountability.
Characters like Mr. Reuter have helped add to the nation’s current home-price inflation by ensuring, through institutionalized censorship, that the opinions of independent third-party appraisers are sufficiently silenced to the benefit of his enterprise’s political and business priorities.
The late Iraqi strongman Saddam Hussein was known to imprison members of Iraq’s national soccer team after a loss. For good measure, he had them caned on the soles of their feet. What awaited al-Sahhaf, were he to have gotten too close to the truth, was obvious. The corruption is more nuanced at Freddie Mac.
- Baghdad Bob of Freddie Mac Merits Mention As Mideast Erupts - June 26, 2025
- Fannie Mae Fraud and Abuse Exposed - April 18, 2025
- Is a Horde of Deadbeat Borrowers Again Walking Among Us? - November 4, 2024
It is a sad truth. And, just as appauling, they hijacked bias and racism as the get away car. Dispicable. White collar crime at its best but, of course, not recognized for what it is. Government affiliated individuals get drunk on the power they weild and abuse it.
Good thing America isn’t North Korea, huh? If it was, we could be chastised severely for using Wrong Speak.
(This same thing is being done all over America and in every facet of American life. We’re not alone. The leftist insanity is rotting everything.)
“Freddie Mac’s own public advice to home buyers uses many of the words and phrases that the mortgage giant requires to be censored from third-party appraisal reports.”
I got a revision from a now former AMC client a while back;
1004_05UAD – REPORT – Fair Lending – Comments in the report contain (AMERICAN) which could be a violation of fair lending practices. Please revise these comments so that there is no risk of fair lending violations
Apparently now the word “American’ is offensive and cannot be used in the appraisal, even when it’s it the lenders name.
You’re most likely being messaged by some lender or amc’s AI robot. And such peramiters were coded into the program. That or a political activist reviewer.
Go to google patents and enter in the names of major lenders, gse’s, or even the companies you work with or purchase products from. You’ll find much more than you bargained for. This one patented software provides a distinct counter to the PAVE task force narrative on who’s biased and who’s not. And there are a thousand others just like it. Social credit scoring is already here.
What good does it do to complain and whine? Nothing ever changes and only gets worse as the years slip by. We have never had any type of representation as a group, at least in the residential arena, and until we do, we are powerless to do anything about it! It’s a lost cause, and the only cure is to get the hell out of this business!
hopefully the 2 giants go back to being private and things will change.. wishful thinking ..
Educate me. How will anything change if the gse’s are privatized? I’m missing the point because all this disclosure is already present. And nothing happens, the investors still support the products and approach, are actively invested in real time right now. With the privatization with a promise of a continuing taxpayer back stop, I’m not understanding how anything would change.
i should have said, hopefully the 2 giants go back to being private and things maybe would change for the better….i suppose i’m feeling a little optimistic for, yes, that reason and it’s carrying over…
HUD updated requirements.
https://www.hud.gov/sites/dfiles/OCHCO/documents/2025-18hsgml.pdf?utm_medium=email&utm_source=govdelivery
https://www.hud.gov/news/hud-no-25-086?utm_medium=email&utm_source=govdelivery
Well, if this is the ‘sweeping change’ from HUD, don’t expect to much from the gse’s.
The appraisal industry hoped for more. This is all hud offered the appraisal industry. Same old tired ‘to save buyers money and unnecessary burdens to become home owners.’ That and everyone can build in flood zones now. That ought to end up really nice. Rubber stamp everything, ‘to help the home owner’. The programs now are all about reduced front end costs and entry standard requirements. As long as we can get the people into those homes, they’ll all magically make it work and nobody needs to worry about affordability challenges or property condition requirements after the fact.
This long after regulatory structure reform from decades past, it would appear that nobody involved with policy setting has any clear understanding why a robust appraisal requirement was in place to begin with, and subsequently chips away at the programs until there is virtually nothing left. Which is where we are today, as TAF failed in it’s duty time and time again. Only fitting we find out amc’s have been directing TAF management this entire time. That figures.
Privatization of gse’s won’t change a thing, not until a monumental taxpayer backstop bill comes due. The avm final rule combined with the apparent sanctioning of investor speculation in residential. Permanent higher housing pricing for everyone. Forever. ‘Appraisal modernization’. Unless you’re an insider with institutional money, then you can pick the holdings out from upstream or auction at sweetheart pricing. The program managers say; if only the service fees to buy a home were lower, people could afford these houses.
The lending system is so complex, people looking from the outside in have no idea the entire structural stability of the system, layer upon layer of safeguards, their operational worth all hinged on the full service independent appraisers presence. Now that the appraisers are gone, anything goes, speculators have already flooded the market and they’re here to stay. (image) It was the full service appraisers presence that deterred fraud before the fraud could ever take root.
This stuff is pretty funny, you gotta have a sense of humor these days. I actually had a reviewer ask me to remove the word “desired” from this sentence: “Typical buyers are willing to pay premiums for desired amenities”. I was laughing while typing my reply “Context matters. If you need me to explain what context means, I will be happy to do so.”
Sounds like they’re watching too much late night Cinemax. We’ve all been there. Maybe they live in one of those big cities. You never know.
Nothing new under the sun – among the first to go was back in the 80’s – “pride of ownership”. Supposedly because it would imply “affluent area”. Well-maintained lesser areas be damned?
And this is why I am sitting in a home with 100K in damages backed by FHA/Freddie MAC. The Appraiser dint have to tell us the roof was bad ad leaking into the basement and he covered up the damage to the chimney by taking a picture so far back leaves coved the chimney. Nor did he test the electrical. But gave it an appraisal higher than the asking price. So now I sit in a home I took all my 401K to purchase 300K asking price. I now need 100K to repair it that I dont qualify for.
But hey who gives a shit surely not FHA and Im told it would cost me near 100k in attorney fees to go after everyone involved. The option I have you ask? I was told I could just walk away from the house….destroy my credit and lose everything.
I have no words for how shitty the system built to protect you is. It sucks and as a consumer you have no recourse
Wow Debbie, that’s horrible.
Did you get an inspection? If so, what did it say? The inspection would have most likely showed the defects prior to purchase, and maybe you would’ve bought another house. The problem with FHA is they are trying to make the appraiser a home inspector, which we definitely are not. Your agent and lender most likely had you sign a waiver or disclosure with regards to a home inspection.
When a loan goes into default/foreclosure, the first place the lender looks to assign blame is the appraisal. Was the house over- valued, under-valued, appropriate comparable sales used, appropriate methodology and adjustments applied, ect? The ‘system’ doesn’t protect appraisers. HUD/FHA are riddled with problems, and protecting themselves is their highest priority. A little bit of research would probably give you the recourse you are seeking…
It’s horrible that your agent sold you a crap house.
It’s horrible you didn’t do your own due diligence when buying your home.
It’s horrible you blame appraisers carte blanche for your problems.
Wasn’t this the feature of an article on this blogs previously? If so please copy paste the link as a post for reference. Name the amc and lender involved if memory serves correctly. They lied to this borrower, concealed facts about the home, refused to take accountability, and the amc shut the lady down and stuck her with the bill and a judge said because the listing was ‘as is’, she had no recourse. So apparently all the FHA rules and appraisal rules for origination did not apply. Who knew. I think that’s the same story from a few years back. Debbie post the link to the original article if that was yours. If this is a new issue and you have not had a featured article here, please clarify that too so we can know.
Hi Debbie,
Sporjo@aol.com need for an appraiser trainer. All state and appraisal classes completed.
Thanks
I’ve found that in almost 43 years of doing this that, if I see a problem, it’s typically worse than what I perceived as evidenced by inspections that I called for by engineers and or home inspectors. I’ve had, I think, over a thousand hours of inspection and property insurance adjusting education, not from appraiser educators, but from international engineering firms and from actual home inspectors. That means that I know a lot, but my state does not allow appraisers to act as home inspectors. Furthermore, I don’t want to. Secondly, I used to be FHA certified. I found that the more I tried to adhere to FHA regulations and standards, the more grief I got from lenders with little help from FHA. FHA used to have that hot line for questions, but it went away. Thirdly, no lender or GSE wants to see or hear anything negative about the condition of a house. Thus, there’s enormous pressure to gloss over, hide, not mention, deny, etc., problems with a house. Thus, I quit doing FHA’s. My procedure for many years has been to photograph and discuss everything that I see whether I perceive it as a value affecting problem or not. Then sometimes I recommend an inspection and repairs or state my reasons for not recommending an inspection and repairs. However, I suggest an inspection by a licensed professional real estate inspector and or engineer on every appraisal I do, even on new houses, sometimes especially on new houses, after I read comments about the builder on the Internet. I also suggest that every appraiser take classes from schools that teach property inspections, not from appraisal education schools. I also suggest taking property insurance adjusting classes from Haag Engineering (if there’s one near you) or some other expert engineering firm that provides such classes. Most teach everything relating to water, wind, lightning, electrical, mold, structural and earthquake damage, etc. No lender or AMC will give a rat’s that you have this knowledge, but it will open your eyes to how much you don’t know. Other excellent sources of useful property damage education are Simpson Strong Tie and UT Arlington used to have the Clawson-Matthys Building Professional Institute. It was excellent, but I don’t know if they still have it. The Building Professional Institute is still functioning, however.
https://forum.policiesforpeople.com/t/do-away-with-gsa-fanniemae-and-freddie-mac/22148/2
Pray Hard or anyone else. Do me a favor and upvote this thread in policies for people website. Create an account if you need to. This goes directly to RFK and Trump. I meant to move on this last year but have been busy. Better late than never, please upvote or take a minute to participate at this site as well.
Just in today; SCOTUS rules many judicial injunctions against the executive invalid.
What does this mean for the disbanding of the CFPB, and the original intent of the C&R billing rule and associated $10k/$20k daily recurrent fines for lenders or agents of lenders (amc’s) failure to pay market rate fees (VA fee table rate) to appraisers…
LMAO!
“William J. Pulte, Director of the U.S. housing regulator (FHFA), urges Congress to investigate Federal Reserve Chairman Jerome Powell, alleging that he made false statements about a $2.5 billion renovation project and is guilty of serious misconduct.” Fannie and Freddie are part of this statement by Pulte.
That’s something else. Found at least one interview where this was mentioned.
https://thehill.com/business/5382041-pulte-powell-fed-congress-investigation/
Question; If the whole world is in debt, to whom are we indebted? That line is from ‘adventures of the guy whom just started paying attention’ cartoon series.