Fannie and Freddie are Getting Tough; Ian Buruma on Google Versus China

According to an article in this morning's Wall Street Journal, Fannie Mae and Freddie Mac are becoming more agressive in compelling lenders to re-purchase mortgages which contain improper/incomplete/false documentation about the borrower.

Freddie required $2.7 billion in such buy-backs during the first nine months of 2009, versus $1.2 billion for the same period in '08.

Nick Timiraos says that Fannie and Freddie are feeling the heat to put the screws on lenders who didn't do their due diligence:

The get-tough stance comes amid pressue on Fannie Freddie to make the most out of more than $100 billion in taxpayer funds they got to stay afloat.

This article/trend backs up what I am seeing in terms of lenders scutinizing potential borrowers extremely closely nowadays: banks have clearly gotten the message that they had better look real hard at each borrower's financials before approving an application.

I'm curious to know what legal process happens when a bank is required to buy-back a mortgage from Fannie or Freddie. Does money change hands, or just the note itself? Are attorneys involved? $2.7 billion isn't actually that much money in the grand scheme of the US housing market, so I imagine that each time a loan is bought-back by one of the banks it is a (relatively) big deal.

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In another article in The Journal, Ian Buruma (here) puts the Google-China dispute in the larger context of the historical efforts by the Chinese to prevent Western ideas and ideologies from overtaking their culture.

The Chinese leaders who are pushing back on Google are accusing it and the US government of engaging in "information imperialism" - this is a term I have not previously heard. Here's an excerpt:

The term "information imperialism" is clearly designed to evoke memories of the Opium Wars and other historical humiliations. Chinese are meant to feel that foreigners who talk about human rights are doing so only to bash China. This is not always entirely irrational. If Chinese chauvinism is defensive, American chauvinism can be offensive.