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Posts Tagged ‘Fannie Mae and Freddie Mac’

Proposal would Merge the GSEs, Ensuring Credit Access for Affordable Housing Initiatives

March 26th, 2016 Comments off

fannie mae hq    yahoo! and reuters   jonathan ernst creditBuilding on steps the Federal Housing Finance Agency has taken to reform government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac, five housing policy experts have proposed merging the two entities into a new corporation, called the National Mortgage Reinsurance Corp. (NMRC), that would continue risk-sharing initiatives with private investors and mortgage insurers.

In addition to acquiring conforming loans through originators or loan aggregators and issue securities, the NMRC would also guarantee timely payments and “ensure credit access for underserved communities through affordable housing initiatives,” as nationalmortgagenews reports. MHProNews understands the FHFA recently made a proposal for the possibility of a secondary market for chattel loans with Fannie and Freddie.

However, the NMRC would differ in that “It would be required to transfer all noncatastrophic credit risk on the securities that it issues to a broad range of private entities,” and its mortgage-backed securities would be fully backed by the U. S. government through the imposition of a G-fee that would cover any government risk. The FHFA would regulate the new agency, but Congress would have to approve a GSE merger.

Isaac Boltansky, an analyst with Compass Point Research and Trading, said, “While legislative GSE reform remains a distant dream at this point, the NMRC proposal represents a noteworthy mile marker in the policy conversation as it reinforces our belief that the mortgage finance debate in D.C. has shifted from liquidating the GSEs toward the consideration of a more simplified set of reforms.” ##

(Photo credit: Yahoo & Reuters/Jonathan Ernst–Fannie Mae headquarters)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Drop in Down Payment Signals Uptick in First-time Home Buyers

June 5th, 2015 Comments off

apartment quest credit   apart for rentFalling to the lowest level since Q1 2012, the average down-payment for single-family homes, condos and townhouses purchased in the first quarter dropped to 14.8 percent of the purchase price, a slight decrease from 15.2 percent the previous quarter and 15.5 percent a year ago, according to what RealtyTrac tells MHProNews.

Down-payment trends in the first quarter indicate that first-time homebuyers are finally starting to come out of the woodwork, albeit it gradually,” says Daren Blomqist, vp at RealtyTrac.

The lower insurance premiums for FHA loans that took effect at the end of January and new low down-payment loan terms from Fannie Mae and Freddie Mac are contributing to the uptick. Typically, new homebuyers cannot afford the required down-payment when shopping for homes, keeping them in the rental market.

In addition, njrereport says down payments of three percent or lower comprised 27 percent of all purchase loans in Q1 2015, up from 26 percent in the last quarter of 2014. As translated into dollars, the average down payment in the first quarter was $57,710, up slightly from $57,618 in the previous quarter but down from $57,992 Q1 2014. ##

(Photo credit: housequest-first time homebuyers)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Turning Renters to Manufactured Home Buyers

June 4th, 2015 Comments off

rent versus buy   rent-directMHLivingNews and MHProNews publisher L.A. “Tony” Kovach follows the time line formation of renter households versus homeowner households, from the New Deal’s attempts to increase homeownership in 1933 to present day attempts, correlating Fannie Mae and Freddie Mac expansion with economic programs, artificially induced interest rates and subsidies to stimulate home buying.

In the 1990s and into the 2000s there were concerted efforts to extend credit to those with modest means in an attempt to keep the American dream of homeownership alive, to give people hope. The Federal Reserve’s key interest rate was the lowest in 45 years, but lenders got loose with loan standards, which led to homeownership peaking at 69.2 percent in 2004.

However, home prices begin falling as the subprime mortgage industry imploded: bundles of questionable loans were sent around like hot potatoes until the potatoes turned rotten, leading to the Great Recession in 2008. Foreclosures increased, lending standards tightened, home prices bottomed out, employment fell, and many people turned their backs on owning a home, leading to a rise in the rental market.

Although the recession was declared over in June 2009, the recovery of the housing market, which is a major ingredient of a strong economy, has been painfully slow. First-time home buyers historically comprise 40 percent of home sales, but that number has fallen to 30 percent, leading to slack new household formation as Millennials slowly emerge from their parents’ basements and head to rental properties.

Employment has been increasing but wages are flat, and as the demand for rentals increase, so do the rents, putting homeownership further out of reach of many would be homebuyers.

Kovach: “Manufactured housing is ideally suited to tap into this rental market. As we reported last year, the National Association of Realtors (NAR ®) reported that some 85% of renters in a survey said they want to be home owners.

The reason we in MH can make this happen is because we can save them money and give them the lifestyle they want. But it won’t happen without a planned effort that changes perceptions.

John Bostick, CEO and president of Sunshine Homes, encourages manufactured home professionals to get behind Kovach’ MH Alliance-Partners in Progress-effort to help spread the good news about quality MH to the public at large. He says,”We either define ourselves or others will define us. When others define us, it is often to our detriment.

Others have been defining the industry for way too long. It’s time to turn the tables. Average rent nationally is around $1200 a month. Average price of a new manufactured home is $64,000. Do the math.

For the full article, please click here. ##

(Image credit: rentdirect)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Interest Rates, Median Home Price Falls

June 2nd, 2015 Comments off

house_keys_cnnmoney__joshua_scottThe National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) reports that 66.5 percent of new and existing homes sold between January and March this year were affordable to families earning the median income of $65,800, the point at which half U. S. incomes are higher and half are lower.

While mortgage interest rates fell from 4.29 percent in the fourth quarter to 4.03 percent in the first quarter, the national median home price dropped $5,000 to $210,000 during the same period, according to consumeraffairs.

Meanwhile, Fannie Mae and Freddie Mac are offering mortgages with down payments as low as three percent, which allows creditworthy borrowers who do not have a large down payment access to homeownership. MHProNews understands the Federal Reserve intends to raise interest rates at some point this year, which will raise the cost of buying a home.

Home ownership builds stronger communities, provides a solid foundation for family and personal achievement and improves the quality of life for millions of people,” said Tom Woods, NAHB chairman. ##

(Image credit: CNNMoney/Joshua Scott)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

FHFA Stretches Multifamily Affordable Housing Lending Categories

May 15th, 2015 Comments off

housing market  costar  credit    5 2015Both of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, operate under a $30 billion cap for purchases of multifamily loans, according to costar. Since they each hit $10 billion in the first quarter, they would max out by the third quarter, leaving no available funds to finance deals in the latter half of the year.

Fortunately, the Federal Housing Finance Agency (FHFA), while not raising those caps, adjusted the affordable housing lending exclusions so that multifamily loan amounts purchased by the GSEs will cover the percentage of units in a property that are considered affordable to renters at 60 percent of the area median income.

In addition to continue excluding manufactured housing rental communities from the caps, as MHProNews reported April 21, 2015, the FHFA also excluded assisted living units for seniors providing they are affordable at 80 percent of the area’s median income. In very higher cost areas, the threshold will be raised to 80 percent of the area’s median income, and even to 100 percent in areas where renters spend a higher percentage of their income on rent.

FHFA Director Melvin L. Watt says, “By responding to continued strong growth in the overall multifamily finance market and making these adjustments, we have sought to achieve two objectives – facilitating ongoing liquidity in the multifamily market and further encouraging the enterprises’ involvement in affordable rental housing.

Additionally, exclusions from the previous caps only covered government subsidized rental units, but under the revisions, some conventional market-rate units may also be considered “affordable.” ##

(Image credit: costar)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

FHFA’s Conservatorship of GSE brings charges of Illegalities and Strong Criticism

December 19th, 2014 Comments off

michael-h-krimminger-partner=cleary-gottlieb-american-banker=credit-posted-daily-business-news-mhpronews-com-Many people in businesses related to the U.S. housing industry feel that reform of U.S. housing finance is essential to avoiding another financial crisis. In an article published in American Banker, former FDIC counsel Michael H. Krimminger said that the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, remain wards of the state. This came as a result of the conservatorships they were placed under in 2008.

The rulings of the Federal Home Finance Agency (FHFA) have affected not only traditionally built housing, but modern manufactured housing as well. Krimminger says that “the government-sponsored entities’ current state of limbo is untenable. At best, the arrangement reinforces continued government dominance of the housing market.”

Krimminger continues by saying it distorts our housing finance system, preserves incentives to misprice mortgages, and creates the potential for a future housing crisis.

One action of the Conservator has resulted in protests and more than 20 lawsuits. This revolves around the decision in 2012 to change the terms of the agencies’ conservatorships and sweep 100 percent of Fannie’s and Freddie’s profits to the U.S. Treasury as dividends in perpetuity.

This is still occurring despite the fact that Fannie and Freddie have now paid back almost $40 billion more than they were originally loaned.

Krimminger says that “this prevents Fannie and Freddie from accumulating any cushion against future losses — potentially putting the fhfa-logo-house-cash-scott-lewis-flickrcreativecommons-posted-daily-business-news-mhpronews-taxpayers at further risk.” He adds that the perpetual conservatorships and Treasury sweeps are a violation of every principle of insolvency law, and that the Housing and Economic Recovery Act of 2008 (HERA) was never meant to authorize permanent government control over the housing sector.

Under HERA, the FHFA and Treasury have the clear statutory authority to begin reform by ending the conservatorships of Fannie and Freddie, but will they do it?

Other voices have been raised in protest of the denial of any compensation to be paid to the GSE stockholders. In a recent lawsuit filed by Perry Capital and Fairholme Funds, investors sued for breach of contract regarding promised dividends and what they termed to be an illegal “taking” under the U.S. Constitution. U.S. District Judge Royce Lamberth ruled against the Plaintiffs.

An article in the November issue of The M Report discussed the fact that Judge Lamberth’s decision, denying any compensation to shareholders, was met with vehement response by many people.

No way,” screamed numerous investors including consumer advocate Ralph Nader. They contend that giving the money to the Treasury is a violation of their Fifth Amendment rights against the seizure of private property for public use without just compensation.

Nader said, “This was deception of the first order. If any corporate executives engaged in something like this, even the slumbering SEC would have moved to action.”

Other legal experts also feel that a travesty has occurred. According to Richard A. Epstein, the Laurence A. Tisch professor of Law at NYU, the ruling handed down by Judge Royce Lamberth is seriously flawed.First, the judge’s opinion seriously misstates the rights and duties of the Federal Housing Finance Agency (FHFA) as a conservator,” Epstein explained. “Second, it seriously misstates the authority of Treasury under HERA. Third, it ignores any evidence on the possible collusion between FHFA and Treasury in fashioning the Third Amendment.

According to Epstein, the Third Amendment was not intended to return Fannie and Freddie to the private market, but was designed to ensure they would never be able to return to the market, no matter how profitable their operations had become.

He said that first, FHFA sold out its fiduciary duties as conservator to the Fannie and Freddie shareholders, and second, Treasury disregarded its obligations in ordering the dividend sweep, which if upheld, will render the stocks of the two companies worthless. Epstein feels that this is an example of the government taking over control of a company and paying out all dividends and capital to itself on a whim.

What this means is that no private company is ever safe,” he explained. “No private party will ever rely on government assurances or guarantees if the Third Amendment is allowed to stand. The rule of law, which is critical to the proper functioning of free markets, has no meaning if it can be suspended whenever deemed convenient.”

Manufactured housing has additional and unique issues with FHFA and the GSEs. These include the failure to implement the Duty To Serve (DTS), lack of access to secondary markets and more. We will explore those in a future report. ##

(Photo credits: Michael H. Krimminger, American Banker. House on cash – Scott Lewis/FlickerCreativeCommons + FHFA Logo.)

sandra-lane-daily-business-news-mhpronews-com-75x75-Article submitted by Sandra Lane to – Daily Business News – MHProNews.

 

Reid Opposes GSE reforms, clouding future of effort

August 27th, 2013 Comments off

harry-reid-official-photo-credit-wiki-commons-posted-daily-business-news-mhpro-news-com-The Senate Banking Committee is developing housing finance reform legislation introduced in the Senate (S. 1217) by Bob Corker (R-TN) and Mark Warner (D-VA). Senate Majority Leader Harry Reid (D-NV) has indicated he opposes the plan abolishing the GSEs, asserting it would become too difficult for many to purchase a home. House legislation’s future is also unclear. The PATH Act developed by House Financial Services Committee Chairman Jeb Hensarling (R-TX) and supported by the Manufactured Housing Institute (MHI) and Texas Manufactured Housing Association (TMHA), contains revisions to Dodd-Frank to eliminate Fannie Mae and Freddie Mac and replace them with a new securitization utility without any governmental backstop, unlike unlike the Corker-Warner bill. Sources at MHI, TMHA and others will keep MHProNews informed on such important and closely monitored efforts. ##

(Photo Credit, Harry Reid: WikiCommons)

Discarding Fannie Mae and Freddie Mac = A Nightmare

August 12th, 2013 Comments off

While the Republican-led House Financial Services Committee is supporting legislation to totally eliminate Fannie Mae and Freddie Mac from the mortgage business with no government interference , the Democrat-majority Senate Banking Committee says the government needs to be a backstop to make certain borrowers of modest means can continue to obtain financing. Even President Obama, as MHProNews reported here Aug. 7, states the mortgage industry would be better served with more private sector involvement. Meanwhile, as HousingWire reports, Fox News blogger Peter Morici and USA Today both say eliminating Fannie and Freddie would raise the cost of borrowing to a level that would be out of reach of the middle class.

(Image credit: Fotosearch)

Fannie and Freddie Repaying Taxpayers

August 9th, 2013 Comments off

Taxpayers may yet see a profit from the $187 billion bailout by the federal government of Fannie Mae and Freddie Mac in 2008. To date, Fannie Mae has seen $105 billion of the $116 billion it borrowed from Treasury repaid, including $10 billion from the most recent quarter. Of the $71 billion Freddie Mac received, as of Wednesday it has repaid $41 billion, and expects to earn $29 billion later this year. During the housing bubble years the two firms had become the main source of funding for home loans, and hardly anyone expected a payback, according to CNNMoney. The housing market improvement during the past year is the main reason for their return to profitability. As MHProNews has learned, the record low mortgage rates spurred refinancings, increasing the pairs’ fees.

(Photo credit: Jonathan Ernst/Yahoo!Reuters–Fannie Mae headquarters)

More Ifs for a Full Housing Recovery

August 1st, 2013 Comments off

While many signs in the first half of 2013 indicate the housing recovery is real and palpable—housing starts are up 24 percent over the first half of 2012, existing home sales increased 32 percent year-over-year in June (excluding foreclosures and short sales), and the delinquency/foreclosure rate fell 14 percent—rising mortgage rates and low inventory have some speaking bubble talk. Mortgage credit remains tight except for those who have already proven their creditworthiness, and will probably remain so leading up to Jan. 2014 when new mortgage rules will help define what loans are risky and how lenders might have skin in the game. In addition, Generation Y members are still in their parents’ homes, and a 2013 Q2 vacancy survey reports 5.6 percent of all housing units are now vacant, up from 5.1 percent in 2009. But as HousingWire tells MHProNews, the (possible) elimination of the mortgage interest deduction and of Fannie Mae and Freddie Mac have the potential to seriously derail a housing market recovery.

(Image credit: FotoSearch)