How to Fix the Housing Crisis

By Doug French

 

The foreclosure crisis has crawled on for going on four years now with no end in sight. The S&P/Case-Shiller index for August fell 3.8 percent from a year ago. The index includes home prices for 20 US cities.

 

"Continued house price declines could lead to even more defaults, foreclosures and distress sales, undermining wealth, confidence and spending," William Dudley, president of the Federal Reserve Bank of New York said. "Breaking this vicious cycle is one of the most pressing issues facing policy makers."

 

Every one of the Republican presidential candidates is being asked how they would handle the slow-motion housing wreck. Long shot Newt Gingrich says he would rewrite the rules to make it profitable for banks to renegotiate loan principal amounts.

 

"He disagrees with his Republican colleagues that the free market will find a fair way to let the banks and homeowners work things out," writes Karoun Demirjian for the Las Vegas Sun.

 

President Obama has jumped in to adjust Fannie Mae and Freddie Mac rules to allow refinances for loans exceeding 125 percent loan to value.

 

The president says this will save underwater… (Read more)

 

Source: Mises.org

Freddie Mac Approves 12 Lenders To Sell Multifamily Seniors Housing Mortgages

McLEAN, Va. – Freddie Mac (OTC: FMCC) has approved 12 lenders to sell and service multifamily seniors housing conventional loans nationwide. The lenders met Freddie Mac’s new qualifications that reflect the specialized skills needed to originate these loans.

News Facts

·        Freddie Mac has provided financing for seniors housing since 1998, but in June had lenders apply for a special national designation to continue to sell these loans to the company.

·        Applicants for the new Seniors Housing designation underwent a rigorous qualifications process that included demonstrating GSE loan origination and underwriting experience for seniors housing properties, having experienced staff who know this specific market, and a track record of strong seniors housing loan performance.

·        The 12 lenders are Berkadia, CBRE Capital Markets, Inc., CW Capital, LLC, Grandbridge, KeyCorp Real Estate Capital Markets, Inc., NorthMarq Capital, LLC, Oak Grove Commercial Mortgage, LLC, PNC Bank, NA, Prudential Affordable Mortgage Company, Red Capital Group, Walker & Dunlop, and Wells Fargo Bank, NA.

·        Freddie Mac’s seniors housing loan portfolio is more than $6 billion.

·        The market for seniors housing continues to grow as more baby boomers reach the age for seniors housing.

Quotes

Mike McRoberts, national vice president of Production and Sales for Freddie Mac

·        “Originating loans for independent living, assisted living, memory care, and rental continuing care property loans requires unique skill sets.”

·        “The Seniors Housing designation qualification process ensures that the loans we purchase are well-managed for credit and risk because the lenders have demonstrated their extensive knowledge, commitment and experience in this market.”

Product Information

·        Freddie Mac’s Seniors Housing Mortgage product is for the purchase of loans for independent living properties, assisted living properties and properties with a limited amount of skilled nursing or dementia care.

·        Senior housing loans are eligible for securitization.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Mortgage Help Center Opens in Sacramento

Fannie Mae Center Provides Free Education and Counseling to Local Homeowners Facing Hardship

WASHINGTON, DC — Fannie Mae today announced the opening of the Sacramento Mortgage Help Center to provide free education and counseling services to struggling Northern California homeowners. The Sacramento Center is the tenth Mortgage Help Center to open across the country, and is part of Fannie Mae's ongoing effort to ensure that homeowners facing foreclosure understand their options, have access to assistance and receive timely resolutions. The Center was developed in partnership with NeighborWorks HomeOwnership Center Sacramento Region, local community and elected officials, and area mortgage servicers.

The Center will offer one-on-one consultations in-person or over the phone with experienced housing counselors to review mortgage loans and financing options, explain the range of options available, and help borrowers apply for loan workouts and other alternatives to foreclosure. Services are offered in both English and Spanish, and will be available to residents in the entire Sacramento region, including Stockton, Modesto, Merced and the Bay Area.

"The housing crisis has hit this region hard, and we are here to help," said Jeff Hayward, Senior Vice President, National Servicing Organization, Fannie Mae. "Across the country, over 60% of the people who have worked with our Mortgage Help Centers have been able to stay in their homes. We're looking forward to working with homeowners in the Sacramento area to find solutions to their mortgage problems."

"NeighborWorks® Home Ownership Center Sacramento Region is proud to be entering into this innovative partnership with Fannie Mae, bringing added resources to the homeowners in Northern California that are facing mortgage issues and are at risk of foreclosure," said Pam Canada, CEO, Neighborworks HomeOwnership Center Sacramento Region. "NeighborWorks Sacramento has led the way for housing counseling and foreclosure mitigation help in this region, assisting thousands of people to an individual solution. The Mortgage Help Center brings the opportunity for more homeowners to receive critical services to review and potentially resolve their mortgage distress."

"Sacramento is pleased to welcome the Fannie Mae Mortgage Help Center and proud of the efforts of NeighborWorks Sacramento to bring this resource to our city," said Mayor Kevin Johnson. "The help center will offer an efficient opportunity for Sacramento homeowners who are struggling to pay their mortgages a place to come, tell their story, and work with the investor for the best solution. NeighborWorks Sacramento is an excellent resource for increasing successful homeownership in our region and a valued partner in our community."

In addition to providing counseling and access to mortgage education and financial literacy resources, the Mortgage Help Center staff will help homeowners coordinate with their mortgage servicers and ensure an efficient response time. The Center will also help to combat mortgage fraud and abuse in the Sacramento region.

The free services offered by the Mortgage Help Center are available for families who have a mortgage owned by Fannie Mae. Homeowners can determine if Fannie Mae owns their loan by visiting www.fanniemae.com/loanlookup or by contacting Fannie Mae at 1-800-7FANNIE. The Mortgage Help Center is available by appointment only and homeowners wishing to schedule a visit or a phone appointment should call the toll-free number (866) 442-9374.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

Mortgage Rates Follow Bond Yields Higher for the Week

MCLEAN, Va., Aug. 25, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates moving higher from the previous week's record lows as Treasury bond yields moved higher and other housing data showed improvement. However, the 5-year ARM did decline to 3.07 percent thereby setting a new all-time record low.

News Facts

·         30-year fixed-rate mortgage (FRM) averaged 4.22 percent with an average 0.7 point for the week ending August 25, 2011, up from last week when it averaged 4.15 percent. Last year at this time, the 30-year FRM averaged 4.36 percent. 

·         15-year FRM this week averaged 3.44 percent with an average 0.6 point, up from last week when it averaged 3.36 percent. A year ago at this time, the 15-year FRM averaged 3.86 percent. 

·         5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.07 percent this week, with an average 0.5 point, down from last week when it averaged 3.08 percent. A year ago, the 5-year ARM averaged 3.56 percent.

·         1-year Treasury-indexed ARM averaged 2.93 percent this week with an average 0.5 point, up from last week when it averaged 2.86 percent. At this time last year, the 1-year ARM averaged 3.52 percent.  

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

"Fixed mortgage rates followed Treasury bond yields higher this week while data reports suggest an improvement in the housing market. The Federal Housing Finance Agency national House Price Index rose for the third straight month in June bolstered by a 3.3 percent gain in the East North Central Census Division. In addition, the Mortgage Bankers Association reported that the serious delinquency rate (90 days or more plus foreclosures) on mortgages outstanding fell for the sixth consecutive quarter at the end of June to 7.85 percent."

Get the latest information from Freddie Mac's Office of the Chief Economist on Twitter: @FreddieMac

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE Freddie Mac

Freddie Mac Announces K-703 Offering of K Certificates Backed Only by 7-Year Multifamily Mortgages

MCLEAN, Va., Aug. 22, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today announced its third offering of Structured Pass-Through Certificates ("K Certificates") backed only by multifamily mortgages with a 7-year term. The company expects to offer approximately $1.0 billion in K Certificates ("K-703 Certificates"), which are expected to price the week of August 22, 2011, and settle on or about September 14, 2011. 

The K-703 Certificates will be offered to the market by a syndicate of dealers led by Wells Fargo Securities, LLC and Credit Suisse Securities (USA) LLC as co-lead managers and joint bookrunners for the transaction.  Barclays Capital Inc., Jefferies & Company, Inc., J.P. Morgan Securities LLC, and Merrill Lynch, Pierce, Fenner & Smith Inc. will serve as co-managers for the transaction. The K-703 Certificates are backed by 71 recently-originated multifamily mortgages and are guaranteed by Freddie Mac. Rating agencies Fitch, Inc. and Moody's Investors Service, Inc. have been engaged for the transaction.

Freddie Mac is a leading issuer of agency-guaranteed structured multifamily securities and has brought to market nine K-deals this year, with an issuance size of about $1 billion each. They feature a wide range of investor options with stable cash flows and a structured credit enhancement.  K-deals include guaranteed senior and interest only classes.

The preliminary offering circular supplement relating to the K-703 Certificates can be found at http://www.freddiemac.com/mbs/data/k703oc.pdf [PDF].  This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission ("SEC") on February 24, 2011, and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Securities Exchange Act of 1934, excluding any information "furnished" to the SEC on Form 8-K.

Freddie Mac's press releases sometimes contain forward-looking statements.  A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2010 and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company's Web site at www.FreddieMac.com/investors and the SEC's Web site at www.sec.gov.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters. www.FreddieMac.com

SOURCE Freddie Mac

Dark Clouds Looming Over Near-Term Outlook According to Fannie Mae's Economics & Mortgage Market Analysis Group

Housing Activity Expected to Weaken, Despite Recent Declines in Long-Term Interest Rates

WASHINGTON, DC — The economy was hit by a barrage of disappointing news during the last month, which led to a significant downgrade in the overall macro economic forecast released today by Fannie Mae's (FNMA/OTC) Economics & Mortgage Market Analysis Group. While the August 2011 Economic Outlook does not forecast a double dip recession, the downgraded forecast reflects the Group's view that the probability of another recession is close to a coin toss. For all of 2011, economic growth is expected to downshift to 1.4 percent from 3.1 percent in 2010. Growth is expected to pick up in 2012, but only to about 2.0 percent, compared with 3.1 percent projected in the July forecast.

"Key factors, including revisions to gross domestic product (GDP) data, have revealed that we have a bigger hole to dig out of, which explains the consumer angst over the lack of employment growth," said Fannie Mae Chief Economist Doug Duncan. "Moreover, European financial market and fiscal policy turmoil, coupled with the U.S. debt ceiling debate, have hit on consumer confidence, which is at recessionary levels."

"Macro economic factors are clearly driving the mindset of consumers and housing is being impacted by this," Duncan continued. "However, housing has moved into second position behind general economic concerns among consumers, which is demonstrated in our National Housing Survey results. Our July data shows that 70 percent of Americans think the economy is on the wrong track, up from 60 percent a year ago. In turn, despite historically low interest rates, consumers are still saying they don't see this as a good time to go out and borrow money to buy a house."

Housing activity is expected to weaken along with the overall economy due to a renewed decline in business and consumer confidence and a softening hiring trend. One exception is the rental housing market. The rental vacancy rate (the share of rental housing that is vacant and for rent) plunged from 9.7 percent to 9.2 percent in the second quarter of 2011, the lowest rate in nine years. This is consistent with the declining trend in the homeownership rate, indicating that a rising share of households have shifted to renting over owning.

For an audio synopsis of the August 2011 Economic Outlook, listen to the podcast on the Economics & Mortgage Market Analysis site at www.fanniemae.com. Visit the site to read the full August 2011 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast.

Also available via link from the Economic Developments Commentary is the Multifamily Market Commentary by Kim Betancourt, Director, Multifamily Economics and Market Research. The Commentary provides data on the rebound of multifamily property sales in the second-quarter of 2011.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economics & Mortgage Market Analysis (EMMA) group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the EMMA group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the EMMA group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

Mortgage Rates Lowest in Over 50 Years

MCLEAN, Va., Aug. 18, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates, fixed and adjustable, reaching all-time record lows providing further incentive for those homeowners looking to refinance. The 30-year fixed averaged 4.15 percent, breaking the previous record low of 4.17 percent set November 11, 2010.

News Facts

·         30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.7 point for the week ending August 18, 2011, down from last week when it averaged 4.32 percent. Last year at this time, the 30-year FRM averaged 4.42 percent. 

·         15-year FRM this week averaged 3.36 percent with an average 0.6 point, down from last week when it averaged 3.50 percent. A year ago at this time, the 15-year FRM averaged 3.90 percent. 

·         5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent this week, with an average 0.5 point, down from last week when it averaged 3.13 percent. A year ago, the 5-year ARM averaged 3.56 percent.

·         1-year Treasury-indexed ARM averaged 2.86 percent this week with an average 0.6 point, down from last week when it averaged 2.89 percent. At this time last year, the 1-year ARM averaged 3.53 percent.  

Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

·         "The Federal Reserve's policy statement last week and ongoing market concerns over the European debt market carried momentum into this week allowing all mortgage products in our survey to reach all-time record lows. For instance, 30-year fixed mortgage rates are now the lowest in over 50 years. In comparison, the Bureau of Economic Analysis estimated the average effective mortgage rate was about 5.3 percent on single-family loans outstanding during the second quarter of 2011.

·         "Not surprising, many homeowners took advantage of this low mortgage rate environment and have already refinanced their loans. The refinance share of applications averaged nearly 70 percent of all mortgage activity in the first half of this year, according to our survey. In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter, according to Freddie Mac's Quarterly Product Transition Report."

Get the latest information from Freddie Mac's Office of the Chief Economist on Twitter: @FreddieMac

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE: Freddie Mac

For further information: Chad Wandler, +1-703-903-2446, Chad_Wandler@FreddieMac.com

HomeSteps® Offers Condo Buyers up to $1500 for Future Association Dues for Limited Time

MCLEAN, Va., Aug. 15, 2011 /PRNewswire/ -- HomeSteps, the real estate sales unit of Freddie Mac (OB:FMCC), today announced "Condo Cash", a special limited time offer that will provide eligible condominium buyers with up to $1,500 for standard condominium association dues.  

HomeSteps' Condo Cash is limited to buyers who submit offers between August 15 and November 15, 2011 and close escrows on or before December 30, 2011.  HomeSteps' Condo Cash offer is valid only on HomeSteps homes that have been on the market for at least 120 days and are sold to owner-occupant buyers.

A two-year Home Protect® limited home warranty that covers electrical, plumbing, air conditioning, heating and other major systems and appliances is offered on some eligible HomeSteps homes.  Home Protect also provides discounts of up to 30 percent on the purchase of appliances.  (Terms, conditions and limitations apply. Not all homes or buyers will qualify. For details, see www.HomeSteps.com/smartbuy.)

HomeSteps Condo Cash is not available on HomeSteps condominiums purchased through auctions, sealed bids, bulk sales or in areas where such offers are prohibited by law.

For complete terms and conditions, visit www.homesteps.com.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE: Freddie Mac

For further information: Brad German, Freddie Mac, +1-703-903-2437, brad_german@freddiemac.com

The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.

95 Percent of Refinancing Borrowers Choose Fixed-Rate Mortgages

Trend Towards Shorter Loan Terms at Highest Share Since 2003

MCLEAN, Va., Aug. 15, 2011 /PRNewswire/ -- In the second quarter of 2011, fixed-rate loans accounted for about 95 percent of refinance loans, based on the Freddie Mac (OTC: FMCC) Quarterly Product Transition Report released today. Refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate.

News Facts

·         An increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter. Of borrowers who paid off a 30-year fixed-rate loan, 37 percent chose a 15- or 20-year loan, the highest such share since the third quarter of 2003.

·         Fifty-five percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the second quarter, while the remaining 45 percent chose to refinance into the same type of product.  The share refinancing from hybrid ARM to hybrid ARM was the highest since the second quarter of 2004.

Quotes

Attributed to Frank Nothaft, Freddie Mac vice president and chief economist

·         "Fixed mortgage rates averaged 4.65 percent for 30-year loans and 3.84 percent for 15-year product during the second quarter in Freddie Mac's Primary Mortgage Market Survey®, well below long-term averages. The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about 5.3 percent during the second quarter of 2011. It's no wonder we continue to see strong refinance activity into fixed-rate loans.

·         "Compared to a 30-year fixed-rate mortgage, the interest rate on 15-year fixed was about 0.8 percentage points lower during the second quarter. For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. The initial interest rate on a 5/1 hybrid ARM was about 1.2 percentage points lower than on a 30-year fixed-rate loan. For borrowers who plan to remain in their current home for only a few years, the hybrid ARM allows for even a greater interest-rate savings."

Get the latest information from Freddie Mac's Office of the Chief Economist on Twitter: @FreddieMac

Quarterly Product Transition Information

These estimates come from a sample of properties on which Freddie Mac has funded at least two successive loans and the latest loan is for refinance rather than for home purchase. Some loan products, such as 1-year ARMs and balloons, are based on a small number of transactions. During the second quarter of 2011, the refinance share of applications averaged 70 percent in Freddie Mac's monthly refi survey, and the ARM share of applications was 6 percent in Freddie Mac's monthly ARM survey, which includes purchase-money as well as refinance applications.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE: Freddie Mac

For further information: Chad Wandler, +1-703-903-2446, Chad_Wandler@freddiemac.com

The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.

Freddie Mac Reports Second Quarter 2011 Financial Results

MCLEAN, Va., Aug. 8, 2011 -- Freddie Mac (OTC: FMCC) today reported its second quarter 2011 financial results and filed its quarterly Form 10-Q with the U.S. Securities and Exchange Commission.  The company's SEC filing and press release are available now on the company's website, www.freddiemac.com/investors, along with these related materials:

·         Second quarter 2011 financial results supplement;

·         Consolidated financial statements; and

·         Core tables, providing additional financial information about the company.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE Freddie Mac

For further information: Media, Doug Duvall, +1-703-903-2476, or Investors, Linda Eddy, +1-571-382-4732