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

September 2011 U. S. Economic and Housing Market Outlook

Monetary and Fiscal Stimuli

MCLEAN, Va., Sept. 26, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) released today its U.S. Economic and Housing Market Outlook for September showing the effect of monetary policy to date and why coupling monetary with fiscal stimulus could accelerate growth in 2012 if the fiscal initiative operates in tandem.

Outlook Highlights

·         The Federal Reserve's accommodative policy has resulted in the lowest interest rates since the early 1950s.

·         Ten-year constant-maturity Treasury yields had averaged 2.0 percent through September before the Federal Open Market Committee's statement, already on track for the lowest monthly average in the 60-year history of the series.

·         Thirty-year and 15-year single-family fixed rates attained new lows in Freddie Mac's Primary Mortgage Market Survey in September.

·         The likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market's recovery.

·         Coupling monetary with fiscal stimulus could accelerate growth in 2012 if the fiscal initiative operates in tandem.

Click here to view the complete September 2011 U.S. Economic and Housing Market Outlook [PDF]. Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.

Quotes

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

·         "Financial worries among consumers are likely holding back home sales, which remain lackluster despite the most affordable home-buying market in decades. Boosting job and income growth among households will support consumer confidence and also stimulate household formation.  With monetary policy expected to keep interest rates low for a while, affordability will remain high for potential homebuyers. In the meantime, many will choose to rent."

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

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 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.

Freddie Mac Prices New $5 Billion Two-Year Reference Notes® Security

MCLEAN, Va., Sept. 15, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) announced today that it priced its new 0.375% $5 billion two-year USD Reference Notes® security due on October 30, 2013.  The issue, CUSIP number 3137EACX5, was priced at 99.937 to yield 0.405%, or 20 basis points more than two-year U.S. Treasury Notes.  The issue will settle on Monday, September 19, 2011

The new two-year Reference Notes security was offered via a syndicate of dealers headed by J.P. Morgan Chase, Deutsche Bank Securities, Inc., and BNP Paribas Securities Corp.  An application was made to list the issue on the Euro MTF market of the Luxembourg Stock Exchange.

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 Section 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. 

SOURCE Freddie Mac

Freddie Mac Prices $1 Billion Reopening of 2.00% Five-Year Reference Notes® Security

MCLEAN, Va., Sept. 14, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) announced today that it auctioned a $1 billion reopening of its 2.00% five-year USD Reference Notes® security that matures on August 25, 2016.  The stop yield for the issue, CUSIP 3137EACW7, was 1.162%, priced at 104.015054, or approximately 28.6 basis points more than five-year U.S. Treasury Notes. The bid-to-cover ratio was 2.695 to 1.

After the reopening, which was conducted via an Internet-based auction, the outstanding size of the 2.00% five-year Reference Notes security will be $5 billion. The issue will settle on Thursday, September 15, 2011, and is listed on the Euro MTF market of the Luxembourg Stock Exchange. All auction details can be found on Freddie Mac's Debt Securities Web page, www.FreddieMac.com/debt/auctionrepurch/auctions.html.

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 Section 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

Freddie Mac Will Delay Announcement of Weekly Reference Bills Auction Due to Hurricane Irene

MCLEAN, Va., Aug. 26, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today announced that it will delay its regularly scheduled August 26, 2011, Reference Bills auction announcement until Monday, August 29, due to impending Hurricane Irene and the potential impact the storm may have on capital market participants in New York and other areas of the eastern United States.

The company's annual funding calendar sets weekly announcement and auction dates for Reference Bills offerings.  Freddie Mac was originally scheduled to announce this week's Reference Bills announcement at 10:30 a.m. today, and conduct the auction on Monday, August 29.  The company will now delay its announcement until the morning of August 29, when it will assess what impact, if any, the storm has had on the operations of the capital markets. 

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

Freddie Mac Will Not Issue a Reference Notes® Security in August

MCLEAN, Va., Aug. 25, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) announced today that it will not issue a Reference Notes® security in August.  The company's 2011 Reference Notes calendar designates dates that it may use to announce the issuance of Reference Notes securities. 

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 Section 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

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

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

August 2011 U. S. Economic and Housing Market Outlook

MCLEAN, Va., Aug. 16, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) released today its U.S. Economic and Housing Market Outlook for August showing that despite the recent ups and downs in the capital markets the likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market's recovery as it continues to struggle.

Outlook Highlights

·         Employment was up 117,000, the best showing since April, and the unemployment rate edged down a tenth to 9.1 percent.

·         Over the first half of 2011, growth was figured to be about 0.8 percent at an annual rate, far too weak to generate enough jobs to keep pace with labor force growth.

·         Compared with the first quarter of 2008, borrowers are paying about $130 billion less in mortgage interest today, at an annual rate.

·         The likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market's recovery.

·         Interest rates on 15-year fixed-rate loans – always popular for borrowers considering to refinance – reached about 3.5 percent in early August, assuring the refinance boom continues.

·         Freddie Mac House Price Index(SM) for the U.S. shows that prices are down 25 percent, on average, as of June 2011 compared with their peak obtained five years ago.

Go to freddiemac.com/news/finance/docs/Aug_2011_public_outlook.pdf to view the complete August 2011 U.S. Economic and Housing Market Outlook. Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.

Quotes

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

·         "While the capital markets have experienced sizeable movements up and down in recent weeks, these swings are unlikely to lead to whiplash or hospitalization for individual investors. Heightened uncertainty, unfortunately, can be harmful to the overall economy."

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

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.

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.

Market Concerns Produce New Record Low Mortgage Rates

MCLEAN, Va., Aug. 11, 2011 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates continuing to decline with the 30-year fixed averaging 4.32 percent marking a new low for 2011, and the 15-year fixed, 5-year ARM, and 1-year ARM averaging new all-time record lows this week.

News Facts

30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending August 11, 2011, down from last week when it averaged 4.39 percent. Last year at this time, the 30-year FRM averaged 4.44 percent. 

15-year FRM this week averaged 3.50 percent with an average 0.7 point, down from last week when it also averaged 3.54 percent. A year ago at this time, the 15-year FRM averaged 3.92 percent. 

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.13 percent this week, with an average 0.5 point, down from last week when it averaged 3.18 percent. A year ago, the 5-year ARM averaged 3.56 percent.

1-year Treasury-indexed ARM averaged 2.89 percent this week with an average 0.5 point, down from last week when it averaged 3.02 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.

"Renewed market concerns about the European debt markets led investors to shift funds into U.S. Treasuries, pushing long-term yields lower. Further, in its August 9th Federal Open Market Committee statement, the Federal Reserve noted that economic growth so far this year had been considerably slower than it expected and that overall labor market conditions had deteriorated in recent months, leading the Committee to conclude that an exceptionally low federal funds rate should be maintained at least through mid-2013. These developments helped to ease mortgage rates lower this week.

"Lower mortgage rates will help to maintain the high degree of home-buyer affordability in the market. The National Association of Realtors® reported that its affordability index over the past three quarters has indicated the highest affordability since the inception of the index in 1970."

Get the latest information from Freddie Mac's Office of the Chief Economist on Twitter: @FreddieMac (and also @PublishPolitics)

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 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