Nye Lavalle

The foreclosure scandals that dominate headlines today could have been averted had Fannie Mae paid more attention to one foreclosed homeowner, according to the New York Times.

Nye Lavalle, a well-to-do business professional, was preparing to pay off the $100,000 balance in 1988 on a loan he took out for a home in Dallas, Texas. But Lavalle found discrepancies in the paperwork that inflated his bill by $18,000. He refused to pay his loan servicer, and endured a long, and ultimately unsuccessful, legal process to fight the charges. In 1995 he lost the home. [more]

A U.S. housing regulator has invited investors to submit initial bids on pools of foreclosed properties owned by government mortgage giant Fannie Mae, the Wall Street Journal reported, with an aim of turning the properties into rental buildings to stabilize the housing market.

The program, which effects about $250 million worth of real estate in six states, is limited to properties that Fannie Mae has already leased through a separate program, the Journal noted. Fannie was chosen to operate the program because it has a more significant foreclosure inventory compared with Freddie Mac. [more]

Despite opposition from much of the financial industry, the U.S. Treasury Department forged ahead with a plan to offer American homeowners principal reductions on their mortgages, CNBC reported.

In a major expansion announced late last week of its Home Affordable Modification Program, the Treasury will increase incentives to lenders who offer principal reductions, paying up to 63 cents on the dollar for those reductions. [more]

Bank of America and Freddie Mac and Fannie Mae mortgage bonds were the big winners from a Federal Reserve housing study that circulated through Congress this week, Bloomberg News reported, while mortgage bonds backed by high-cost debt lost in a massive market-shakeup. [more]

Though the federal government has repeatedly attempted to work its way out of the housing market, Federal Reserve Chairman Ben Bernanke yesterday called for more public support for the market, which he said was a critical component of a broader sustained economic recovery. Outlined in a 26-page paper the Fed sent to Congress, Bloomberg News reported that support could include cutting mortgage obligations for U.S. homeowners, making taxpayer-supported Freddie Mac and Fannie Mae more susceptible to losses. [more]

Could gloomy popular assumptions about how tough it is to get approved for a
mortgage be scaring away large numbers of people who are qualified from even
applying?

Could the same worries — I can’t come up with the big down payment I
need, my credit scores are too low, my bank account has almost none of
the “reserves” lenders want to see — put a needless damper on a housing
recovery in the new year?

You bet. Lenders and economists will tell you flat out: The lack of accurate
information about the availability of loan programs that are designed to
address special needs is discouraging far too many consumers from even
considering an application, much less shopping around. [more]

A lawsuit filed in Manhattan federal court today accuses former executives of Freddie Mac and Fannie Mae, including former CEOs of both firms, of misleading investors about their exposure to subprime mortgages, the Wall Street Journal reported.

Former Freddie CEO Richard Syron and former Fannie CEO Daniel Mudd, are among the six executives named in the suit, the Journal said. Earlier this year, the SEC had informed the executives it planned to pursue actions against them.

[more]

The bi-partisan proposal in Congress last week to hike fees charged by mortgage giants Fannie Mae and Freddie Mac is a “short-sighted,” “counterproductive” threat to the fragile housing recovery and not how the funds were intended to be used, Bob Nielsen, chairman of the National Association of Home Builders and a home builder with Reno-based Shelter Properties, said in a statement today.

The proposal would raise the guarantee fees charged by Fannie and Freddie each time a mortgage is originated. As Fannie and Freddie re-package and sell securitized loans to investors, those fees cover the risk that borrowers will default.

“Congress is tampering with g-fees and needlessly raising the cost of buying a home,” Nielsen said. “This will jeopardize the tenuous rebound and is the last thing this economy needs.” – Guelda Voien [more]

As if there were not enough bad news for condominium owners already, there is the fact that tomorrow marks a mass expiration of Federal Housing Authority and Fannie Mae project certifications for condo projects across the U.S.

To combat the possible exodus of eligible condo buildings, National Condo Advisors, a Westchester-based firm that streamlines the FHA-approval process for developers and owners, is holding a 24-hour application marathon to push through the torrent of re-certifications.

Without certification from the FHA or Fannie Mae, many condo buildings may find it much more difficult to sell their units, but many aren’t even aware that the certification is expiring, said Orest Tomaselli, CEO at National Condo. [more]

How big a whack did your credit scores take during the grim years of economic distress following the housing bust? Was it 20 points, 50 points, 100 points — or maybe no drop at all?

These are key questions affecting millions of potential homebuyers who hope to qualify for mortgages and current owners looking to refinance. New research from a major credit-risk evaluation company suggests that the drop in huge numbers of Americans’ scores was dramatic.

FICO (formerly known as Fair Isaac Corp.), which developed and markets the eponymous score that dominates the home mortgage field, found that during 2008 to 2009, approximately 50 million consumers in this country saw their FICO scores plunge by more than 20 points. [more]