Rep. Elijah Cummings and Edward DeMarco
A group of 45 members of the U.S. House of Representatives came together today to sign a letter urging president Obama to appoint a permanent leader of the Federal Housing Finance Agency who will make aiding distressed homeowners a priority, according to the Huffington Post. [more]
122 East 42nd Street (credit: PropertyShark) and FHFA Director Ed DeMarco
In the wake of the Federal Housing Finance Agency’s disclosure of a plan to help minimize banks’ risks of buying back bad mortgages, three housing non-profits are planning a rally tomorrow outside Freddie Mac’s Midtown office to demand changes to federal foreclosure policies.
New Yorkers affected by foreclosures are planning to march from Bryant Park to Freddie Mac’s regional headquarters at 122 East 42nd Street, between Lexington and Park avenues, to demand that President Barack Obama reform the government-sponsored entity and its counterpart Fannie Mae, which the organizers hold responsible for more foreclosures than any other bank. [more]
Edward DeMarco, Federal Housing Finance Agency director
The Federal Housing Finance Agency announced a new plan Monday to guide banks through the lending process in a way that minimizes financial institutions’ risk of being forced to buy back bad mortgages, the Wall Street Journal reported.
Since the housing market’s collapse, Fannie Mae and Freddie Mac have forced banks to repurchase $75 billion worth of distressed mortgages. Banks’ are fearful of finding themselves in similar situations, and that has resulted in a tight lending environment. [more]
If you’re underwater and facing financial distress, what might Fannie Mae’s and Freddie Mac’s new short sale reform policies mean for you? Potentially a lot — even if you are current on your mortgage payments and never imagined that a short sale and principal reduction could be in the cards.
Here’s what’s involved. Starting Nov. 1, owners whose loans have been purchased or guaranteed by Fannie or Freddie may qualify for a short sale if they fit key hardship criteria including: unemployment; divorce; long-term disability; a change of employment that is more than 50 miles from the current home; a business failure; death of the primary or secondary wage earner; or a natural or man-made disaster. [more]
Brian Chappelle of Potomac Partners
After demanding banks buy back some $80 billion worth of flawed loans over the last three years, the government-controlled mortgage agencies are now working to help banks increase lending while simultaneously avoiding a similar fate in the future. Bloomberg News reported that the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, is concerned that banks are over-tightening their lending standards in response to the perceived buy-back threat and stifling the housing market. Banks have been requiring credit scores on government-backed loans 100-200 points higher than minimums set by the agencies. [more]
The Federal Housing Finance Agency has proposed replacing the mortgage-backed securities that Fannie Mae and Freddie Mac currently issue with a uniform security in a strategic plan it sent to Congress and the Obama administration, the Wall Street Journal reported.
The switch would mark a major change for both companies, and according to the FHFA paper, would be a public utility that could outlast the government-sponsored enterprises. [more]
House Speaker John Boehner and President Barack Obama
President Barack Obama provided more details on his plan to alleviate distressed homeowners in hopes of igniting the economy during a speech in Virginia yesterday, BusinessWeek reported.
As first proposed in his State of the Union address, Obama wants to make it easier for underwater homeowners to refinance their mortgages with low-interest, Federal Housing Administration-backed loans. To fund the plan, he is seeking congressional approval to tax large financial institutions, a measure Congress has twice rejected in the past two years. [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]
The Related Companies has been served with a subpoena as part of a federal inspector general’s investigation of a transaction the company did with Fannie Mae that allowed Related to invest a stake in several apartment buildings that had been foreclosed upon by Fannie, according to the Wall Street Journal. Related retained Kenneth Breen, a New York-based litigator at international law firm Paul Hastings, in the case.
As previously reported, the inspector general began a limited investigation into Fannie Mae in October; the agency responded by putting employees on leave until the investigation is completed.
“The investigation is limited in scope and we are cooperating fully,” a Fannie spokesperson commented.
… [more]
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