Conditions are ripe for the construction of new multi-family housing in the United States, yet the rate at which those properties are being started is still well below where it’s been for most of the last 50 years. A Slate columnist blamed this phenomenon on the Federal Reserve’s inability to make a commitment to the direction interest rates will be steered. [more]

The guidelines for the conversion of real estate owned homes into rental properties were released by the Federal Reserve last week, the Los Angeles Times reported. The central bank decreed that lenders could receive Community Reinvestment Act credit under the new policy. The Community Reinvestment Act, enacted in 1977, was intended to encourage lenders to provide housing to low- and moderate-income people. [more]

Fed Chairman Ben Bernanke

Thanks to “extraordinary market conditions” the Federal Reserve officially approved banks’ strategy to rent out foreclosed homes yesterday, the Wall Street Journal reported. Outside those conditions, lenders have to demonstrate a legitimate effort to sell repossessed properties. But recognizing the state of the rental market and the sales market, the Fed and banks have been strategizing for months on how to rent out the bevy of foreclosures backlogging the market. [more]

While nationwide demand for commercial real estate loans is up, banks are not loosening lending constraints, it would appear, reviewing figures from the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices report, released yesterday.

A “moderate fraction” of the 56 domestic banks surveyed said that demand for commercial real estate loans had strengthened, on net, over the past three months. However, those banks reported little change in their lending standards, which spells bad news for many owners who will be in need of refinancing this year. U.S. branches of foreign banks reported that they had even tightened their lending standards in some cases, according to the report.
[more]

In its research paper on the housing market, the Federal Reserve Bank of New York urged Congress to allow American homeowners an easier path to refinancing despite potential losses to investors because the benefits to homeowners outweigh losses to investors, according to the Wall Street Journal. [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]

Negative equity and underwater homeowners are frequently in the headlines, but what about positive equity in Americans’ homes?

Is there much of it left after the wealth-killing recession and real estate bust? Where is it? Who’s got equity? You might be surprised.

A new study, conducted by mortgage and real estate data firm CoreLogic for this column, found that there are substantial reserves of positive equity across the country. CoreLogic maintains the largest database on home loans — 42 million active accounts, more than 80 percent of all existing mortgages — with information supplied regularly by lenders and servicers.

First let me give some basics on equity. The Federal Reserve estimates that at the end of June, Americans held $6.2 trillion in equity in their homes. This was down sharply from its high mark of $13.2 trillion in 2005. Roughly one of every three homes is mortgage-free, according to federal and industry estimates. [more]

Attorney General Eric SchneidermanFrom the September issue: When New York State Attorney General Eric Schneiderman took office earlier this year, some critics feared he would do more ideological grandstanding than consumer protection and reform.
After eight months on the job, the former Democratic state senator (and ex-deputy sheriff) appears to be winning over some skeptics while enraging others.
The relatively low-profile Schneiderman exploded into the national spotlight last month when he filed a last-minute motion to block a proposed $8.5 billion settlement between Bank of America and investors in 530 New York trusts represented by Bank of New York Mellon.
The blockbuster move alleged that Bank of New York effectively tried to carve out a sweetheart deal for itself at the expense of the investors it was supposed to be representing. [more]

Morgan Stanley, which just kicked off the sale of its mortgage servicing arm and partnered with the Witkoff Group at a Broadway condominium conversion project, borrowed $107.3 billion from the Federal Reserve in 2008, the most of any bank, according to data compiled by Bloomberg News using information released in response to Freedom of Information Act requests, related court orders and an act of Congress.

An examination of the Fed’s emergency lending reveals how close Morgan Stanley came to bankruptcy because of a run on its prime brokerage, the unit that finances hedge funds’ trades, Bloomberg reported.

“Prime brokerage was presumed to be a pretty secure business, where the funding was not actually part of the liquidity of the bank,” said Frank Suozzo, president of advisory firm FXS Capital in Goldens Bridge, N.Y. [more]