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]

The average rate for a 30-year fixed loan increased this week from the
lowest number on record, up to 3.95 percent, according to Bloomberg. The
3.91 percent rate last week was the lowest since 1971, when records
were first kept, according to Freddie Mac. “Low interest rates are a
necessary condition to help the housing market but they aren’t
sufficient,” said Charles Lieberman, chief investment officer at
Advisors Capital Management in New Jersey. [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]

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]

Fannie Mae and Freddie Mac improperly foreclosed on homeowners and cost the government billions of dollars by failing to hold major banks to strict lending requirements, according to a semi-annual report by a government watchdog group. The Federal Housing Finance Agency also gave “undue deference” to Fannie and Freddie officials and didn’t question giant bonuses granted to the mortgage giants’ executives, the inspector general said.

The report says that Fannie and Freddie did not force banks to repurchase mortgages when they did not satisfy strict underwriting requirements and knew about allegations of improper foreclosure practices as far back as 2003 but did not act to prevent them. [more]

Even as President Barack Obama urges federal lenders to help consumers refinance their home loans, Freddie Mac made it harder for some consumers to do just that in an effort to mitigate risk. Bloomberg News reported the company will increase the standards that certain homeowners must meet in order to refinance their loan.

Homeowners with a loan-to-value ratio of less than 80 percent — meaning they owe at least 80 percent of their home’s value in debt — cannot have a total housing debt, including second loans, that exceeds 105 percent of the property’s current value if they want to refinance. Previously there was no limit. [more]

Fannie Mae and CFO Susan McFarlandAfter reporting $5.1 billion in third-quarter losses Fannie Mae is seeking $7.8 billion more in Treasury Department aid, according to Bloomberg News. The loss is up from $3.5 billion for the prior year quarter and $2.9 billion from the second-quarter of this year.

The losses are fueled by defaults on loans made before 2009 and plummeting interest rates that have weighed on expected revenue. Still, the company’s revenues have been increasing of late as loans originated since 2009 have higher fees and were given to stronger borrowers. [more]

When you apply for a mortgage to buy a house, how often does the lender ask detailed questions about monthly energy costs or tell the appraiser to factor in the energy-efficiency features of the house when coming up with a value?

Hardly ever. That’s because the big three mortgage players — Fannie Mae, Freddie Mac and the Federal Housing Administration, who together account for more than 90 percent of all loan volume — typically don’t consider energy costs in underwriting. Yet utility bills can be larger annual cash drains than property taxes or insurance — key items in standard underwriting — and can seriously affect a family’s ability to afford a house. [more]