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]

Can the Internal Revenue Service handle tax credit programs that pump out billions of dollars to homeowners and buyers? A new federal investigation on home energy tax credits suggests the answer may be: not quite yet. The Treasury Department’s inspector general for tax administration audited the residential tax credit program created by Congress to encourage homeowners to install energy-saving equipment and materials in their houses, and found some disturbing oversights. One part of the program offers 30 percent credits — with no dollar limit — for solar energy systems, geothermal heat pumps, wind turbines and fuel cells installed before Dec. 31, 2016. [more]

Commercial building owners — in their haste to get in on the Treasury Department’s solar panel installation grants before the year-end deadline — have depleted some energy factories of their inventory, the New York Times reported. The federal program, instituted in 2009 as part of the American Recovery and Reinvestment Act, covers 30 percent of the project’s cost and, according to a study by the U.S. Partnership for Renewal Energy Finance, has doubled nationwide investment in solar energy systems. [more]

HUD’s Raphael Bostic

The nationwide housing market is showing modest improvement, according to the U.S. Department of Housing and Urban Development and the Department of Treasury, spurring tepid optimism that the market may be headed toward stabilization in the near future. Housing prices remained level in July, according to the departments’ jointly released housing scorecard, after declining for 30 consecutive months. Aiding the future recovery is the continuation of historically low interest rates on 30-year mortgages — Freddie Mac reported today that mortgage rates have reached a new record low for the ninth consecutive week. Still, there is reason to be cautious, according to Raphael Bostic, assistant secretary of HUD. “It remains clear that we have more work ahead,” Bostic said. “We know that we must continue to provide support to underwater borrowers, unemployed homeowners and to the nation’s hardest hit neighborhoods.” TRD

[more]

HUD’s Raphael Bostic

The nationwide housing market is showing modest improvement, according to the U.S. Department of Housing and Urban Development and the Department of Treasury, spurring tepid optimism that the market may be headed toward stabilization in the near future. Housing prices remained level in July, according to the departments’ jointly released housing scorecard, after declining for 30 consecutive months. Aiding the future recovery is the continuation of historically low interest rates on 30-year mortgages — Freddie Mac reported today that mortgage rates have reached a new record low for the ninth consecutive week. Still, there is reason to be cautious, according to Raphael Bostic, assistant secretary of HUD. “It remains clear that we have more work ahead,” Bostic said. “We know that we must continue to provide support to underwater borrowers, unemployed homeowners and to the nation’s hardest hit neighborhoods.” TRD

[more]

The 10-year Treasury note’s yield has fallen just below 3 percent, and it’s dragging mortgage rates down along with it. If the yield dips further — particularly, if it crosses the 2.8 percent mark that market analysts say is critical — mortgage rates could drop so far as to spur homeowners to refinance the 5 and 6 percent loans they took out over the last year-and-a-half. That’s bad news for investors in mortgage-backed securities, on which prices are near record highs. Following yesterday’s drop in Treasury yields, the price of the 5 percent mortgage securities coupon — which is reflective of mortgage rates — fell to 104.75 from 106.0625. [Fox Business] 

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The 10-year Treasury note’s yield has fallen just below 3 percent, and it’s dragging mortgage rates down along with it. If the yield dips further — particularly, if it crosses the 2.8 percent mark that market analysts say is critical — mortgage rates could drop so far as to spur homeowners to refinance the 5 and 6 percent loans they took out over the last year-and-a-half. That’s bad news for investors in mortgage-backed securities, on which prices are near record highs. Following yesterday’s drop in Treasury yields, the price of the 5 percent mortgage securities coupon — which is reflective of mortgage rates — fell to 104.75 from 106.0625. [Fox Business] 

[more]

A 79-member group from the House of Representatives is urging the Treasury Department and the Federal Reserve to ramp up their efforts to stave off a commercial real estate crisis that could bring down the economic recovery. In a letter sent yesterday, the bipartisan group, led by Paul Kanjorski, a Pennsylvania Democrat, and Ken Calvert, a California Republican, urged the agencies to publicly encourage lenders to make credit available for property owners who want to refinance mortgages on performing assets whose values have declined. “In order to safeguard the businesses operating on Main Street and protect the millions of jobs depending on commercial real estate, the Treasury and the Federal Reserve now must take needed and urgent action to stave off a potentially devastating wave of commercial real estate foreclosures and bank losses,” Kanjorski said in a statement. [NYT]

Borrowers participating in the Obama administration’s Home Affordable Modification Program will soon have a simpler route to mortgage loan modifications. Under new guidelines, borrowers seeking to lower their mortgage payments will be required to provide just three items to servicers: a form requesting the modification, authorization for the servicer to access tax information from the Internal Revenue Service and evidence of income, the Treasury announced yesterday. The HAMP program, launched one year ago, has been widely criticized for its low success rates in turning three-month trial modifications into permanent ones, and borrowers and servicers alike had pointed to complex documentation requirements as one of the major stumbling blocks. Roughly 900,000 borrowers had been given trial modifications by the close of 2009, but only 66,465 of those had been converted to permanent ones. Beginning June 1, servicers will also have to gather the documents prior to granting trial modifications in order to avoid beginning the process with borrowers who ultimately won’t be able to come up with the paperwork. [WSJ]

The Obama administration has no immediate plans to encourage mortgage principal reductions through its foreclosure prevention program, the Treasury Department said yesterday. The announcement comes amid mounting pressure from banking regulators and attorneys general in 14 states, who have said that with so many homeowners now underwater, reducing loan balances may be the only way to curtail the foreclosure crisis. The administration’s program, which was announced last February, aims to reduce borrowers’ loan payments but has met with criticism over still-rising delinquencies and its failure to thus far turn many temporary loan modifications into permanent ones. An administration report released last week said only 7 percent of borrowers in the program had received permanent modifications by the end of 2009, largely due to issues with paperwork. More than 70 percent of loan modifications have actually resulted in an increase in principal because of unpaid interest and fees, according to a report by state attorneys general and banking regulators. “The failure to reduce principal jeopardizes the sustainability of loan modifications,” said Mark Pearce, North Carolina’s deputy banking commissioner. [WSJ]