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Fannie Mae's Economic, Strategic & Research Group has pointed out on multiple occasions that housing market growth has been slowed by tepid growth of household income. In a new analysis released Monday, the Fannie Mae ESR Group announced that homeowners underestimating their home equity may also be a factor in weighing down housing markets. The NHS from Fannie Mae suggests that homeowners who underestimate their equity may also be underestimating in other areas such as how large of a downpayment they could make with that equity.
Fannie Mae's research found that through the end of 2011 the percentage of respondents with a mortgage who thought they were underwater was an average of 6 percentage points higher than the share estimated by CoreLogic. The 20 percent spike in home prices from 2012 to 2014 reduced CoreLogic's estimate of the share of underwater borrowers from 21 percent down to 9 percent. But in the Fannie Mae NHS, the share of homeowners who perceived they had negative equity fell by only 3 percentage points from 26 percent down to 23 percent.
At least one industry analyst disagrees with capping the salaries for the CEOs of Fannie Mae and Freddie Mac. The chairman of the Collingwood Group, Tim Rood, said that he hopes a bill that passed in the House Financial Services Committee last week is defeated in Congress. He also said he hopes the two CEOs receive the multi-million pay raises granted them by their regulator. Rood said the CEOs have "demonstrated their worth, stabilizing the companies and supporting market recovery."
