Secondary Market

According to Jones Lang LaSalle Hotels, hotel deal volume in Manhattan will range from $1.9 billion to $2.4 billion in 2011. Manhattan is the most active hotel transaction market in the country, posting the highest growth rates of any major U.S. market in 2010. The report reveals that Manhattan is expected to remain the top U.S. hotel investment market, attracting attention from domestic and off-shore buyers.

The Federal Housing Finance Agency (FHFA) has issued a 28-page document that presents several alternatives it plans to consider for how Fannie Mae and Freddie Mac compensate mortgage servicers. The agency says today's model does not provide the flexibility needed for the servicing of nonperforming loans during times of high defaults. Alternatives being considered include a fee-for-service compensation structure for nonperforming loans and reducing or eliminating the minimum servicing fee for performing loans.

The Association of Mortgage Investors (AMI) said on Wednesday they consider the Obama administration's GSE reform white paper a good start, but the organization says the plan is missing a key ingredient: transparency. The consensus among industry experts, White House officials, and lawmakers is that private capital must return to the market, but AMI says it sees a number of omissions in the proposal that will frustrate the success of a private market revival.

A New York judge has ruled that Mortgage Electronic Registration Systems, Inc. (MERS) does not have the right to transfer mortgages on behalf of its members, meaning it does not have the right to file foreclosures on behalf of lenders. The company has recently been under fire for the practice, but the company defended its actions saying that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors.

Federal Reserve Governor Sarah Bloom Raskin says the biggest drag on the nation's economy is the absence of any substantial recovery in the housing sector. She has challenged mortgage servicers to step up to the plate and make home retention their top priority. Raskin says too many servicing practices have been developed and defended solely on the basis of ""standard industry practice"" but according to her, many practices are not only standard but ""shoddy.""

Organizations from every corner of the industry are weighing in on the administration's proposal to reform the nation's housing finance system. A number of groups are throwing their support behind the long-term reform option that calls for a group of private companies to provide guarantees for well underwritten mortgage securities, and the federal government to offer investors a type of reinsurance on these bonds. There are some, though, who say even this more prudent approach will raise borrowing costs and push small businesses out of the market.

New Jersey-based Visionet Systems, a full-service mortgage consulting and business process outsourcing company, recently launched new outsourcing services to assist banks with loan buybacks. Currently, Visionet is aiding two of the top four U.S. banks in recovering a majority of mortgage repurchase requests from GSEs and private investors, according to a statement from the company.

On top of the more imminent reform measures laid out Friday to begin winding down Fannie Mae and Freddie Mac, the Obama administration's proposal outlines three options for long-term reform and structuring the government's future role in housing. One approach would pull the government completely out of the mortgage guarantee business except for insurance provided through FHA. A second option would add a backstop mechanism during times of crisis to the mix. And a third option would provide an FDIC-type insurance guarantee for certain mortgage securities.

A study by George Washington University suggests the Federal Housing Administration (FHA) is carrying too much risk in insuring such a large percentage of large loans. In 2007 the FHA share of the home purchase market was at 6 percent. In 2009 that number came in at more than 56 percent. During that time, the size of the agency's loan limits more than doubled. The administration's plan for reforming the housing finance market indicates the government is planning to return FHA to its traditional role.

The Obama administration says its plan for reforming the housing finance system will dramatically reduce the government's role in the mortgage market and bring an end to Fannie Mae and Freddie Mac within seven years. Key actions for phasing out the GSEs include pricing their guarantees based on the same capital standards as private lenders and increasing down payment requirements to 10 percent. The proposal also outlines near-term reforms to correct problems in foreclosure processing such as setting national standards for mortgage servicing.