Tag Archives: FHFA

The head of one of the world's most powerful financial policy bodies has tossed her hat into the debate over mortgage principal reductions. Christine Lagarde, managing director of the International Monetary Fund (IMF), says ""the housing problem in the U.S. is something that needs to be addressed"" and it is ""a matter of urgency."" Lagarde tipped her hat in favor of the administration's proposal of principal reductions, but said the problem is that ""the big boys and girls - Fannie and Freddie - have to be part of that equation.""

Eleven state attorneys general sent a letter to Edward DeMarco, Acting Director of the FHFA, urging him to allow Fannie Mae and Freddie Mac to move forward with principal reductions. Headlined by Massachusetts Attorney General Martha Coakley, the letter doubled down on the FHFA to ""preserve assets and prevent unnecessary foreclosures by implementing loan modifications that include principal write-downs."" State attorneys general said that new reductions ""should consider all of a borrower's debts, not just the monthly mortgage debt, be uniform, transparent, and publicly disclosed.""

Nineteen members of California's congressional delegation want to keep Fannie Mae's and Freddie Mac's ""for rent"" signs outside their state's borders. Led by Congressman Gary Miller, the group sent a letter to Edward DeMarco, acting director of the Federal Housing Finance Agency, petitioning him to exclude the 600 homes in California slated for the pilot program of the REO Initiative, which aims to sell off homes repossessed by the GSEs and FHA to institutional investors who will turn the properties into rental homes.

While arguments continue to be made that Fannie Mae and Freddie Mac should apply principal reductions to keep underwater borrowers from going into foreclosure, Edward DeMarco, FHFA acting director, still has plenty of ammo to defend his highly criticized stance. During a speech at the Brookings Institution Tuesday, DeMarco, despite revealing figures that showed the GSEs could potentially save $1.7 billion through the application of principal reduction, still cited reasons to be wary of the proposed foreclosure prevention solution.

For 2011, investment purchases increased significantly, according to data from the National Association of Realtors, and with more individual investors absorbing REO properties, the organization thinks it is time to limit bulk REO sales to large institutions. Investment-home sales increased 64.5 percent last year to 1.23 million, NAR reports. In a letter to federal regulators, NAR urged policymakers and lenders to focus on expanding the availability of financing for qualified homebuyers and investors to reduce the number of REOs on the market.

With numbers from a CoreLogic report revealing 22.8 percent of borrowers are underwater, principal reduction has been eyed as a key solution to keep borrowers in their homes. The Center for American Progress has released a report detailing solutions to the ""moral hazard"" issue. One is to make principal reduction a one-time program open to borrowers already delinquent; another is to open the program only to current borrowers who are at-risk of default; and the third is ""shared appreciation"" modifications.

Standard & Poor's reported Tuesday that it's closely watched Case-Shiller index declined in January for the fifth straight month. But according to John Burns Real Estate Consulting (JBREC), that's stale news and doesn't reflect what's actually happening in the market right now. In fact, the independent research company says home prices are rising. JBREC conducted its own analysis of home prices in 97 markets and found that over the January-to-March period prices are up in 90 of them, with an average increase of 1.1 percent.

NPR reported Friday that Fannie Mae and Freddie Mac might consider principal reduction as a means to help underwater homeowners. Edward DeMarco, acting director of the FHFA, has stood firm in his decision to not allow for principal reduction, despite mounting criticism from Democrats and petitioning from organizations to have DeMarco fired. ""NPR and ProPublica have learned that both firms have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases,"" NPR stated in its story.

While prices are expected to drop for the year 2012, house prices were left unchanged from December to January, according to the FHFA’s monthly House Price Index. Over a 12-month span ending in January 2012, prices fell 0.8 percent. While the drop is not dramatic, the U.S. Index shows prices are 19.2 percent below the April 2007 peak and roughly the same as the February 2004 index level. The FHFA monthly index is based on purchase prices of homes backing mortgages sold to or guaranteed by Fannie Mae or Freddie Mac.

State and local governments across the nation responded to the foreclosure crisis by introducing a wave of new laws aimed at protecting homeowners. Unfortunately, according to Alfred M. Pollard, general counsel for the Federal Housing Finance Agency (FHFA), some of these laws are hurting more than helping as the housing market struggles toward recovery. Pollard, speaking before a House of Representatives committee this week, cited estimates that state governments have introduced 550 bills related to mortgage servicing since 2009.