Tag Archives: FHFA

The Federal Housing Finance Agency (FHFA) reports that home prices nationally dropped 0.8 percent in the fourth quarter of 2010 when compared to the previous three-month period. On a year-over-year basis, the agency's index is down 3.9 percent. It's the largest annual decline recorded since the third quarter of 2009. Home prices have come in below their year-ago levels for 13 consecutive quarters now. The ongoing depreciation is being attributed, in part, to an elevated number of distressed properties weighing heavy on surrounding home prices.

Fannie Mae has released its fourth-quarter and full-year 2010 earnings results. The GSE reported net income of $73 million for the last three months of 2010. It's the first time the company's been in the black in over three years. Still, after a hefty $2.2 billion fourth-quarter dividend payment to the U.S. Treasury, Fannie Mae had a net worth deficit as of the end of last year and has requested $2.6 billion more in taxpayer dollars. For the full year of 2010, Fannie Mae recorded a net loss of $14 billion, compared with a loss of $72 billion for 2009.

Freddie Mac reported Thursday that it lost $113 million in the fourth quarter of 2010. The loss, compounded by the company's $1.6 billion quarterly dividend payment to Treasury for bailout money, left the GSE with a net worth deficit again. Freddie's regulator is requesting another draw from Treasury, this time to the tune of $500 million. The company's fourth-quarter shortfall was actually the smallest of 2010 and brings the GSE's losses for the full year to $14 billion.

Location, location, location. Elizabeth Warren says ""that's the real estate mantra, and the new consumer bureau is following the professional's lead."" The U.S. Department of the Treasury announced late last week that the future permanent headquarters of the Consumer Financial Protection Bureau (CFPB) will be located at 1700 G Street, NW in Washington, D.C., just across the street from the White House complex.

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.

In late January it was revealed that taxpayers have spent more than $160 million defending former Fannie Mae and Freddie Mac executives in court, with $132 million of that money going to the defense of Fannie execs. This week at a congressional hearing, members of several government agencies defended the spending, claiming a refusal to cover the court costs would have been illegal. But Ohio Attorney General Mike DeWine condemned the use of taxpayer dollars to defend executives he says defrauded the system and broke the rules.

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.

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.

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.

The industry is abuzz with news that the federal government could unveil its proposal for overhauling Fannie Mae and Freddie Mac as early as Friday. The GSEs haven't had a profitable quarter in over three and a half years and were placed under government control in 2008 to avert their collapse. Since then, Treasury has pumped more than $150 billion into the two GSEs and cries for their reform have grown louder. The forthcoming proposal is expected to lay out three recommendations that call for phasing out the nation's two largest housing-finance companies.