Tag Archives: Freddie Mac

The lowest mortgage interest rates in more than a half century have kindled a rise in refinancing activity among homeowners looking to reduce their debt and lower monthly payments. The Mortgage Bankers Association (MBA) reported Wednesday that its index for refinance applications jumped 17.1 percent last week, hitting its highest mark since May of last year. For the past two months, refinancing has accounted for more than 80 percent of conventional loan applications.

Will Fannie Mae and Freddie Mac still be here in three years? Or will they be replaced by a new federal mortgage agency? Or will the government begin a grand exodus from the housing market and leave the conveyance of the American Dream to the private sector? These were the questions addressed Tuesday at the administration's housing finance conference in Washington - a discussion that the Treasury says will help shape its proposal for the future of the housing finance system, including the structure of the nation's two largest mortgage companies.

The Federal Housing Finance Agency (FHFA) has proposed the establishment of an Office of the Ombudsman to field complaints related to FHFA's regulations and supervision. The Office of the Ombudsman would be responsible for considering grievances and appeals from entities overseen by FHFA, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, as well as any person that has a business relationship with a regulated entity or the Office of Finance.

The Federal Housing Finance Agency wants to restrict Fannie Mae and Freddie Mac from purchasing mortgages with private transfer fee covenants, also referred to as Wall Street home resale fees. These fees are sometimes worked into home purchase contracts, and require that a percentage of the sale price be paid to the original owner of the property every time the property is sold, typically for 99 years. FHFA says ""the fees fund purely private streams of income for select market participants and do not benefit homeowners.""

Undoubtedly, the model of home financing is in for a change. And the structural bastions of the nation's mortgage system - Fannie Mae and Freddie Mac - are at the very center of the debate. Ideas range from completely eliminating the two GSEs to turning them into official government agencies. Next week, Treasury will host a conference in Washington, D.C. on the subject, to gather input and suggestions from industry stakeholders. On Thursday, the administration released its guest list for the event.

Just how low can mortgage interest rates go? Lately it seems like there's no bottom in site. For months now, rates have been falling to new record-lows week after week, and this week, they headed even lower. Freddie Mac reported Thursday that interest rates for 30-year fixed mortgages are now averaging 4.44 percent, and 15-year fixed-rate home loans are at 3.92 percent. Bankrate's weekly survey puts the average rate for 30-year mortgages at 4.57 percent, and 15-year mortgages at 4.06 percent.

Mortgage interest rates have been hovering at their lowest levels in decades, but that's done little to sway consumers to buy a home or refinance their mortgage to take advantage of the interest savings. The economists at Freddie Mac point to several reasons for the ""missing"" originations, which they trace back to deteriorating home values. Many borrowers' home equity is so badly eroded that they don't qualify for a refinance, and potential buyers remain nervous about investing in a home absent big incentives.

Freddie Mac reported Monday that it lost $4.7 billion during the second quarter. The GSE is asking the Treasury for another $1.8 billion of taxpayer dollars. Freddie has drawn $64 billion from its line of credit with the Treasury since the government took control of the mortgage giant in September 2008. Despite a continuous string of losses - this was the 11th in the last 12 quarters - Freddie Mac's latest earnings report actually marks an improvement. For the previous three-month period, the GSE posted a $6.7 billion loss.

Leaders of the House Financial Services Committee say they are looking for ways to recoup the billions of dollars the federal government has sunk into the GSEs over the past two years. Taxpayer support to shore up Fannie Mae and Freddie Mac stands at $145 billion so far, and the tab keeps rising. Rep. Paul Kanjorski says, ""Twenty years ago, we found a way for industry to pay back the sizable U.S. Treasury payments for resolving the savings-and-loan crisis. We can do it again.""

The U.S. Federal Reserve is in the same boat as the banks now, dealing with a mortgage portfolio that's riddled with deficiencies and delinquencies. The central bank's New York branch has been saddled with a heap of souring loans from the assets it picked up to support the 2008 bailout of Bear Stearns. And now, as more and more of these loans - both residential and commercial - fall into default, the New York Fed is faced with a dilemma: to foreclose or not to foreclose.