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Housing regulator releases plan for Fannie, Freddi
NAR monitors housing reform
NAR advocates a continuing government influence over Fannie Mae and Freddie Mac. According to NAR a government cutback will reduce housing access and affordability for qualified homebuyers generate higher profits for Americas big banks establish more too-big-to-fail banks create more risk to consumers and taxpayers hurt the economy and hinder job creation and growth. NARs complete analysis Reforming Americas Housing Finance Market is available online.
WASHINGTON Feb. 22 2012 A federal housing regulator on Tuesday released a plan for beginning to scale back mortgage giants Fannie Mae and Freddie Mac just as the Obama administration is pressing the taxpayer-backed companies to do more to help homeowners.
The Federal Housing Finance Agency which oversees Fannie and Freddie laid out steps to wind down the companies largely by increasing fees charged to borrowers who take out mortgages. The FHFAs hope is that as the cost of receiving a taxpayer-backed mortgage goes up more borrowers will turn to private lenders whose loans do not carry government backing.
But the effort could conflict with measures being pursued by Fannie and Freddie and the Obama administration to increase the governments role in housing.
A year ago the administration released a white paper calling for a gradual wind-down of Fannie and Freddie whose bad bets on risky home loans before the financial crisis have cost taxpayers more than $130 billion.
But for much of the past year the White House has been going in the opposite direction. Administration officials have been urging Fannie and Freddie to take steps to help homeowners in an effort to lift home values free up cash in the economy and help borrowers avoid foreclosure.
Officials have been encouraging the companies to reduce debts owed by homeowners for instance and to make it easier for borrowers to refinance at lower interest rates. Those measures require Fannie and Freddie to take new risks with taxpayer money and make the housing market more reliant on the government.
The FHFA which controls the firms in a legal arrangement known as conservatorship has resisted taking steps that would burden Fannie and Freddie with more taxpayer losses.
This is clearly one of the challenges that FHFA faces as conservator said Edward DeMarco acting FHFA director. Were getting a clear message about wind-down. At the same time there are continuing to be calls for Fannie and Freddie to do more.
The companies are essential cogs in the $10 trillion housing finance market. Operating through the banking system they connect investors around the world with Americans looking to buy homes.
By pledging that taxpayers will make investors whole if borrowers default Fannie and Freddie are essentially able to guarantee a plentiful supply of funding for mortgages making it easier for buyers to get affordable home loans.
Fannie and Freddie together with the Federal Housing Administration have dominated the housing market in the past four years as banks withdrew sharply from lending during the financial crisis and recession.
The private market has not bounced back with the rest of the economy. Policymakers are concerned about the risk to taxpayers presented by the governments large footprint in the mortgage market. The Obama administration plans to publish more details about overhauling housing finance in the coming months.
The housing sector will continue to be a drag on our economic recovery until we end the ongoing bailout of Fannie and Freddie and replace the existing government-backed mortgage finance system with a purely private market solution said Rep. Scott Garrett (R-N.J.) chairman of the congressional subcommittee that oversees the firms.
However that is not a universal view. Top administration advisers and many outside economists say the government must still play a significant role in housing.
Part of the conundrum for policymakers is we can have some broad consensus on wanting to wind down Fannie and Freddie DeMarco said but it becomes pretty unclear about whats left in the marketplace after theyre gone.
The FHFAs plan discusses efforts to lay the groundwork for a new mortgage system including among other things a new process for pooling loans into bundles and selling them to investors.
The plan also discusses the things that Fannie and Freddie can continue to do to help lessen the nations foreclosure crisis without increasing taxpayer losses.
Those include facilitating short sales and deeds-in-lieu in which a homeowner is forgiven for part of the debt owed to a bank either when selling the home or transferring ownership to the lender.
Copyright washingtonpost.com Zachary A. Goldfarb
02/22/12
U.S. housing starts rise modestly
February 16th 2012
WASHINGTON (AP) Feb. 16 2012 Construction of single-family homes in the U.S. cooled off slightly in January after surging in the final month last year. But a rise in permits suggests builders are growing more confident that more buyers are ready to come off the sidelines.
The Commerce Department said Thursday that builders broke ground on a seasonally adjusted annual rate of 699000 homes in January. That's up 1.5 percent from December and nearly matches November's three-year high for starts.
Construction began work on 508000 single-family homes last month. That's a 1 percent drop from December and the first decline in four months. A big rise in volatile apartment construction helped offset the decline in single-family homes.
Still December single-family homes were revised up strongly to show builders started 513000 homes a 12 percent gain from November.
And building permits a gauge of future construction rose 0.7 percent. The majority of those permits were for single-family homes. It can take 12 months for a builder to obtain a permit and construct a single-family home.
Single-family home construction rose in each of the final three months of last year bringing the pace of those starts to the highest level since April 2010. The modest but steady gains helped boost confidence among builders after the worst year for single-family home construction on record.
The upturn in permits and starts in recent months has been consistent with the surge in the survey of homebuilders which has surprised the markets to the upside for five straight months said Ian Shepherdson chief U.S. economist at High Frequency Economics. The new home sales numbers have not yet responded but builders seem confident that if they build buyers will come.
The critical gauge of the housing market's health has a long way to go before most declare a full recovery is under way. The current pace is less than half the rate in which those homes went up during the 1990s. And it's only one-quarter of the 1.82 million single-family homes that builders started in January 2006 at the peak of the housing boom.
Most analysts say it could be years before the industry is fully recovered from the damage caused by the housing bust.
Builders are starting to see some signs of progress.
A measure of builder sentiment has risen for five straight months and is now at its highest level in nearly five years. Many builders are seeing more people express interest in buying a home leading them to believe 2012 could be a turn-around year for the market. Mortgage rates have never been cheaper. And home sales started to rise at the end of last year.
Yet for all their optimism builders began just 430900 single-family homes last year. It was the fewest on records dating back a half-century. And home prices are still falling.
Though new homes represent just 20 percent of the overall home market they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90000 in taxes according to the National Association of Home Builders.
Builders are struggling to compete with deeply discounted foreclosures and short sales when lenders allow homes to be sold for less than what's owed on the mortgage.
After previous recessions housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009 it has contributed just 4 percent.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That's nearly twice the markup typical in a healthy housing market.
Copyright 2012 The Associated Press Derek Kravitz AP real estate writer.
02/16/12
12 Housing Markets Seeing the Biggest Turnarounds
The National Association of Home Builders is debuting a new economic index that highlights metro areas that are seeing the most improvement in their housing markets. The First American Improving Markets Index reveals 12 metro areas that have seen a turnaround for at least six months in three core economic areas " housing permits employment and housing prices.
"Despite the challenging conditions in the national economy and housing sector there are areas throughout the country where we are seeing pockets of improvement" Bob Nielsen chairman of NAHB said in a statement. "We created this new index to shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery."
Here are the 12 cities that have seen the biggest improvements according to NAHBs new index:
Alexandria La.
Anchorage Alaska
Bangor ME
Bismarck N.D.
Casper Wyo.
Fairbanks Alaska
Fayetteville N.C.
Houma La.
Midland Texas
New Orleans La.
Pittsburgh Pa.
Waco Texas
By REALTOR Magazine Daily News
09/13/11
What you should know about strategic default
What you should know about strategic default
(ARA) - Who would risk the negative impact of defaulting on a mortgage if they didn't really have to About 17 percent of Americans who defaulted on their mortgages in the second quarter of 2010 did exactly that according to a study by Experian the leading global information services company.
"Strategic default" - choosing to stop paying on your mortgage even if you can afford the monthly payments - peaked at the end of 2008 during the height of the Great Recession. At that time strategic defaults accounted for 20 percent of all mortgage defaults 60 or more days overdue according to Experian.
And while the percentage of Americans taking this option has steadily declined since then the credit risks for strategic defaulters remain unchanged.
"Not paying your mortgage will have a far-reaching long-lasting impact on your ability to secure future credit regardless of the reason for your default" says Charles Chung Experian's president of Decision Analytics. "Experian's study indicates that many strategic defaulters continue to faithfully pay on their other debts. Some even purchase other homes for better terms before selectively defaulting on their upside-down mortgage."
If you owe more on your home than its current market value you may feel tempted to walk away from a bad investment even if you can afford to make the monthly mortgage payment. But when considering strategic default you should keep several factors in mind:
* Defaulting on your mortgage is the second most damaging thing you can do to your credit even if you continue to pay your other bills. Only bankruptcy will affect your credit score more adversely than foreclosure.
* Foreclosure remains on your credit report for seven years. During that time securing other credit at reasonable terms and rates will be very difficult if not impossible.
* Potential employers are looking at credit reports. In fact 60 percent now check applicants' credit reports according to an article in the Washington Times. By impacting your credit a strategic default may affect your ability to get a job.
* Last year Fannie Mae the government-controlled mortgage giant said it would implement a policy to prohibit strategic defaulters from getting a new Fannie Mae-backed mortgage for seven years from the date of foreclosure.
* Finally in some cases the debt that foreclosure "erases" may be recorded as income which means you will have to pay taxes on it.
"Some may see strategic default as a way to get out of paying a bad debt" Chung says. "But its associated costs like a lower credit score higher interest rates and less ability to secure future credits can wipe out the financial benefit of no longer having a mortgage payment."
To learn more about credit management credit reports credit scores and the factors that affect them visit www.Experian.com.
09/06/11
Fed's: Housing Market Severely Out of Balance
The severely out of balance housing market is greatly hampering the nation's economic recovery and solving the supply-and-demand issues in the housing market needs to be an immediate priority Elizabeth Duke member of the Board of Governors of the Federal Reserve said late last week to the Federal Reserve Board Policy Forum during a speech The Housing Market Going Forward: Lessons Learned from the Recent Crisis.
Duke said that addressing the swelling inventories of REOs is critical for helping to rebalance the housing market. An inventory of at least 1 million REOs this year as well as 2012 and 2013 is expected to pass through the market and "REO properties are weighing heavily on the market for owner-occupied house" and bringing overall home prices down Duke said.
Duke said that converting a portion of residential REOs to rental units may be one reasonable option for lenders to handle the big wave of foreclosures.
"Such conversions might also be in the best interests of lienholders and guarantors if recoveries from renting out properties exceed those from outright sales" she said. "Over time as financing conditions ease and the number of REO properties to be sold declines the share of properties sold to owner-occupants and sold to investors for rental will adjust commensurately."
Source: Fed Duke: Balancing Housing Market Supply-Demand Immediate Priority Market News International (Sept. 1 2011)
09/06/11
AgentBillboard Real Estate Blog
By Professional Realtors For Real Estate Agents
Blogs are updated regularly with current information
Housing regulator releases plan for Fannie, Freddi
A federal housing regulator on Tuesday released a plan for beginning to scale back mortgage giants F
NAR monitors housing reform
NAR advocates a continuing government influence over Fannie Mae and Freddie Mac. According to NAR a government cutback will reduce housing access and affordability for qualified homebuyers generate higher profits for Americas big banks establish more too-big-to-fail banks create more risk to consumers and taxpayers hurt the economy and hinder job creation and growth. NARs complete analysis Reforming Americas Housing Finance Market is available online.
WASHINGTON Feb. 22 2012 A federal housing regulator on Tuesday released a plan for beginning to scale back mortgage giants Fannie Mae and Freddie Mac just as the Obama administration is pressing the taxpayer-backed companies to do more to help homeowners.
The Federal Housing Finance Agency which oversees Fannie and Freddie laid out steps to wind down the companies largely by increasing fees charged to borrowers who take out mortgages. The FHFAs hope is that as the cost of receiving a taxpayer-backed mortgage goes up more borrowers will turn to private lenders whose loans do not carry government backing.
But the effort could conflict with measures being pursued by Fannie and Freddie and the Obama administration to increase the governments role in housing.
A year ago the administration released a white paper calling for a gradual wind-down of Fannie and Freddie whose bad bets on risky home loans before the financial crisis have cost taxpayers more than $130 billion.
But for much of the past year the White House has been going in the opposite direction. Administration officials have been urging Fannie and Freddie to take steps to help homeowners in an effort to lift home values free up cash in the economy and help borrowers avoid foreclosure.
Officials have been encouraging the companies to reduce debts owed by homeowners for instance and to make it easier for borrowers to refinance at lower interest rates. Those measures require Fannie and Freddie to take new risks with taxpayer money and make the housing market more reliant on the government.
The FHFA which controls the firms in a legal arrangement known as conservatorship has resisted taking steps that would burden Fannie and Freddie with more taxpayer losses.
This is clearly one of the challenges that FHFA faces as conservator said Edward DeMarco acting FHFA director. Were getting a clear message about wind-down. At the same time there are continuing to be calls for Fannie and Freddie to do more.
The companies are essential cogs in the $10 trillion housing finance market. Operating through the banking system they connect investors around the world with Americans looking to buy homes.
By pledging that taxpayers will make investors whole if borrowers default Fannie and Freddie are essentially able to guarantee a plentiful supply of funding for mortgages making it easier for buyers to get affordable home loans.
Fannie and Freddie together with the Federal Housing Administration have dominated the housing market in the past four years as banks withdrew sharply from lending during the financial crisis and recession.
The private market has not bounced back with the rest of the economy. Policymakers are concerned about the risk to taxpayers presented by the governments large footprint in the mortgage market. The Obama administration plans to publish more details about overhauling housing finance in the coming months.
The housing sector will continue to be a drag on our economic recovery until we end the ongoing bailout of Fannie and Freddie and replace the existing government-backed mortgage finance system with a purely private market solution said Rep. Scott Garrett (R-N.J.) chairman of the congressional subcommittee that oversees the firms.
However that is not a universal view. Top administration advisers and many outside economists say the government must still play a significant role in housing.
Part of the conundrum for policymakers is we can have some broad consensus on wanting to wind down Fannie and Freddie DeMarco said but it becomes pretty unclear about whats left in the marketplace after theyre gone.
The FHFAs plan discusses efforts to lay the groundwork for a new mortgage system including among other things a new process for pooling loans into bundles and selling them to investors.
The plan also discusses the things that Fannie and Freddie can continue to do to help lessen the nations foreclosure crisis without increasing taxpayer losses.
Those include facilitating short sales and deeds-in-lieu in which a homeowner is forgiven for part of the debt owed to a bank either when selling the home or transferring ownership to the lender.
Copyright washingtonpost.com Zachary A. Goldfarb
AgentBillboard - 02/22/12
Tags: Freddie Mac, Fannie Mae
U.S. housing starts rise modestly
a rise in permits suggests builders are growing more confident
February 16th 2012
WASHINGTON (AP) Feb. 16 2012 Construction of single-family homes in the U.S. cooled off slightly in January after surging in the final month last year. But a rise in permits suggests builders are growing more confident that more buyers are ready to come off the sidelines.
The Commerce Department said Thursday that builders broke ground on a seasonally adjusted annual rate of 699000 homes in January. That's up 1.5 percent from December and nearly matches November's three-year high for starts.
Construction began work on 508000 single-family homes last month. That's a 1 percent drop from December and the first decline in four months. A big rise in volatile apartment construction helped offset the decline in single-family homes.
Still December single-family homes were revised up strongly to show builders started 513000 homes a 12 percent gain from November.
And building permits a gauge of future construction rose 0.7 percent. The majority of those permits were for single-family homes. It can take 12 months for a builder to obtain a permit and construct a single-family home.
Single-family home construction rose in each of the final three months of last year bringing the pace of those starts to the highest level since April 2010. The modest but steady gains helped boost confidence among builders after the worst year for single-family home construction on record.
The upturn in permits and starts in recent months has been consistent with the surge in the survey of homebuilders which has surprised the markets to the upside for five straight months said Ian Shepherdson chief U.S. economist at High Frequency Economics. The new home sales numbers have not yet responded but builders seem confident that if they build buyers will come.
The critical gauge of the housing market's health has a long way to go before most declare a full recovery is under way. The current pace is less than half the rate in which those homes went up during the 1990s. And it's only one-quarter of the 1.82 million single-family homes that builders started in January 2006 at the peak of the housing boom.
Most analysts say it could be years before the industry is fully recovered from the damage caused by the housing bust.
Builders are starting to see some signs of progress.
A measure of builder sentiment has risen for five straight months and is now at its highest level in nearly five years. Many builders are seeing more people express interest in buying a home leading them to believe 2012 could be a turn-around year for the market. Mortgage rates have never been cheaper. And home sales started to rise at the end of last year.
Yet for all their optimism builders began just 430900 single-family homes last year. It was the fewest on records dating back a half-century. And home prices are still falling.
Though new homes represent just 20 percent of the overall home market they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90000 in taxes according to the National Association of Home Builders.
Builders are struggling to compete with deeply discounted foreclosures and short sales when lenders allow homes to be sold for less than what's owed on the mortgage.
After previous recessions housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009 it has contributed just 4 percent.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That's nearly twice the markup typical in a healthy housing market.
Copyright 2012 The Associated Press Derek Kravitz AP real estate writer.
AgentBillboard - 02/16/12
Tags: New Home Sales, New contruction, Commerce Department
12 Housing Markets Seeing the Biggest Turnarounds
Daily Real Estate News | Monday, September 12, 2011
The National Association of Home Builders is debuting a new economic index that highlights metro areas that are seeing the most improvement in their housing markets. The First American Improving Markets Index reveals 12 metro areas that have seen a turnaround for at least six months in three core economic areas " housing permits employment and housing prices.
"Despite the challenging conditions in the national economy and housing sector there are areas throughout the country where we are seeing pockets of improvement" Bob Nielsen chairman of NAHB said in a statement. "We created this new index to shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery."
Here are the 12 cities that have seen the biggest improvements according to NAHBs new index:
Alexandria La.
Anchorage Alaska
Bangor ME
Bismarck N.D.
Casper Wyo.
Fairbanks Alaska
Fayetteville N.C.
Houma La.
Midland Texas
New Orleans La.
Pittsburgh Pa.
Waco Texas
By REALTOR Magazine Daily News
AgentBillboard - 09/13/11
Tags: National Association of Homebuilders, housing sector, NAHB
What you should know about strategic default
"Strategic default" - choosing to stop paying on your mortgage even if you can afford the monthly pa
What you should know about strategic default
(ARA) - Who would risk the negative impact of defaulting on a mortgage if they didn't really have to About 17 percent of Americans who defaulted on their mortgages in the second quarter of 2010 did exactly that according to a study by Experian the leading global information services company.
"Strategic default" - choosing to stop paying on your mortgage even if you can afford the monthly payments - peaked at the end of 2008 during the height of the Great Recession. At that time strategic defaults accounted for 20 percent of all mortgage defaults 60 or more days overdue according to Experian.
And while the percentage of Americans taking this option has steadily declined since then the credit risks for strategic defaulters remain unchanged.
"Not paying your mortgage will have a far-reaching long-lasting impact on your ability to secure future credit regardless of the reason for your default" says Charles Chung Experian's president of Decision Analytics. "Experian's study indicates that many strategic defaulters continue to faithfully pay on their other debts. Some even purchase other homes for better terms before selectively defaulting on their upside-down mortgage."
If you owe more on your home than its current market value you may feel tempted to walk away from a bad investment even if you can afford to make the monthly mortgage payment. But when considering strategic default you should keep several factors in mind:
* Defaulting on your mortgage is the second most damaging thing you can do to your credit even if you continue to pay your other bills. Only bankruptcy will affect your credit score more adversely than foreclosure.
* Foreclosure remains on your credit report for seven years. During that time securing other credit at reasonable terms and rates will be very difficult if not impossible.
* Potential employers are looking at credit reports. In fact 60 percent now check applicants' credit reports according to an article in the Washington Times. By impacting your credit a strategic default may affect your ability to get a job.
* Last year Fannie Mae the government-controlled mortgage giant said it would implement a policy to prohibit strategic defaulters from getting a new Fannie Mae-backed mortgage for seven years from the date of foreclosure.
* Finally in some cases the debt that foreclosure "erases" may be recorded as income which means you will have to pay taxes on it.
"Some may see strategic default as a way to get out of paying a bad debt" Chung says. "But its associated costs like a lower credit score higher interest rates and less ability to secure future credits can wipe out the financial benefit of no longer having a mortgage payment."
To learn more about credit management credit reports credit scores and the factors that affect them visit www.Experian.com.
AgentBillboard - 09/06/11
Tags: Experian, Great Recession, credit scores, Strategic Default
Fed's: Housing Market Severely Out of Balance
Daily Real Estate News | Tuesday, September 06, 2011
The severely out of balance housing market is greatly hampering the nation's economic recovery and solving the supply-and-demand issues in the housing market needs to be an immediate priority Elizabeth Duke member of the Board of Governors of the Federal Reserve said late last week to the Federal Reserve Board Policy Forum during a speech The Housing Market Going Forward: Lessons Learned from the Recent Crisis.
Duke said that addressing the swelling inventories of REOs is critical for helping to rebalance the housing market. An inventory of at least 1 million REOs this year as well as 2012 and 2013 is expected to pass through the market and "REO properties are weighing heavily on the market for owner-occupied house" and bringing overall home prices down Duke said.
Duke said that converting a portion of residential REOs to rental units may be one reasonable option for lenders to handle the big wave of foreclosures.
"Such conversions might also be in the best interests of lienholders and guarantors if recoveries from renting out properties exceed those from outright sales" she said. "Over time as financing conditions ease and the number of REO properties to be sold declines the share of properties sold to owner-occupants and sold to investors for rental will adjust commensurately."
Source: Fed Duke: Balancing Housing Market Supply-Demand Immediate Priority Market News International (Sept. 1 2011)
AgentBillboard - 09/06/11
Tags: Fed, housing supply, Duke, housing market