Ex-Freddie, Fannie Chiefs Sued by SEC

Not surprised at this.  However, Fannie and Freddie were following a failed pushed by the federal government to make "everyone a homeowner".

“This action arises out of series of materially false and misleading public disclosures,” the SEC said in the complaint filed against Syron. The agency seeks unspecified damages against the defendants. Fannie Mae or Freddie Mac aren’t named as defendants in the case.

Mudd, now CEO of Fortress Investment Group LLC, was ousted when Fannie Mae and Freddie Mac were seized by regulators in September 2008.

I wonder if this investigation or a new investigation will look at the policitians, but they always seem to cover themselves.

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Fitch: Properties average eight months in REO

The Federal Housing Finance Agency is working on new ways to sell these homes. Fannie Mae and Freddie Mac currently own around half of them, according to Fitch. Analysts said bulk sales would be "a key part" of the housing market for the next two years.

If they want to sell them fast, why don't they just sell them a auctions instead of making them REO's?

A typical foreclosed home will spend eight months in REO before being resold, Fitch Ratings analysts said.

More than 2 million of these properties are somewhere in the foreclosure process, Lender Processing Services (LPS: 17.77 -3.69%) estimates, and more are coming. The majority of the backlog could take as long as two years to clear, according to Fitch as the current foreclosure timeline can last more than 12 months, before the time the property will spend in REO.

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Freddie Mac single-family delinquency rate edges up in October

Government-sponsored enterprise Freddie Mac reported Wednesday that its single-family seriously delinquent rate edged up in October, hitting 3.54%, compared to 3.51% in September.

At the same time, the multifamily delinquency rate edged down to 0.31% in October from 0.33% in September.

The company, which is involved in an ongoing shift from a GSE-driven market to a more privatized mortgage finance system, saw its total mortgage portfolio fall at an annualized rate of 5.2% last month.

The single-family, refinance, loan purchase and guarantee volume hit $24.1 billion in October, representing 72% of the GSE's total mortgage portfolio purchases and issuances.

In addition, the mortgage-related securities and other guarantees from the GSE fell at an annualized rate of 6.6% during the month of October.

In October, Freddie Mac modified 6,571 loans, up from 6,465 loans in September, bringing the 10-month total to 96,697 loan mods.

Link Here

Investors Raising Cash to Buy Government Foreclosures

The investors are looking for volume discounts.

"Many investors are out there raising billions of dollars to buy these properties," says Jaret Seiberg of MF Global. "It's a great idea, and it's one of the few things that we've heard in several years now that could really help housing in a meaningful way."

Seiberg likens it to the Resolution Trust Corporation, which liquidated assets (primarily real estate assets) during the Savings and Loan crisis in the 1980's.

"The idea is not just to reduce supply but to reduce the fear that there's going to be this massive flood of foreclosed homes into many markets, and it's that fear of this foreclosure inventory that's really keeping prices down," adds Seiberg.

And...

Investors would need some incentives, however, like perhaps a tax break or low-interest-rate loans. Currently Fannie Mae caps the number of loans it makes to investors in single family properties at 10. Any program would of course have to go through Fannie and Freddie's regulator, the Federal Housing Finance Agency (FHFA), which is still, shall we say, mulling.

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Credit getting tighter as Banks become more responsible for bad loans

Lenders are insisting on higher credit scores and more documents than required by the Federal Housing Administration and government-backed Fannie Mae and Freddie Mac. Quicken Loans Inc. and Vision Mortgage Capital are among firms saying they are increasing scrutiny of would-be borrowers in response to pressure to cover losses incurred on U.S.-backed housing debt.

And main reason is that Fannie Mae is making banks cover the cost of bad loans.

You’ve got to take measures now to protect yourself,” John B. Johnson, chief executive officer of Birmingham, Alabama- based MortgageAmerica Inc., said during a panel discussion this month. Demands that lenders repurchase bad mortgages from Fannie Mae and Freddie Mac are “casting a pall over the market. I fear that it will face a much longer recovery because of this.

Lenders’ contracts with Fannie Mae and Freddie Mac allow them to force buybacks of mortgages if the loan originators fail to properly vet debt, such as by accepting inflated borrower incomes or appraisals. Flawed paperwork can lead to pressure from Fannie Mae and Freddie Mac even on performing mortgages.

This is having ripples all over industry, but it's what was required to get a loan in 1998.

Pressure from the GSEs has “definitely stanched the flow of credit to the mortgage market, but we had clearly gone too far,” said Richard Eckert, an analyst in San Francisco at securities firm B. Riley & Co. who wrote research on subprime lenders during the housing boom and then joined a hedge fund betting against property loans during the collapse. “We’ve got to return to some kind of happy balance.”

Bank of America Corp. (BAC) has scaled back mortgage lending as CEO Brian T. Moynihan prepares for new capital requirements and grapples with demands that it compensate investors including Fannie Mae and Freddie for losses.

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Obama administration ramps up mortgage refinancing effort

HARP, which launched in March 2009, helped 838,000 Fannie Mae and Freddie Mac borrowers with loan-to-value ratios between 80% and 125% refinance. But roughly 7% of those held LTVs above 105%.

In order to assist more of the estimated 11 million borrowers who owe more on their mortgage than their home is worth, the FHFA removed the 125% LTV ceiling on the program.

And....

Underwater borrowers can't qualify for new loans or refinancings even if they are current on payments. And many would-be buyers are sitting on their hands, spooked by the high numbers of foreclosures and vast tracts of vacant homes.

In the meantime, banks are stepping up efforts to foreclose on borrowers in default. In the three months that ended Sept. 30, notices of default, the first formal step in the foreclosure process, jumped nearly 26% from the previous quarter, according to DataQuick, a San Diego real estate information service.

Even with this plan there still will be a large shadow inventory out there

And even with changes, the program won't do anything for the 3.5 million homeowners who are at least 120 days late on their payments or in default.

The administration is working on another plan that could convert a large number of vacant homes to rental properties. The effort, floated by Fed officials and people in the housing industry, could reduce the number of empty houses that are blighting communities.

With demand for rental housing relatively strong, small investors have been buying foreclosures and other homes to turn them into rentals. But Fed Gov. Elizabeth Duke said at a recent forum that large-scale conversions haven't happened because it's expensive to manage single-family home rentals and that the standard practice for the government and the industry has been to prepare vacant properties for sale to new homeowners.

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Federal Government's Housing Inspector General Under Fire: Olick

Again another reason why they should be privatized and be regulatory agency at best.

Given that the conservator of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA) has been wielding incredible power of late in deciding how much the two mortgage giants can and cannot charge in guarantee fees and whom they can and cannot refinance, it was particularly disturbing to learn the that same FHFA has been deemed, dare I say it, incompetent, at least in one of its oversight capacities.

FHFA-OIG has identified shortfalls in the Agency's examination coverage, particularly in the areas of Real Estate Owned (REO) and default-related legal services," the report begins. Translation: "Robo-signing" paperwork issues.

"FHFA has too few examiners overall to ensure the efficiency and effectiveness of its examination program," the report continues. Apparently just about a third of the FHFA's 120 non-executive examiners are accredited federal financial examiners, and there is nothing in the works there to "improve this condition."

But wait, there's more: "FHFA, to its credit, has sought to address these challenges. Although this is a positive response, FHFA has expressed concern that its current hiring initiative will neither enable it to overcome its examination capacity shortfalls nor ensure the effectiveness of its 2011 reorganization."

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Housing Slump Hits New Mortgage Loans

In its annual analysis of mortgage data provided by thousands of financial institutions, the Fed found that lenders originated 7.9 million mortgages in 2010, down 12% from 2009. The only year they were lower in the past decade was 2008, when they hit 7.2 million. The Fed analyzed data from more than 7,900 mortgage lenders that are reported to regulators under the Home Mortgage Disclosure Act

The lending drop in distressed areas stems in part from declines in loans to borrowers who don't use the homes as their primary residences, often investors. But the report also found a rising concentration of lower-income borrowers in those communities. Higher-income borrowers accounted for just 29% of all loans in those distressed neighborhoods last year, compared with 52% of loans in those neighborhoods in 2005. In less-distressed neighborhoods, higher-income borrowers accounted for half of all loans in 2005 and 43% of loans last year.

And

Refinancing has been particularly limited in five states that have seen the biggest home-price declines: Arizona, California, Florida, Michigan and Nevada. In those states, some 6.4% of borrowers with credit scores between 680 and 719 refinanced last year, compared with 9.7% of borrowers in the remaining 45 states

And this is the incredible part.  Traditionally, FHA were no more than 2% to 5% of the home loans for purchases.

The study illustrates the mortgage market's continued heavy reliance on government-backed mortgages. Federal agencies such as the Federal Housing Administration, which allows borrowers to make down payments of just 3.5%, accounted for more than half of all loans for home purchases in 2010. Fannie Mae and Freddie Mac accounted for nearly one-quarter of purchase loans and more than half of refinances.

Any increase in FHA down payment requirements or the privatization of Fannie or Freddie means that these borrowers will have to tougher standards to get a loan.  The long term goal is to privatize the government agencies and FHA is in financial trouble.

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Home prices hit 2004 levels

House prices inched higher in July, but are down 3.3% for the year ended July 31 and 18.4% lower than the April 2007 peak, according to the Federal Housing Finance Agency.

The regulator, which holds Fannie Mae and Freddie Mac in conservatorship, said July home prices increased 0.8% and are at levels last seen in March 2004. The agency lowered June's gain to 0.7% from a previously reported 0.9% increase.

The FHFA index includes the price of properties backing mortgages sold to or guaranteed by the government-sponsored enterprises.

Prices rose 3.6% in July in the West North Central Census region, according to the FHFA, while prices in the South Atlantic region fell 0.4% in July.

The agency said the West North Central region, which includes the Plains States west of the Mississippi River, was the only area of the country to see home prices rise in the 12 months through the end of July.

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PMI could be required on more types of Fannie Mae and Freddie Mac loans

The government-sponsored enterprises often require private mortgage insurance on mortgages with loan-to-value ratios above 80%. The coverage is often deeper than is even required by law and there are hints it could go to a lower LTV.

His first example was requiring private mortgage insurance on more loans guaranteed by the GSEs.

"A traditional way that the Enterprises shared risk with the private sector was through the use of private mortgage insurance," DeMarco said. "Consideration could be given to requiring greater mortgage insurance coverage, but doing so would need to be weighed against the financial condition of individual mortgage insurers."

Where the PMI then goes against the Frank-Dodd rule.

If the FHFA adopted such a policy, it would clash against the current risk-retention proposal. According to a still pending rule proposed by federal regulators, lenders would not have to maintain the credit risk on a mortgage after securitization if the borrower puts 20% down and if other requirements are met as part of the qualified residential mortgage exemption. But no room was made for mortgage insurance under the QRM.

Finally, fees are going up too.

He said the past degree of cross subsidization of certain product types will not be present in a private-dominant model. The FHFA will also take into account local economic conditions and state laws, specifically foreclosure timelines, when pricing the g-fees. Meaning, in places where it is more expensive and longer to foreclose, lenders could see g-fees go up. DeMarco also added that the fee competition between the GSEs would not be appropriate in the future, signaling an alignment of the fees between the two giants.

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Obama looks to increase Fannie and Freddie guarantee fees

As posted earlier.  And how is he going to do this?

Jim Vogel with FTN Financial studied the plan and found the administration wants a 10-basis point increase in guarantee fees at Fannie Mae and Freddie Mac by next year. He added, the "FHFA is going to look for creative ways to gradually raise fees in 2012 with a combo of fewer discounts, geographic differentiation, and a reduction of cross-product subsidies." The Treasury Department believes the change could result in savings of $28 billion over a period of 10 years.

This have impact on the mortgage of the loan obtain by the borrower, 10 basis points is .1% mortgage rate increase.  

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Fannie Mae and Freddie Mac raising loan guarantee fees

According to Diana Olick at CNBC, the FHFA Director will raise the loan guarantee fees that both Fannie Mae and Freddie Mac charge.  When a loan is backed by Fannie Mae or Freddie Mac and it defaults, then Fannie or Freddie Mac must compensate the investor that purchase the loan.  If too many loans fail then Fannie and Freddie start losing money and therefore the tax payers lose money, since 79.9% of both companies are owned by the Federal government.  This increase in fees will keep the bill off the taxpayers, so what would happen in 100% privately ran system.

It is believed that both companies will eventually go back to being 100% private.  And the loan guarantee by the US government will decrease or disappear entirety.  This will have the affect of raise the mortgage rates, which is what FHFA is trying to do.

Freddie Mac Extends Mortgage Relief to Borrowers Affected by Hurricane Irene

MCLEAN, Va., Sept. 7, 2011 /PRNewswire/ -- Freddie Mac's (OTC: FMCC) full menu of relief policies for borrowers affected by disaster is being extended to homeowners whose homes were damaged or destroyed by Hurricane Irene and are located in counties that the President has declared to be Major Disaster Areas and where he has made federal Individual Assistance programs available to affected individuals and households. Freddie Mac is one of the nation's largest investors in residential mortgages.
"Freddie Mac has authorized the nation's mortgage servicers to provide a full range of mortgage relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac," said Anthony Renzi, Executive Vice President of Single-Family Business, Operations and Technology at Freddie Mac. "Forbearance on mortgage payments for up to one year are among the options our servicers have been instructed to offer borrowers on a case-by-case basis."
Freddie Mac disaster relief policies provide a number of ways for mortgage servicers to help affected borrowers in the Major Disaster Areas where federal Individual Assistance programs have been extended.
Freddie Mac, for example, gives servicers the discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie Mac-owned mortgages that have been affected by a disaster. Each case must be individually assessed to determine what assistance will best fit the homeowner's circumstances.
Freddie Mac also strongly encourages servicers to help affected borrowers with Freddie Mac-owned loans by:

• Suspending foreclosure and eviction proceedings for up to 12 months;
• Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes; and
• Not reporting forbearance or delinquencies caused by the disaster to the nation's credit bureaus.

For more information on mortgage payment relief, homeowners should contact their mortgage servicer -- the company to which they send their monthly mortgage payment -- or call Freddie Mac at 800-FREDDIE.  Freddie Mac's general disaster relief policies are posted online at http://www.freddiemac.com/singlefamily/service/disastermgmt.html.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.
SOURCE Freddie Mac

Morgan Stanley finds investors highly receptive to bulk REO sales idea

Government is soliciting ideas to depose of foreclosed homes.

Analysts with the investment bank released an update to this strategy — which is known as the REBUILD proposal — estimating there are currently 6 million properties in REO, foreclosure or more than 90 days past due.

In its latest update, Morgan Stanley addressed some concerns raised about the proposal, namely that it would not be free-market based with the government-sponsored enterprises becoming landlords and growing their balance sheets. Or the idea that it would be unregulated, giving investors purchasing power at rock-bottom prices without ensuring they have a concern for rehabilitation or neighborhood property values.

And...

"We believe the best solution lies somewhere in the middle, and instead of focusing on what we don’t want, we think it’s better to focus on what we do want, and figure out a way to reach those goals," analysts at Morgan Stanley said.

"In this case, we believe that the goal should be effective ownership and management of rental properties, while retaining some upside for taxpayers if everything works out and home prices recover," according to Morgan Stanley.

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Lenders are Looking More at the Condition of the Property

Lenders are just making sure that aren't lending to home that has major issues.

I am not talking about the value of the property -- those kinds of appraisal issues have been with us for some time now. Today, I am referring to the physical condition of the property.

FHA and VA have historically been more stringent than conventional lenders with respect to issues such as peeling paint, unpermitted additions, and non-fully functioning appliances. Nowadays, though, it seems just as likely that a real or perceived deficiency in the property’s physical condition may cause as much of a problem for a conventional loan as for one that is FHA or VA.

Wow, look at the issues this can create, especially in California.

In California it has become common for a buyer to ask a seller to provide a four-page form known as the Seller Property Questionnaire (SPQ). The SPQ was created by the California Association of Realtors® (CAR). It is considerably more detailed and informative than the state-mandated Real Estate Transfer Disclosure Statement (TDS). Although not required by law, provision of an SPQ is often called for as part of the purchase agreement between buyer and seller. What is happening now is that, sometimes, underwriters are asking for a copy of the SPQ.

Why might this be a problem? Suppose the disclosure revealed a roof leak in one corner of the three-car garage. It would cost $1,500 to fix. The buyer appreciates the disclosure, but he doesn’t care because he is going to remodel the garage and put a loft room –with a new roof – over that corner. The underwriter says, “No, it must be fixed before we will approve the loan.”

It's will only put more pressure on the  home prices.  If the seller is upside on equity and is doing a shortsale they won't be spending money to improve the property.  It will probably result in: a) drop in prices b) more negative equity sellers just walking away.

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Feds sue biggest US banks over risky mortgages

Funny, if the suit forces bankruptcy on the bank, then does the FDIC (with also federal backing) come in a bail the depositors, probably with tax money?  This lawsuit is very illogical.

In a sweeping move, the government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

Among the 17 targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Goldman Sachs.

The lawsuits were filed Friday by the Federal Housing Finance Agency which oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

The total price tag for the securities bought by Fannie and Freddie affected by the lawsuits: $196 billion.

The government didn't provide a dollar amount of how much it seeks in damages. It said that it wants to have the purchases of the securities canceled, be compensated for lost principal and interest payments as well as attorney fees and costs. The lawsuits allege the financial firms broke federal and state laws with the sales.

Home mortgage-backed securities were risky investments that collapsed after the real-estate bust and helped fuel the financial crisis in late 2008.

Finally, what is the ultimate purchase of this lawsuit.

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Hurricane Irene could cause home refinancing, purchasing issues

This will get more complicated in a few more weeks.

"What has to happen — or what is required — is that they need to have a re-inspection completed on the property by the original appraiser to verify no damage has been done and the value of the home has not been affected," by the storm, according to John Walsh, president of Total Mortgage Services, a lender based in Connecticut.

Walsh said the re-appraisal issue will impact homeowners who had pending home purchase and refinancing applications in FEMA-designated disaster areas before the hurricane.

The FEMA website names at least 11 states and Washington as federal disaster areas impacted by last weekend's storm. Walsh said somewhere between 15% to 50% of his firm's pending mortgage application pipeline requires a new inspection.

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Wells Fargo closes 704,000 loan mods over past two years

In the past two years, Wells Fargo (WFC: 24.20 -4.08%) offered more than 4.4 million homeowners new low-rate loans and did more than 704,000 loan modifications for mortgages in its servicing portfolio, the bank said this week.

About 85% of its loan modifications were completed through Wells Fargo programs, while 105,404 modifications were handled through the government's Home Affordable Modification Program.

As of the second quarter, 93% of home loans in the company's servicing portfolio were current on payments. Fewer than 2% of owner-occupied loans in the  servicing portfolio proceeded to foreclosure sale in the past year.

During July, 404,000 distressed borrowers received some type of counseling, with 10.9 million borrowers underwater, or owing more than the property is worth, nationwide, according to the Obama administration's August housing scorecard.

The government cited statistics showing prime mortgages with a delinquency rate of 4.5%, compared to 33.2% among subprime loans and 12.2% for FHA loans. About 3.65 million existing homes were on the sales block in July.

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U.S. to sue big banks over mortgage securities: report

Fannie Mae and Freddie Mac lost more than $30 billion, due partly to their purchases of mortgage-backed securities, when the housing bubble burst in late 2008. Those losses were covered mostly with taxpayers' money.

The agency filed suit against UBS in July, seeking to recover at least $900 million for taxpayers, and the individuals told the Times the new suits would be similar in scope.

A spokesman for the Federal Housing Finance Agency was not immediately available for comment.

The Times said Bank of America, JP Morgan and Goldman Sachs all declined comment. A Deutsche Bank spokesman told the Times, "We can't comment on a suit that we haven't seen and hasn't been filed yet."

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Fannie Mae and Freddie Mac underwater refinances up for first time since February

Fannie Mae and Freddie Mac allowed more than 28,000 underwater mortgages refinancings through a government program in June, up roughly 12% from the previous month and the first increase since February.

The Home Affordable Refinancing Program launched in March 2009 to allow current borrowers who owe up to 25% more on their mortgage than the home is worth refinance into lower monthly payments. So far, roughly 838,400 Fannie and Freddie loans received a refinance, according to data released by the Federal Housing Finance Agency Thursday.

The June total is the first increase since February, when HARP refis increased from 41,000 to 47,000. Totals declined every month since. In June, 23,000 of the HARP recipients held a loan-to-value ratio between 80% and 105%. More than 5,000 held an LTV between 105% and 125%.

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