A federal judge has dismissed a lawsuit brought by Massachusetts Attorney General Martha Coakley against the federal agencies Freddie Mac and Fannie Mae for refusing to sell homes in foreclosure to nonprofit groups that want to return them to the original owners.
US District Judge Richard G. Stearns issued his ruling in the case Tuesday.
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The lawsuit made national headlines in June when it was filed. It also made a splash last week in the Massachusetts gubernatorial campaign, in which Coakley is the Democratic nominee.
The Globe reported Thursday that the cochair of Coakley’s campaign finance committee, Elyse Cherry, runs the only nonprofit in the country that buys and sells such distressed properties.
MCLEAN, VA–(Marketwired – Oct 22, 2014) – Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for October, showing the four key ingredients labor, income, fixed investment and trust required to lift the economy toward robust sustainable growth are still lacking the necessary thrust. A video preview, along with the complete October 2014 U.S. Economic and Housing Market Outlook and forecast table, is available here.
- Projecting the unemployment rate to average around 5.7 percent next year as many of the missing 25-54 year olds who have dropped out of the labor market start to return, driving participation rates up.
- A faster GDP growth rate is the essential step to getting broad-based income growth. Unfortunately, the economy can’t perform at its highest level until this happens.
- Fixed investment has picked up, but as a share of total GDP it is still about 2 percentage points below the levels reached prior to the Great Recession. Housing’s share of this investment is particularly lagging.
- Long-run demand means new home construction needs to ramp up to a pace of 1.7 million additional housing units each year. Over the past twelve months, there have been about 1 million housing starts.
- The final ingredient we need for lift off is arguably the most fragile today. Fortunately, headlines about fiscal and monetary policy have ebbed and total economic policy uncertainty is near the lowest level since the end of the Great Recession.
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.
“Renewed confidence and declining uncertainty are starting to unfold. However, fears of a slowdown in Europe and a multitude of crises overseas have struck a blow to confidence in recent weeks. While the recent news on the domestic economy has been positive, we are keeping a wary eye on the economy to see if confidence falters. That said, labor markets are healing, incomes are starting to rise, and fixed investment is increasing so trust and confidence should start to build throughout the economy. But the trust and confidence won’t sustain if wages don’t rise as well. Combined, these forces, once firing on all cylinders, can provide the lift off needed for economic growth to be stronger in 2015.”
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. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.
West Chester, Ohio (PRWEB) October 22, 2014
GLVAR is the local representative of the National Association of REALTORS® and the largest professional organization in Southern Nevada. GLVAR is one of the top 10 largest REALTOR® Associations in the United States. GLVAR serves more than 11,500 real estate professionals in the Greater Las Vegas area, providing local members with the highest level of education, training and political representation.
Heidi Kasama, 2014 GLVAR President, said, “After researching this issue, we chose SentriLock for this important service because we determined they were the most qualified and offered the best, most cost-efficient solution for our more than 11,500 GLVAR members.”
SentriLock CEO and founder Scott Fisher has led the company through 11 years of consistent growth to serve more than 280 REALTOR® Associations and MLS customers throughout North America. “We’re extremely excited about partnering with a proven leader like Greater Las Vegas Association of REALTORS®, which is an outstanding organization with a great staff,” Fisher said. “I believe GLVAR recognizes that our 100% REALTOR®-focused company will be an excellent fit for their members. As with all of our customers, SentriLock is committed to providing GLVAR members with the best product and service available.”
September’s existing-home sales numbers, released Tuesday, show the choppy path of the housing recovery.
Sales rose 2.4 percent from August, to a seasonally adjusted rate of 5.17 million, but were still down 1.7 percent from September 2013, and are on track to finish the year below 2013 totals.
In Bergen County, September sales of single-family homes were down about 9 percent from a year earlier, while in Passaic, sales were down about 3.4 percent, according to the New Jersey Association of Realtors. Year to date, both counties are running below the 2013 sales pace in sales of both single-family homes and condos and co-ops.
Single-family home prices dropped slightly in September in both Bergen and Passaic counties, compared with a year earlier. The median price was $452,500 in Bergen, down 0.5 percent, and $287,500 in Passaic, down 2.5 percent.
Although mortgage rates remain low – in the 4 percent range – home purchases have been held back by a number of factors. Rising prices through much of 2013, weak income growth and tighter credit standards have priced out many would-be buyers across the nation.
And people who would like to buy will find there’s not a lot to choose from. Many homeowners who bought during the housing boom are not putting their homes on the market because they’re unwilling to sell for today’s lower prices.
The National Association of Realtors has projected that 4.94 million existing homes will be sold this year, down 3 percent from 5.09 million in 2013. Analysts generally associate sales of roughly 5.5 million existing homes with a healthy market.
Fannie Mae’s chief economist, Doug Duncan, recently predicted that “the pace of growth in the housing sector will be subdued during the remainder of 2014, with modest improvement in 2015.”
Patrick Newport and Stephanie Karol, economists with IHS Global Insight, saw more reasons to be optimistic, pointing out that sales to families were up in September, while sales to investors dropped.
“This is an encouraging development in the housing recovery,” the two wrote in a research note. “While the early stage of the recovery was marked by elevated levels of investor activity, investors have been scaling back their purchases as distressed homes become harder to find.”
Newport and Karol also see an easing of mortgage lending standards.
“With more families empowered to make home purchases, we believe the stage is set for future improvements,” Newport and Karol said.
The rap on Millennials is familiar: They’re broke, underemployed, and living in their parents’ basements. They’re stalling when it comes to marriage and kids, and they have a general disdain for tradition. With that narrative it’s hard to imagine that many of them have the desire, let alone the means, to leave the nest and purchase homes of their own.
And it’s partially true: Those in their late 20s and early 30s are definitely a bit behind earlier generations when it comes to shelling out for their first homes. According to the National Association of Realtors, among the under-35 crowd, who largely make up the first-time homebuyer market, homeownership is down to 36 percent from a high of 43 percent in 2005.
But that’s not exactly the whole story. “Younger buyers have expressed a desire to enter the market, and as they get married, get better jobs and begin to settle down and have children, they will,” says Stan Humphries, chief economist at Zillow. More than ever, young Americans are taking their time and trying to gain their financial footing before putting down roots. And according to Humphries, that could create a new normal when it comes to home buying, pushing the average age of the first-time homebuyer from 31 to between 32 and 34 within the next few years.
So what’s causing the delay? It seems that a mix of generational preferences and economic circumstances is responsible. Across the nation renting is actually about 38 percent more expensive than purchasing a home, according to Trulia, a real-estate search-and-analysis site. Right now rates on mortgages are low. Very low. And though home values are rising, properties in many places across the country have yet to return to their pre-recession prices. That means that the cost of buying in many areas is relatively affordable, which is especially important for first time buyers who won’t have the proceeds from property sales to finance their purchase.
Even in New York and California where homes in major metropolitan areas can be particularly pricey, the spread between renting and buying is small thanks to few rental vacancies and skyrocketing rental prices. “What I’m paying for my mortgage is less than what I was paying in rent,” says Yasmine Parrish, a 28-year-old PR-and-marketing professional who recently purchased a home in Los Angeles. Parrish’s mortgage broker helped her find a program for first-time buyers that allowed her to put down 5 percent instead of the standard 20 percent. Without a low down-payment option Parrish says she would have eventually reached her goal of owning a home, but saving up for it would’ve taken at least another year or two and by then, it’s likely that prices would have risen.
So why aren’t all young would-be homebuyers just taking advantage of the low down-payment options offered by these plans to get into the market before prices rise further? Not everyone has access to the programs that can shrink a down payment, and even for those who do, such help may not be enough. “Typically the down payment is the biggest hurdle for a homebuyer” says Ken Fears, director of regional economics and housing finance at the National Association of Realtors. “Programs that have a lower down payment are going to provide a bigger boost for the consumer.” Some programs, like Fannie Mae’s Community Home Buyer’s, require a 5 percent down payment, a sum that still makes saving a difficult proposition for many young people, particularly those in areas with quickly climbing home prices, such as San Francisco and San Diego. States like North Carolina and New Hampshire, have particularly well-regarded programs that allow for down payments of about 3 percent. Some private lenders also offer assistance to new homebuyers, but fees and additional factors, such as debt-to-income ratios, can prove more restrictive.
But programs aimed at reducing down payments for first-time homebuyers can feel like a double-edged sword. In competitive areas, where homes are scarce and multiple bids are common, an affordably low down payment can be limiting. “You’re not very competitive. If you’re going into a house with multiple offers and they see 3 percent down versus 10 or 20 percent down, they’re not going to go with your offer,” says Anne Simpson, a 27-year-old teacher and prospective homebuyer in Washington D.C.
Instead of utilizing a first-time homebuyer program, like DC Open Doors, she and her husband Chris Gillyard, managed to save up for a 10 percent down payment plus closing costs by forgoing nights out with friends and stashing away any extra cash they could. After saving for several years the couple already had more than a 3 percent down payment, and felt like they wouldn’t benefit much from a program aimed at down-payment assistance. More importantly, they wanted to ensure that their bid would be taken seriously in the hot D.C. market.
Tight inventory is also a major hurdle for first time buyers. “In a majority of large metro areas nationwide, the inventory of lower-priced homes for sale is much lower than inventory of mid and high-priced homes for sale,” says Humphries. That can make for a stressful and competitive shopping experience where prospective buyers feel like there’s a race to save up for their down payment before rates go up and favorite neighborhoods sell out.
“There’s a lot of pressure with how quickly the market seems to be moving and how quickly neighborhoods seem to be getting more expensive,” Simpson says. “I felt like if we don’t do this now, we won’t be able to buy in this neighborhood anymore. There is a window and that window feels like it closes very fast.”
And for more Millennials, issues of poor or nonexistent credit and lack of consistent wages push dreams of homeownership just out of reach. High student-debt payments combined with escalating rent leaves little extra income for savings and even those with steady jobs have learned that significant raises are hard to come by. According to Humphries, there’s no quick fix. Instead, patience, education, and advocacy programs for newer buyers will be the key to boosting first time home purchases among younger buyers, progress that could take another three to five years.
Read What Will It Take for Millennials to Become Homeowners? on theatlantic.com
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By Contributed Report
Posted Oct. 22, 2014 @ 2:01 am
Updated Oct 22, 2014 at 8:12 AM
WASHINGTON, DC–(Marketwired – Oct 21, 2014) – The following is a statement by National Association of Realtors® President Steve Brown:
“NAR applauds the Federal Deposit Insurance Corporation for finalizing the Qualified Residential Mortgage rule today, which includes a broad definition of QRM and aligns with the Qualified Mortgage standard implemented earlier this year.
“Realtors® are confident that the new QRM rule will encourage sound and financially prudent mortgage financing by lenders while also ensuring responsible homebuyers have access to safe and affordable credit. The synchronization with the QM rule will provide lenders with much needed clarity and consistency as they apply the new standards to loan applications while also providing a framework to bring more competition to the secondary mortgage market.
“The new QRM rule is a healthy step towards a more robust securities market that will reduce the government’s footprint and creates more opportunities for private capital to participate.
“Importantly, the final rule relies on sound and responsible underwriting rather than on an onerous downpayment requirement to qualify as a QRM loan. NAR strongly opposed earlier versions of the rule that included 20 and 30 percent downpayment requirements, which would have denied millions of Americans access to the lowest cost and safest mortgages.
“To mobilize against the proposed QRM rules that would have excluded credit-worthy Americans from the housing market, NAR forged the broad-based Coalition for Sensible Housing Policy, a partnership of approximately 50 consumer organizations, civil rights groups, lenders and real estate professionals united in their opposition to high downpayment requirements.
“The QRM rule is a win-win for consumers, Realtors® and the housing finance industry. NAR thanks U.S. Sens. Johnny Isakson, R-Ga., Kay Hagan, D-N.C., and Mary Landrieu, D-La., for their work to craft an effective QRM rule that supports middle-class families and the housing recovery. We look forward to working with regulators and industry stakeholders on the implementation of the new risk-retention standards.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Videos” tab on the website.
CHICAGO â€” Fannie Mae and Freddie Mac are close to allowing consumers to buy a home with as little as a 3 percent down payment and still have the mortgages backed by the two agencies.
More details are expected to be announced in coming weeks, but the move from a 5 percent down payment could increase the ability of creditworthy but cash-strapped consumers to become homeowners and help a faltering housing market regain its traction. Both agencies at one point had accepted 3 percent down payments.
â€œThrough these revised guidelines, we believe that the enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower down payment mortgages by taking into account compensating factors,â€� said Mel Watt, director of the Federal Housing Finance Agency, Fannie and Freddie’s overseer, during a speech Monday at the Mortgage Bankers Association’s annual convention in Las Vegas. â€œIt is yet another much-needed piece to the broader access-to-credit puzzle.â€�
Watt announced other policy initiatives to make lenders more comfortable with the federal government’s mortgage purchase guidelines in the hope it will loosen their purse strings.
â€œIt’s a very big deal,â€� said Dan Gjeldum, a senior vice president at mortgage lender Guaranteed Rate. â€œIt will dramatically reduce the expense for a first-time homebuyer. The easier it is to do business with the agency, the easier it’s going to be for consumers to work with mortgage companies.â€�
Fannie and Freddie do not originate mortgages directly to homebuyers. Instead, lenders sell mortgages that meet certain criteria to the two agencies, which in turn package them into securities and sell them to investors. The investments are guaranteed, which means that investors recoup losses if the homeowner defaults. Fannie and Freddie can force lenders to repurchase bad loans.
The upshot of those assurances is a more cautious lending environment.
Watt said the FHFA was taking steps to clarify the circumstances under which Fannie and Freddie could force a lender to repurchase a loan, in an effort to reduce lender confusion. â€œI hope our actions provide sufficient certainty to … more aggressively make responsible loans available to creditworthy borrowers,â€� Watt said.
The average FICO credit score of borrowers is 744 for Fannie Mae and 742 for Freddie Mac, lower than at the end of 2013.
Borrowers who put down less than 20 percent on a home purchase typically pay mortgage insurance that continues until their equity in the home reaches 20 percent. Reducing the down payment requirement to 3 percent from 5 percent will require a longer period of mortgage insurance and benefit mortgage insurance providers.
Homebuyers with lesser credit scores and smaller down payments traditionally flocked to mortgages backed by the Federal Housing Administration that required down payments of only 3.5 percent. But the upfront fees have increased, keeping more first-time buyers on the sidelines.
Federal Housing Finance Agency director Mel Watt’s speech earlier this week gave most people following Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) the impression that he was planning for the future, not preparing to eliminate the GSEs currently in conservatorship. Rafferty Capital Markets VP of equity research Richard Bove actually reached this conclusion after Watt’s speech at the Brooking’s Institution earlier this year, and Watt’s recent remarks give him confidence that government policy on GSE reform has turned a corner.
“Mr. Watt is reshaping Fannie Mae and Freddie Mac so that Congress may never be forced to vote on their status again. He is acting, undoubtedly with the President’s blessing, to create a new entity that will be the Fannie and Freddie of the future,” Bove writes. “These companies are likely to be merged but they are not going away and the shareholders in these companies are not going to be eliminated as Judge Lamberth believes should be the case.”
Fannie Mae, Freddie Mac will be de facto merged with CSP
First, Bove points to the different ways that Watt is trying to attract more business for Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). The regulator is clarifying and to some extent relaxing the rules around mandatory loan repurchases so that mortgage originators don’t face as much risk, as well as allowing low down payment loans that Bove calls a ‘slap in the face’ to CFPB’s qualified mortgage guidelines. Watt also signaled that he may reconsider lowering guarantee fees to attract more business.
On top of that, the Common Securitization Platform (CSP) and Common Securitization Securities (CSS) will force the two agencies to work closely together, paving the way for fully integrating them somewhere down the line. If the GSEs stop acquiring mortgages themselves, Bove points out that they will have practically been merged already.
Congress continues ceding authority to agencies
Bove, who has been long on Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) for about the last year, sees this as a positive sign for shareholders, even though Watt has expressly said that they aren’t his concern.
Bove also puts this FHFA-led GSE reform in the proper legislative context, pointing out that “Congress in recent years has continually given up its powers to govern to a series of omnipotent agencies that cannot be controlled by Congress.”
He doesn’t cite any examples, but they’re easy enough to find. Everyone in Congress has an opinion on the war against ISIS (or whatever you prefer to call it), but there hasn’t been a vote; extraordinary action from the Fed (the monetary authority) has been partly blamed on inaction from Congress (the fiscal authority) to pursue painful structural reforms. With legislative GSE reform ground to a halt, non-legislative reform is apparently the order of the day.
The nation’s largest mortgage firms plan to once again buy loans where the borrowers put as little as 3% down.
Perhaps you thought the days of putting little money down for a home were gone. Well, not so fast. On Monday the CEO of Fannie Mae, Timothy Mayopoulos, announced that the housing giant planned to once again buy loans for which the borrowers put as little as 3% down. Mayopoulos told the crowd gathered at the Mortgage Bankers Association conference in Las Vegas that Fannie, which along with Freddie Mac supports the bulk of the mortgage market today, is working to finalize the details of the offering and gain regulatory approval to proceed. “We want this business,” he said.
So far no details have been announced about what income or credit score requirements borrowers making such small down payments will need to meet the group’s standards. Mayopoulos said more information would be released in the coming weeks. Both Fannie and Freddie previously purchased loans with 3% down but had stopped in recent years. Today the firms usually require at least a 5% down payment on most loans.
Melvin Watt, director of the Federal Housing Finance Authority, which regulates the two government enterprises, said his group was working with them to develop “sensible and responsible guidelines” for the 3% loans, in an effort “to increase access for creditworthy but lower-wealth borrowers.” He cited “compensating factors” in evaluating such borrowers, though he didn’t say what those factors would be.
A 3% down payment is not exactly nonexistent today. The Federal Housing Administration has been offering mortgages with as little as 3.5% down for years. Traditionally, most borrowers were lower income, and the amount they could borrow was capped, but today even higher income folks use FHA loans to buy homes in expensive areas (loan limits vary by state but typically top out at $625,500). In recent years, these mortgages—which come with higher fees than traditional loans, as well as pricey mortgage insurance—have accounted for a larger than normal share of the market.
Now Fannie seems intent to grab some of that business. The low-down-payment loan, Mayopoulos promised, “will also be competitively priced, including against FHA execution.”
In a related move, FHFA’s Watt also announced that the agency is working to provide more details on when the housing giants can force a lender to buy back a loan that goes bad, which he hopes will encourage banks to loosen their lending standards. Over the past few years Fannie and Freddie have required lenders to buy back millions of dollars of bad loans, “sometimes for seemingly minor issues, such as missing a piece of paperwork,” said Keith Gumbinger, vice president at mortgage information publisher HSH.com.
“This clarification might allow lenders to look at riskier borrowers with less fear of having to buy these loans back in the future,” he said. He noted, though, that any changes are likely to be incremental: “It might let a few more borrowers in at the margin, but it won’t be like flipping a light switch where FICO scores down to 640 are now in.”
It’s important to note that Fannie and Freddie can’t force banks to lower their lending standards. In fact, most banks today require tougher standards than the government agencies impose, partially because they are fearful of having to buy back loans that go bad. For example, Fannie and Freddie will buy loans with FICO scores as low as 620, but most banks require at least a 660 or 680, Gumbinger said.
Similarly, lenders could always decide not to offer 3% down loans, even though Fannie and Freddie have agreed to eventually start buying them again. So it remains to be seen whether and how much the rule changes, when they are formally announced in the next few weeks, will ease the way for borrowers.