Fannie Mae Prices $789 Million Multifamily DUS REMIC Under Its Fannie Mae GeMS™ Program

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Fannie Mae Announces Know Your Options™ Customer Care Foreclosure Prevention Program

WASHINGTON, July 16, 2012 /PRNewswire/ – Fannie Mae (OTC Bulletin Board: FNMA) launched Know Your Options Customer Care, a customer engagement strategy and training program for servicers aimed at preventing foreclosures by developing consultative relationships with struggling homeowners.  Under the program, Fannie Mae personnel conduct trainings for servicers’ call center employees, provide scripting for interactions with homeowners and help implement ongoing quality control measures.  

“Everybody wins when we can prevent foreclosure: the servicer, Fannie Mae, and most importantly, the homeowner and their community,” said Leslie Peeler, Senior Vice President, National Servicing Organization, Fannie Mae.  “What we’ve learned through the housing crisis is that if everybody takes the responsibility to work together and act early, then we can prevent foreclosures and keep families in their homes in many cases.  We want our servicers to be trusted counselors to their customers, from attentively collecting documents to advising them of their options and guiding them through the process.”

Fannie Mae has been developing the Know Your Options Customer Care program for approximately one year and is already implementing it with 18 of its largest servicers.  One of the key elements of the program is creating a single point of contact in the call center for each customer to ensure that rapport is built with the homeowner, regular contact is maintained through the loss mitigation process, and that foreclosure prevention options are properly presented and pursued.  Servicers that have participated in the program have typically seen 20-30 percent increases in workouts.  We are now making our training available through online webinars and program materials so all servicers may participate and implement Know Your Options Customer Care.  The program is available free of charge to servicers.

“Helping homeowners avoid foreclosure is our top priority,” said Eric Schuppenhauer, Senior Vice President and Head of Servicing at JPMorgan Chase, which was one of the first servicers to begin participating in Know Your Options Customer Care.  “When a homeowner calls Chase, they have a single point of contact to help guide them through the process, whether they’re seeking a loan modification or other assistance.  We are pleased to be working with Fannie Mae to help more families stay in their homes.”

In addition to Know Your Options Customer Care, Fannie Mae has taken a number of steps to help prevent foreclosures, including: 

  • Launching the KnowYourOptions.com website to provide educational tools and resources for homeowners
  • Opening 12 Mortgage Help Centers in areas hardest hit by the housing crisis to provide individual assistance to Fannie Mae homeowners (additional info)
  • Implementing the Servicing Alignment Initiative with the Federal Housing Finance Agency and Freddie Mac to require early outreach by servicers to struggling homeowners (additional info)  
  • Requiring servicers to reduce timelines for short sales (additional info)
  • Developing and implementing the Servicing Total Achievement and Rewards (STAR) program to evaluate and motivate servicers’ performance in helping homeowners (additional info)

Contact information for Fannie Mae’s Mortgage Help Centers and additional resources for homeowners can be found at www.knowyouroptions.com.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

Follow us on Twitter: http://twitter.com/FannieMae

SOURCE Fannie Mae

How Forgiveness Fits in Housing-Fix Toolkit

Policy makers are wrestling with a dilemma about the overhang of mortgage debt from the housing bust: to forgive or not to forgive?

With prices down by one-third from their 2006 peak, more than 11 million homeowners are underwater, or owe more than their homes are worth. That is about 24% of all homeowners with a mortgage, according to data firm CoreLogic.

The massive debt overhang—totaling almost $700 billion—is troubling not only because it leaves homeowners more exposed to foreclosure, which further erodes property values. It also weighs on the economy, making homeowners less likely to spruce up their properties and unable to tap equity to start businesses or pay for things like college tuition.

Housing demand also suffers. Without equity, young families are less likely to trade up to bigger places while empty-nesters may be unable to downsize. Perversely, in some of the hardest-hit markets, home prices appear to be stabilizing because there aren’t enough homes for sale—in part because so many homeowners are frozen in place.

Recent home-price gains will help a little. CoreLogic estimates that during the first quarter, about 700,000 borrowers climbed out of negative equity thanks to modest price appreciation. But in a handful of states, more than one-third of borrowers are still underwater.

That is reviving calls for policy makers to embrace principal forgiveness. One problem is deciding who deserves help and who doesn’t—and who will absorb the losses: taxpayers or mortgage investors. Often the two are the same because taxpayer-supported entities like Fannie Mae and Freddie Mac back about 60% of all mortgages.

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Economists are split. “There’s no question that in many cases, [principal forgiveness] is the only way to assure people will stay in the house,” says Kenneth Rosen of the University of California, Berkeley.

Others say what really matters to borrowers is an affordable monthly payment. “If people have a huge debt burden but the mortgage is not the problem, why are we reducing the mortgage?” asks Thomas Lawler, an independent housing economist in Leesburg, Va.

Fannie and Freddie’s federal regulator has been wary of debt forgiveness, saying there are cheaper ways to help homeowners avoid foreclosure.

The Treasury Department tried to force the issue this year when it offered to pick up part of the tab for Fannie and Freddie if the government-supported mortgage giants adopted an existing federal program that subsidizes such write-downs for struggling borrowers. Economists estimate the firms could reach about 300,000 borrowers.

Cost isn’t the only issue. Trimming debt only for homeowners who are behind on their mortgage payments could lead other homeowners to default in hopes of getting a break—and could inflame those who believe it is unfair.

Another concern: Many borrowers who are underwater have second mortgages, which are primarily owned by banks, sitting behind the first mortgages that are primarily owned by Fannie, Freddie, and private investors. Writing down taxpayer-backed first mortgages without extinguishing bank-owned seconds is both politically dicey and an inversion of property rights. Is there a way to end this stalemate? Among the ideas offered by economists, private investors and government agencies:

First, Fannie and Freddie could cover closing costs for underwater borrowers who refinance into shorter-term loans with lower rates, a proposal the White House first put forward and that Sen. Jeff Merkley (D., Ore.) introduced in a bill earlier this year. Already, Fannie and Freddie have relaxed refinancing rules so that anyone with a loan backed by the firms can refinance, no matter how underwater, as long as they are current on payments. Accelerating amortization provides less of a break than principal reduction, but it nevertheless returns the borrower to terra firma much sooner.

Columbia University economists Glenn Hubbard, Christopher Mayer, James Witkin and mortgage-bond veteran Alan Boyce spelled out in a paper how this might work. A homeowner who owes 117% of his home’s value and who took out a 30-year loan with a 6.7% rate five years ago could refinance now into a 15-year loan with a 3.1% rate. That would increase the monthly payment by just $24. But it would leave the borrower with positive equity in less than three years, assuming home prices stay flat; within five years, the homeowner would have 17% equity. Doing nothing, the borrower would be underwater for more than seven years.

Second, mortgage investors could structure “earned” forgiveness programs that effectively pay deeply underwater borrowers to stay current on their mortgages. Loan Value Group, a Rumson, N.J.-based outfit, has designed such a program, called the “Responsible Homeowner Reward,” and is working with about 25,000 borrowers from a half-dozen mortgage firms.

The program works like this: Participating mortgage investors enroll borrowers who receive a small cash “reward” every month that they make their payments. The reward might grow to 10% of the loan balance, but it can be claimed only at some time in the future, usually when the borrower pays off the loan.

Finally, if Fannie and Freddie aren’t comfortable implementing a principal-writedown program of their own, they could ramp up sales of defaulted mortgages to investors who buy them at a discount, cut the loan balance, and make money by keeping the borrower in the house. The Federal Housing Administration this month said it would sell about 9,000 of those nonperforming mortgages later this year.

Other initiatives have run into a buzz saw of protest from mortgage investors, including a bid by the White House three years ago to allow judges to write down loans during bankruptcy proceedings. More recently, local governments in California have broached the idea of seizing mortgages through eminent domain and then restructuring them.

Principal reduction isn’t a panacea for the nation’s housing market. But in a handful of markets, the negative-equity problem will persist for many years. It makes sense for policy makers to at least experiment with how to speed along the clearing process.

Write to Nick Timiraos at nick.timiraos@wsj.com

Freddie Mac Prices New $3.5 Billion Seven-Year Reference Notes® Security

MCLEAN, Va., July 27, 2012 /PRNewswire/ — Freddie Mac (FMCC) announced today that it priced its new 1.25% $3.5 billion seven-year USD Reference Notes® security due on August 1, 2019.  The issue, CUSIP number 3137EADK2, was priced at 99.573 to yield 1.314%, or 30 basis points more than seven-year U.S. Treasury Notes.  The issue will settle on Monday, July 30, 2012.

The new seven-year Reference Notes security was offered via a syndicate of dealers headed by Citigroup Global Markets, Barclays Capital and J.P. Morgan Chase.  An application was made to list the issue on the Euro MTF market of the Luxembourg Stock Exchange.

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission (“SEC”) on March 9, 2012; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (‘Exchange Act”) since December 31, 2011, excluding any information “furnished” to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information “furnished” to the SEC on Form 8-K.

Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2011, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s Web site at www.sec.gov.

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 homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com.

Freddie Mac Issues Monthly Volume Summary For June 2012

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Is Your Home Really Worth More than it was Last Year?

Is your home really worth more today than it was last year at this time? Do you believe all of the hype you read in the papers? The answer is probably yes it is worth more, but how much and will the statistics continue to improve?

After four years of decreases, it is uplifting to watch a gradual increase. Economists take the numbers and plot them out in the same directions with the hope of seeing better conditions. Are they correct?

The most important thing to remember is that home prices fell anywhere from 25-35 percent or more since the beginning of this latest economic downturn according to the Price Shiller home price index. Only recently have indicators and statistics shown a rise in values.

The big question in real estate today is which direction home values are headed. There is no shortage of opinions on the subject. National Association of Realtors Chief Economist Lawrence Yun, during the National Association of Real Estate Editors conference in Denver a few weeks ago, said:

“This time next year, there could be a 10 percent price appreciation. I would not be surprised to see that.” So, should the seller wait to list in anticipation of commanding a higher home sale?

Not if one believes Morgan Stanley, in their latest housing report which estimated a “drop of 5-10 percent more”.

With home values rising even as little as 1 percent, homeowners that are only slightly underwater are profiting the most. The jump has been enough to move many homeowners back into positive territory and thus qualifying them for refinancing opportunities. Low inventory that is spiking the number of multiple offers is helping more than just homeowners that want to sell.

Corelogic reported a decrease of home owners with mortgages that were considered underwater on their mortgage from 25.2 percent, or 12.1 million home owners to 23.7 percent — or 11.4 million, Some of the decrease must be contributed to investors flocking to foreclosure auctions. Over 160 properties are considered for auction on a typical Friday morning at the Bellevue auction site.

“While the overall stagnating economic recovery will likely slow the housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk,” said Mark Fleming, CoreLogic’s chief economist.

No one can dispute the fact that jobs, housing and the economy are inter-related. With the national unemployment rate hovering at 8.2 percent and statistics in the Seattle area in the 7’s, we are a long way from experiencing an end to our economic woes.

Analysts polled by Briefing.com, expect annualized growth of 1.2 percent for the quarter, down from 1.9 percent growth in the first quarter. This is the wrong direction.

Only 40 percent of companies reported sales above estimates with many companies adjusting projections of third quarter earnings downward. That’s the lowest percentage since 2009, according to research firm FactSet.

Only when employers, from both large and small companies, feel secure in the requirements imposed by the government and begin hiring additional employees will we truly see stability in the housing market.

About this column: Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales. She is president-elect (2012) of the Seattle King County Association of Realtors.
 

Fewer contracts to buy previously occupied homes signed in June

Last Updated:
10:40 AM, July 26, 2012

Posted:
10:40 AM, July 26, 2012



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WASHINGTON — Americans signed fewer contracts to buy previously occupied homes last month, the latest sign the housing market recovery is uneven.

The National Association of Realtors says its index of sales agreements fell 1.4 percent last month to 99.3. May’s reading was revised down to 100.7.

A reading of 100 is considered healthy. The index is 9.5 percent higher than it was a year ago. The index bottomed at 75.88 in June 2010 after a homebuyers’ tax credit expired.

Contract signings typically indicate where the housing market is headed. There’s generally a one- to two-month lag between a signed contract and a completed deal.

China’s Gift to U.S. Homeowners

They are increasingly rich, hungry for the good things this country has to offer, buying high-end homes, and don’t mind paying huge amounts of cash upfront to get them without going into debt. If you don’t think this reads like a typical American story today, you’re right—these new homeowners are Chinese living in the U.S.

For a housing market just starting its recovery, foreign investment in U.S. residential real estate has been a bright spot, and there’s no sign of the trend letting up. According to data released last month by the National Association of Realtors, non-U.S. buyers accounted for $82.5 billion in residential property sales in the 12 months ended March 2012. Chinese purchasers made up 11 percent of this total, while Canadians continued to represent the largest swath at 24 percent. Perhaps even more striking is the fact that 27 percent of Realtors surveyed by the NAR reported working with international clients in the last year. Along with China and Canada, buyers from countries including Mexico, India, and the U.K. combined to make up 55 percent of purchases from abroad—mainly concentrated in Florida, Texas, Arizona, California, and New York. The fastest growth in recent years is among Chinese buyers.

The global interest is driven by several different factors, yet for the Chinese in particular, the chance to get their children into top universities is probably the largest motivation. To Chinese parents, the opportunity provides proof that their years of effort have paid off. “The Chinese work very hard—it’s part of their culture,” says Cathy Zhao, a real estate broker in Maryland who has served many wealthy Chinese clients. “For them, the most important thing is education, and with prices being very low as they are, they see a chance to get near a good school.” And once here, most international buyers want to stay, Zhao adds, because their chance of a better-paying job is still better in the U.S. than back home.

The chance to earn a prestigious degree is not the only reason Chinese buyers find the U.S. market increasingly appealing. “There is an increasing number of wealthy Chinese who are buying in the U.S. to diversify their portfolio,” says NAR economist Jed Smith, who helped compile the annual survey. “Even with the rally in recent months, homes here still look very good from an investment point of view.”

Unlike Japanese corporations in the 1980s, which bought at the top of the market in their quest for big-name commercial properties, the Chinese are more interested in good deals. With residential real estate prices still almost a third less than they were at their peak in 2007, it’s a strategy that may well pay off if job growth returns and triggers a rally in the housing market, according to Smith.

Last year the average price of a foreign-purchased U.S. home was more than $400,000, which is double the national average—so the search for good value might only extend so far. That high figure becomes even more impressive when one considers that buyers from abroad often lack credit scores and access to mortgages, and frequently opt to pay the whole price upfront. “[S]ales transactions can often be completed quickly as many Chinese purchasers prefer all-cash deals,” Pamela Liebman, president and chief executive officer of the Corcoran Group, a New York real estate firm, writes in an e-mail. Liebman also says that her company has serviced more Chinese clients this year than at any time in the past, and that their interest is not just in residential real estate but in commercial property as well. Sixty-two percent of purchases by foreign buyers last year were in cash, according to the NAR. Zhao says many of the deals are for very large homes, capable of supporting several generations under one roof, which is a preference for affluent families.

Foreign buyers still make up a small part of all U.S. sales, accounting for just 4.8 percent of the total dollar amount in the last year. While in relative terms this represents an increase, the numbers will probably not spur a nationwide real estate recovery.

“In a market the size of New York, it would take a substantial influx of any one buyer group to significantly affect market prices,” writes Liebman of Corcoran. “The number of Chinese purchasers of New York real estate has not reached the critical mass it would require to impact prices.” It’s a point echoed by Smith of the NAR. “The only thing that will really get the market back to where it was is jobs. Really it’s all about jobs in the end,” he says.

That may be true, but the pattern of recent years might allow Americans to take some solace in the fact that their country is still top of the list when it comes to places where individuals from around the world want to live and learn.

Fannie Mae Cuts 2012 GDP Growth Forecast


Fannie Mae has cut its U.S. gross domestic product growth projection for the year, citing an uncertain job market and weak consumer spending.

The mortgage-finance company said GDP growth would be 2%, down from its earlier estimate of 2.2%. “The data from the past month collectively point to decelerating economic growth, but growth nonetheless,” Chief Economist Doug Duncan said. He noted, however, that housing continues to be a bright spot, presenting a “rare upside boost” to the economy.

Compared with the same period last year, home sales increased by 9% and single-family housing starts were 20% higher, though the company said levels are still considered below healthy norms.

Residential investment is expected to increase this year but from a very low base, and is expected to contribute to economic growth for the first time since 2005.

According to Fannie Mae’s June 2012 National Housing Survey, homeowners are showing greater confidence in one-year-ahead home price expectations, and their broad attitudes regarding the housing market continue to improve. The share of polled consumers who say they would buy a home if they were going to move increased to the highest level seen in the survey’s two-year history, partly due to low interest rates and the assumption that home prices have hit bottom.

Michigan Congressman Calls For Fannie Mae Eviction Moratorium

Rep. Hansen Clarke, D-Mich., has called on Fannie Mae to implement a 90-day moratorium on homeowner evictions.

In a letter to Fannie Mae President and CEO Timothy Mayopoulos and Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco, Clarke urged that the government-sponsored enterprise adopt a case-by-case policy of reviewing whether homeowners can remain in their homes if they are able to continue making “reasonable payments” or are able to purchase the property at a fair market rate.

“My office has heard numerous reports of Fannie Mae refusing to sell homes in foreclosure to the families who have lived in them for years, sometimes decades, despite reasonable offers from those families or outside nonprofits working with the homeowners,” Clarke wrote. “Instead, Fannie Mae evicts these families and allows their homes to become vacant. Once homes are vacant, they are often stripped of valuable materials and deteriorate into blighted structures that require demolition. This process has devastated many metro Detroit neighborhoods, increasing crime, lowering home values, and decreasing the local tax base, which funds services for all city residents.”

Clarke, who noted that Fannie Mae does not have an office in Detroit, invited the Fannie Mae and FHFA leaders to meet with Detroit-area homeowners and community groups to discuss the situation at greater length.