Fannie Mae: Economic expansion to slow in second half of 2017

Economic growth is set to remain at 2% for the year as the high growth in the first half of the year is expected to slow.

Economic data shows growth rebounded to 2.7% annually, up from 1.4% in the first quarter, according to Fannie Mae’s economic and strategic research group’s July 2017 Economic and Housing Outlook.

Fannie Mae explained the full percentage point increase since December signals a growing caution among consumers, despite the high levels of consumer confidence.

“While second quarter growth is poised to rebound, we expect growth to moderate through the remainder of 2017,” Fannie Mae Chief Economist Doug Duncan said. “Consumer spending, traditionally the largest contributor to economic growth, is sluggish and is lagging positive consumer sentiment and solid hiring.”

“While labor market slack continues to diminish, wage growth is not accelerating and inflation has moved further below the Fed’s target,” Duncan said. “These conditions support our call that the Fed will continue gradual monetary policy normalization, announce its balance sheet tapering policy in September, and wait until December for additional data, especially on inflation, before raising the fed funds rate for the third time this year.”

Decelerating corporate profit growth, which is commonly seen in the late stages of an economic expansion, presents a challenge to business investment. Businesses are also concerned with the rising uncertainty of tax reform.

Residential investment will likely decline in the second half of the year due to the lackluster homebuilding activity and tight inventory which continues to hold back home sales.

Because of these factors, Fannie Mae predicts economic growth will slow to 1.9% for the second half of the year. And this moderate growth is expected to continue into 2018 as potential changes to fiscal and monetary policy posing both upside and downside risks to the forecast.

“Construction activity has lost some steam following the first quarter’s weather-driven boost,” Duncan said. “Meanwhile, very lean inventory continues to act as a boon for home prices and a bane for affordability, particularly among potential first-time homeowners.”

“According to our second quarter Mortgage Lender Sentiment Survey, lenders expect to ease credit standards further,” he said. “However, we continue to project that the pace of growth in total home sales will slow to 3.3% this year, as we believe rapid home price gains amid scarce supply will remain a hurdle for potential homebuyers despite improvements in credit access.”

Fannie Mae and Freddie Mac Would Be Privatized Under Proposed House Budget

House Republicans want to privatize Fannie Mae and Freddie Mac as part of their 2018 budget proposal.

GOP members of the House of Representatives on Tuesday unveiled their 2018 budget. Dubbed “Building a Better America” and authored by Budget Chairman Diane Black (R-TN), the plan calls for more than $200 billion in cuts to mandatory spending programs and sets the path for tax reform. It also calls for the privatization of mortgage giants Fannie Mae and Freddie Mac and assumes provisions of the House bill that would repeal Dodd-Frank.

The budget calls for the Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corp. (FMCC) , better known as Fannie Mae and Freddie Mac, to be privatized. The federal government placed them in conservatorship to prevent them from going bankrupt in 2008.

“The Treasury has already provided $187 billion in bailouts to Fannie and Freddie, and taxpayers remain exposed to $5 trillion in Fannie Mae and Freddie Mac’s outstanding commitments, as long as the entities remain in conservatorship,” the plan reads. “Our budget recommends putting an end to corporate subsidies and taxpayer bailouts in housing finance.”

Investors apparently shrugged at the proposal, as shares of both firms traded mildly lower on Tuesday morning.

To be sure, privatizing Frannie and Freddie is not a novel idea.

Steven Mnuchin said in in an interview with Fox Business in November soon after he was tapped as Treasury Secretary that thinks the two government-backed mortgage-finance companies should be privatized, sending both stocks soaring. During his Senate confirmation hearing in January, he appeared to soften his stance. In May testimony before the Senate Finance Committee, he said “we need to fix Fannie and Freddie.”

“Big picture, Republicans would undoubtedly like to shrink the government’s footprint in the residential mortgage market, but that’s simply not a political reality,” said Compass Point LLC analyst Isaac Boltansky. “Housing is a fifth of our economy, and there is simply no political will or procedural capacity to dramatically reshaping the mortgage market.”

The House budget released on Tuesday also assumes provisions of a bill to repeal crisis-era Dodd-Frank will be enacted, but it stops short of presuming the entire bill will pass.

The Financial CHOICE Act, a 600-page bill championed by Representative Jeb Hensarling (R-TX), passed the House in June. The broad consensus is that it was essentially sent to the Senate to die, although parts of it are expected to survive.

The House budget highlights seven “key principles” of the CHOICE Act, including stopping taxpayer bailouts of financial institutions, revitalizing economic growth through capital markets and managing systemic risk. It does not provide details on specific measures.

The budget seeks to achieve $14 billion in savings through the Financial Services Committee, which Boltanksy said it can do by eliminating the Orderly Liquidation Authority to unwind troubled financial institutions. “They can get to their $14 billion target easily with the Orderly Liquidation change, which would net about $15 billion,” he said.

Overall, the House GOP’s budget calls for $621 billion in defense spending and $511 in non-defense spending. It also calls for House committees to come up with $203 billion in savings and takes aims at social programs such as Medicare and food stamps.

The proposal assumes $204 billion in deficit reduction over the course of a decade from the passage of the House bill to repeal and replace Obamacare, even though healthcare legislation appeared to die in the Senate on Monday evening.

To be sure, Tuesday’s House budget is essentially a wish list of Republican proposals and one step in what is likely to be a long process of negotiations.

“These are the talking points we’ve seen time and time again,” Boltansky said. “The goal here was to get a document done to begin the process. Specificity wasn’t the goal.” 

Freddie Mac Announces the Issuance of a New Two-Year Reference Notes Security

MCLEAN, VA–(Marketwired – Jul 17, 2017) –  Freddie Mac (OTCQB: FMCC) announced today that it plans to issue a new two-year USD Reference Notes® security, CUSIP number 3134EAEH8, due on Aug. 15, 2019. The issue will be priced on Tuesday, July 18, 2017, and will settle on Wednesday, July 19, 2017, at benchmark size.

The new two-year Reference Notes security will be offered via a syndicate of dealers headed by Barclays Capital Inc., J.P. Morgan Securities LLC and Nomura Securities International, Inc.

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, 2016, filed with the Securities and Exchange Commission (SEC) on February 16, 2017; 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, 2016, 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, 2016, 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 website.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

Sen. Paul wants health-plan associations

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Group files demand to invalidate Kern County vote to kill PACE program

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Why NAR thinks preserving ‘net neutrality’ is crucial for agents and brokers

You’ve probably heard the phrase “net neutrality” by now — but do you know how the concept (or its disappearance) could affect your real estate business?

In June, the National Association of Realtors (NAR) joined a coalition of businesses and public interest groups working to preserve rules surrounding the Open Internet, also known as net neutrality. Today, the trade organization filed comments with the Federal Communications Commission (FCC) about the rules to replace current net neutrality guidelines as proposed by FCC Chairman Ajit Pai, who was appointed by President Trump in January.

If net neutrality is not preserved, real estate agents and brokers might have to start paying more for their websites to perform as well as they have in the past. “As the business of real estate continues to evolve, a free and open internet is increasingly critical to Realtors,” said NAR President Bill Brown in a statement strongly urging the FCC to preserve net neutrality. “Net neutrality rul…

Fannie Mae Prices $902.3 Million Multifamily DUS REMIC (FNA 2017-M8) Under Its GeMS Program

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Freddie Mac joins Fannie Mae in reducing mortgage modification interest rate

Last week, Fannie Mae announced it was cutting its benchmark interest rate for standard mortgage modifications for the second time this year, but Freddie Mac didn’t lower its rate, or so it appeared.

Normally, Fannie and Freddie raise or lower the benchmark interest rate at the same time, but when Fannie sent out a notification to mortgage servicers that it was dropping the benchmark rate from 4.125% to 4%, Freddie’s notification was nowhere to be seen.

As it turns out, Freddie is indeed cutting its benchmark rate to the same level as Fannie, but Freddie just took a little extra time to update its website to reflect that change.

So, on Monday, when Fannie Mae’s new benchmark rate of 4% took effect, it took effect for Freddie Mac too.

The standard modification program is “designed to help those borrowers who are ineligible for the Home Affordable Modification Program.”

According to the GSEs, the standard modification program is “designed to help those borrowers who are ineligible for the Home Affordable Modification Program.

Therefore, the new rate does not extend to HAMP borrowers.

Freddie Mac loan finances $20.3M apartment building acquisition

The Columns at East Bay apartment complex in Largo

A buyer used Freddie Mac financing to acquire a garden-style apartment building in Largo for $20.3 million.

Insula Capital bought the 196-unit property, called Columns at East Bay, from ECI Group Inc. for about $103,500 per apartment.

Insula financed the acquisition with a three-year $17.77 million loan with interest-only payments and a loan-to-value ratio of 85 percent.

The new owner obtained the loan through Freddie Mac’s Value-Add and Green Up programs, which provide financial incentives for “green improvements” that limit a property’s consumption of energy and water.

Berkadia marketed Columns at East Bay on behalf of the seller and arranged the acquisition financing for the buyer.

Built in 1986, Columns at East Bay consists of 15 two-story buildings on a 14.19-acre site at 3660 East Bay Drive in Largo, just south of Clearwater.

The property has 120 one-bedroom apartments and 76 two-bedrooms. Common-area amenities include a swimming pool, spa, clubhouse, lighted tennis court, playground and an on-site laundry.

Local Realtors donate school supplies to Boys & Girls Clubs – Las Vegas Review

Greater Las Vegas Association of Realtors members are participating in a school supply drive organized by the Nevada Association of Realtors and its LeadershipNVAR Class of 2017 to benefit local c ...

Members of the Greater Las Vegas Association of Realtors are teaming up with the Boys Girls Clubs of Southern Nevada this summer to donate school supplies for students served by the clubs.

GLVAR President David J. Tina said the school supply drive is part of a statewide effort being organized by the Nevada Association of Realtors and its LeadershipNVAR Class of 2017 to benefit Boys Girls Clubs throughout Nevada.

These same groups organized a similar drive last year, when local Realtors donated more than 1,000 backpacks stocked with school supplies for the Boys Girls Clubs of Southern Nevada.

Tina said these community service projects enable GLVAR members to show their support for a national partnership between the Boys Girls Clubs of America and the National Association of Realtors.

He added that Boys Girls Clubs are a home away from home for nearly 4 million American children who visit the clubs each year, including thousands of boys and girls here in Southern Nevada.

“This is another example of how our local Realtors contribute to our community,” Tina said. “We’re encouraging our members to do what they can to support this cause and to help local kids go back to school with the basic supplies they need to succeed.”

Las Vegas Realtors’ Stephanie Dibbs-Mangual, a 2017 LeadershipNVAR class member and one of the leaders of this project, said, “This drive is a big challenge to our leadership class and our Realtors friends across the state. It will be exciting, too. Our class fully intends to get to work and promote the value of these donations. We want to bring many smiles to the children who thrive in these clubs and the staff that works tirelessly to help kids.”

GLVAR is encouraging local Realtors to bring backpacks, No. 2 pencils, folders, three-ring binders, markers, dictionaries, wide-ruled paper and other school supplies to the GLVAR office at 1750 E. Sahara Ave. in Las Vegas, as well as other designated drop-off sites around Southern Nevada. GLVAR members can also donate bottled water, sunblock, lip balm, sanitizing wipes, sports equipment, musical instruments and new clothing for children served by the clubs.

GLVAR’s school supply drive started in May and concludes in August, just as local children return to school. For more information, visit www.nvar.org.

GLVAR was founded in 1947 and provides its more than 13,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada. Each GLVAR member receives the highest level of professional training and must abide by a strict code of ethics. For more information, visit LasVegasRealtor.com. Email your real estate questions to ask@glvar.org.