Don’t forget to check in on our “HSH in the News 2009” page located at the top-right section of the blog. News outlets across the country seek to quote not only our mortgage rates and statistics, but they often seek our commentary and opinions on the latest financial and consumer news items.
Here’s a look at some of our more-recent mentions:
UDATE1: Fannie Mae has released the details to a program that will turn struggling homeowners into renters. The “Deed for Lease Program” (DLP) allows delinquent homeowners to rent their home for up to a year instead of being foreclosed upon.
Here’s a story that managed to slip under the radar: Fannie Mae and Freddie Mac’s regulator announced a few weeks back that taxpayers shouldn’t expect to be repaid in full by the mortgage giants. Federal Housing Finance Agency (FHFA) Director James Lockhart said in a speech in Washington last month that some of the GSEs losses will “never be repaid.”
Lockhart’s skepticism didn’t stop there. In a television interview, the head of the FHFA suggested taxpayers should look at the losses as a necessary price we had to pay:
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This does not come as much of a surprise:
The regulator of Fannie Mae and Freddie Mac said it was unlikely that the federal government would ever be paid back the entire $85 billion spent so far on bailing out the firms — and added that the cost was going to rise as additional funds are drawn.
“Their book is so large,” James Lockhart, director of the Federal Housing Finance Agency, said at the National Press Club. “It’s hard for me to see that they will be able to repay all of that.”
Here we go again. While we wanted to be the first to coin that phrase as it pertains to the recent push by two Congressmen for Fannie and Freddie to loosen their lending standards, we were beaten to the punch (it was one of Drudge Report’s top headlines today) — so we’ll have to settle for second place.
But settling for second won’t stop us from reiterating just how unbelievable we think it is that certain lawmakers have already begun to revert back to the actions and decisions that were among the basic causes of this housing crisis and the subsequent recession.
In an attempt to increase participation in the White House’s Home Affordable Refinance plan, Fannie Mae and Freddie Mac’s regulator is considering expanding the qualifications for the program. The Federal Housing Finance Authority (FHFA) is currently discussing whether or not to allow the GSEs to refinance mortgages with a loan to value (LTV) over 105%:
“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent “is a number” that’s on the table, though “not necessarily the number we’re going to end up with.”
In a letter to Fannie Mae and Freddie Mac, Democratic lawmakers Barney Frank (D., M.A.) and Anthony Weiner (D., N.Y.) urged the government-sponsored agencies to loosen their lending standards to accomodate those buying condos:
In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won’t purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.
Executives at Freddie Mac went toe-to-toe with their regulator this month over whether or not to reveal certain financial information. Freddie’s executives have determined that the government’s management has and will continue to negatively impact their profitability — an opinion the Federal Housing Finance Agency (FHFA) urged them not to disclose.
As the disagreement grew to a head, executives threatened to notify the Securities and Exchange Commission (SEC) “that the regulator’s request was out of line.” The FHFA backed down.
Beginning in December we wrote that the conclusion of the Federal Open Market Committee (FOMC) meetings were growing less about changes to the federal funds rates than they were about the announcement that followed the meeting. Today’s conclusion was no different. While the Fed decided to once again leave the target range for the fed funds rates at 0 to .25%, the big news was the Fed’s decision to expand their balance sheet — and expand it extensively they will.
The brief press release issued immediately after the conclusion of the two-day meeting introduced the Fed’s expanded plan to purchase up to $1.25 trillion worth of Fannie and Freddie mortgage backed securities (MBS), $300 billion in longer-term Treasury securities, as well as a plan to increase their purchase of F&F debt by up to $100 billion.
The market observers on the bailout watch, scanning the economic waters for the next potential “black hole,” say they’ve spotted one: Freddie Mac. The mortgage giant reported a 4th quarter loss of $24 billion, raising their total of red ink for 2008 up to $50 billion. Just last week Freddie tapped another $31 billion in exchange for preferred stock.
The substantial losses at Freddie can be accredited to a number of shortfalls: mortgage insurance, mortgage-backed securities tied to subprime, adjustable rate, and/or jumbo mortgages, interest rate derivatives, bonds, and the approximately 30,000 homes they currently own (costing the GSE about $3,300 a month to maintain):
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