Financial Crisis News Center

Gov. Duke Discusses Shape of Future Housing Finance System

This story appeared in Bank Digest.

Addressing the Federal Reserve Bank of Chicago's Mortgage Foreclosure Policy Conference, Fed Governor Elizabeth A. Duke outlined her ideas for a future housing finance system. According to Duke, such a system should be evaluated on four criteria: consumer protection, transparency, simplicity and alignment of incentives. Based on these, she discussed several aspects of such a system:

• Lending practices should include better consumer protection and disclosures and more financial education.
• Secondary markets would benefit from better access to information, standardized contracts and simplified structures.
• Servicers need contracts that provide clear guidance and incentive structures that lead to transparency and certainty in loan modifications.
• Fannie Mae and Freddie Mac need to operate in a defined manner.

HAMP Servicer Agreements Released

This story appeared in Bank Digest.

The Treasury Department has posted the following servicer participation agreements for the Home Affordable Modification Program (HAMP): First Keystone Bank; Home Financing Center Inc.; and Marix Serving LLC.

These agreements are the first step servicers need to take to participate in HAMP for loans that are not owned, securitized or guaranteed by Fannie Mae or Freddie Mac.

Home Prices Increase Slightly in Third Quarter

This story appeared in Bank Digest.

U.S.house prices rose modestly in the third quarter of 2009, according to the FHFA's seasonally adjusted purchase-only house price index (HPI). The HPI, calculated using home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages, was 0.2 percent higher on a seasonally adjusted basis in the third quarter than in the second quarter of 2009. Over the past year, seasonally adjusted prices fell 3.8 percent from the third quarter of 2008 to the third quarter of 2009.

GSE Loan Modifications Continue to Grow

This story appeared in Bank Digest.

FHFA Acting Director Edward J. DeMarco has released the monthly Foreclosure Prevention Report, which provides comprehensive monthly data on the loss mitigation efforts of Fannie Mae and Freddie Mac as well as information on delinquencies, foreclosures initiated and foreclosures completed. Fannie Mae and Freddie Mac completed nearly 32,000 home retention actions in August 2009, a 32 percent increase from July. Also, trial mortgage loan modifications under the Administration's Home Affordable Modification Program increased nearly 30 percent from September to October 2009.

HAMP Servicer Agreements Released

This story appeared in Bank Digest.

The Treasury Department has posted the following servicer participation agreements for the Home Affordable Modification Program (HAMP): Hillsdale County National Bank; QLending Inc.; and Quantum Servicing Corporation.

These agreements are the first step servicers need to take to participate in HAMP for loans that are not owned, securitized or guaranteed by Fannie Mae or Freddie Mac.

Bachus, Capito Call For Hearings To Examine State of FHA

This story appeared in Bank Digest.

Financial Services Committee Ranking Member Spencer Bachus, R-Ala., and Housing Subcommittee Ranking Member Shelley Moore Capito, R-W.Va., urged Chairman Barney Frank, D-Mass., and Housing Subcommittee Chairwoman Maxine Waters, D-Calif., to convene a hearing to examine the precipitous decline in the Federal Housing Administration's (FHA) capital reserves. On November 12, the Department of Housing and Urban Development released an actuarial review  which found that FHA's capital reserve ratio has fallen to 0.53 percent. "The review showed that the MMIF's [Mutual Mortgage Insurance Fund's] capital reserve ratio dropped below the Congressionally-mandated threshold of two percent to a less-than-expected 0.53 percent. If home prices do not recover, the economic value of the MMIF could fall below zero. We are concerned that such a drop could force HUD to request an appropriation from Congress," Bachus and Capito wrote.

Oversight’s Ranking Member Calls for FHFA-IG Clarification

This story appeared in Bank Digest.

Oversight and Government Reform Committee Ranking Member Darrell Issa, R-Calif., has raised questions about whether the Federal Housing Finance Agency has an effective Inspector General. Press reports have indicated that the agency's chief has questioned the authority of the existing IG. Issa called for the former IG of the Federal Housing Finance Board to be empowered to continue to act until a permanent appointment is made, and he questioned whether Fannie Mae and Freddie Mac should receive any additional government support until then.

Low-Income Housing Tax Credit May Be Transferred

This story appeared in Bank Digest.

Shortly after the establishment of the conservatorships for Fannie Mae and Freddie Mac, Federal Housing Finance Agency issued a statement emphasizing the importance of all aspects of the Enterprises’ multifamily businesses to a healthy secondary market and housing affordability—including the low-income housing tax credit (LIHTC) program. However, the FHFA has informed Fannie Mae that a possible transfer of a portion of its LIHTC investments to unrelated third-party investors is consistent with FHFA’s ongoing efforts to conserve Enterprise assets and with the Enterprise’s multifamily housing mission.

FHFA Report Shows Refinance Volumes Dropped in September; Mortgage Rates Still Higher than in Spring

This story appeared in Bank Digest.

A Federal Housing Finance Agency refinance report shows that Fannie Mae and Freddie Mac refinanced more than 3.5 million mortgage loans in 2009 through September of this year. In the month of September, 262,000 mortgages were refinanced—a drop from the volume of the preceding month—with mortgage rates still higher than levels observed in the spring. The report shows that refinance volume decreased from August to September as the average interest rate on a 30-year mortgage in July and August—5.22 and 5.19 percent respectively as reported by Freddie Mac—were at a level higher than the rates observed earlier in 2009.

http://www.fhfa.gov/webfiles/15153/Sept_Refinance_Final_report_and_release_11_2_09.pdf

FHFA Sends Two Reports to Congress on Mortgage Market

This story appeared in Bank Digest.

Acting Federal Housing Finance Agency Director Edward J. DeMarco has sent two reports to Congress pursuant to requirements of the Housing and Economic Recovery Act, passed in July 2008. The reports discuss a number of topics, including mortgage risk, Fannie Mae’s and Freddie Mac’s housing goal performance, and key developments in the housing market. The first report, titled “Default Risk Evaluation in the Single-Family Mortgage Market,” evaluates recent research related to mortgage risk. The report discusses recent literature on underwriting standards, collateral valuation, loan securitization, mortgage modifications, and the effects of foreclosures on home values. The second report, the Annual Housing Report, was  submitted pursuant to Section 1125 of the Housing and Economic Recovery Act of 2008.