Government Seeks to Shut Down Fannie and Freddie

The FHFA, who oversees GSEs Fannie Mae and Freddie Mac as a conservator, has a plan to shrink their involvement in the housing market over time. They want to create a new market for mortgage-backed securities; something more privately-owned rather than government-backed. Fannie and Freddie have had a major part in keeping the housing finance market going during the country's recession and economic hardship. They currently represent 75% of all new home loans, which equals to nearly $100 billion a month in mortgages. However, President Obama and Congress seek to shut down Fannie and Freddie so they can ultimately reduce the role that the government plays in the mortgage market. There is not yet an official plan on how to squeeze out the GSEs without causing further damage to the housing market,...

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Greece Stable For Now; Impact on U.S.?

Europe's Finance ministers have officially given Greece 130 billion euros. As we reported last, Greece was given enough debt relief to help them not default on their bond repayment due in March. Greece is holding steady for the moment, but this in no way fixes their long-term problems. Additionally, the bailout has certainly had an impact on the overall European market. The euro has fluctuated since a whopping 386 billion euros have been spent to rescue not only Greece, but also Ireland and Portugal. Greece is now forced to abide to these strict austerity measures and economic reforms that come with the deal. Adhering to these rules, however, might prove to be too rigorous for the Greek citizens which could ultimately lead to social unrest and more rioting, something that the Greek politicians...

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FHFA's Next Step Regarding GSE Conservatorship

In February 2010, the FHFA's Acting Director Edward J. DeMarco wrote a letter to Congress regarding conservatorships of the GSEs Fannie Mae and Freddie Mac. Recently, he has also released the next phase of his plan that builds on what he wrote in that letter 2 years ago. It is meant to update and extend the goals of these conservatorships. First of all, what is a conservatorship? The FHFA is the conservator, or an organization that has legal control over another entity, which would in this case be the GSEs. Fannie Mae and Freddie Mac have received $180 billion in taxpayer support since they have been placed into conservatorship in September 2008. DeMarco's plan will establish objectives that the FHFA is to take in order to meet its obligations as a conservator. It consists of three strategic...

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Retirement Growing Increasingly Difficult for Americans

In this rough economy, most people cannot afford to be unemployed. This is especially the case when these people have mortgages to pay. However, money woes do not discriminate against age. More and more, people are finding themselves unable to retire at the traditional age of 55. In fact, surveys have shown that just over 40% of Americans 55 and older are still working. Comparatively, this figure was below 30% in the early 1990s. Granted, there are people in this age range that choose to work. But overall, people don't have much of a choice otherwise. The economy can take the blame for that. Fortunately, there are more jobs today that are not physically demanding as compared with past decades, so those who are forced to work are at least able to do so relatively well. Those who have held...

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Greece Bailout Update

For months, citizens of Greece have been protesting against the possibility of very strict austerity measures being placed upon them. There have been riots that have occurred because of these measures as well as the potential bailout that Greece had requested. Now, a deal has finally been reached. The eurozone and the International Monetary Fund (IMF) have agreed to supply Greece with €130 billion ($170 billion) in additional bailout loans. The fear was that Greece would default in March without these additional funds. According to the terms of this new program, private bondholders have agreed to take greater losses on their end, while Athens is forced to commit to these very severe but ambitious austerity measures that the citizens have long been against. These austerity measures including...

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Obama's Optimistic Economic Recovery Budget Plan

We have reported about Obama's Economic Recovery plan in the past. Here is a breakdown of what it entails. Basically, he wants to start decreasing debt by spending more money. It goes without saying that many people have a problem with this theory. Congressional Republicans in particular have been tearing this plan to pieces claiming that spending money we don't have is not the way to help the economy recover. First of all, the President has very optimistic hopes for the economy. In a proposed budget plan, he expects to cut $4 trillion out of the country's deficit over the next ten years. The deficit would fall to $901 billion in 2013 and then $575 billion by 2018. However, in order to achieve this lofty goal, the administration wants to raise spending on programs that will supposedly kick-start...

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FHA Saved from Needing a Bailout

Several months ago, the Federal Housing Administration (FHA) asked for a bailout. The White House Office of Management and Budget (OMB) crunched the numbers and found that the FHA needed $688 million. This would mark the first time in the FHA's 78-year history that a bailout was ever needed. However, some good news has surfaced for the FHA. We previously reported about the $25 billion settlement between attorneys general and the nation's five largest banks over fraudulent foreclosure agreements. We also mentioned the problem with Bank of America and Countrywide handing out mortgages to unqualified homeowners which brought about a $1 billion settlement. Because of these, and increased insurance premiums, the estimate that the OMB gave to the FHA regarding their bailout request is no longer...

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HUD's Plan to Improve Public Housing

The U.S. Department of Housing and Urban Development (HUD) has recently given $1.8 billion to public housing authorities that will allow these agencies to improve their public housing units. This will have an effect on all 50 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands. These grants are supplied through HUD's Capital Fund Program which annually provides funds for public housing communities to be able to build, repair, renovate and upgrade features such as roofs, plumbing and electrical systems to enhance efficiency. HUD's budget for 2012 will ultimately help to preserve and enhance America's affordable housing, which includes public housing. They have been given the go-ahead by Congress to test a comprehensive demonstration tool to begin this preservation...

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Economy Impacting News from Around the World

Here on our own turf, President Obama is proposing a new "Seven Step" budget plan to Congress in hopes of cutting the country's deficit by $4 trillion over the next 10 years. He will do this by raising taxes and cutting expenditures. However, this plan is likely to cause a larger deficit first before it reduces it. The expectation is $1.33 trillion in 2012 and $1 trillion in 2013. This is mostly due to the government trying to pull the struggling economy out of the gutter, such as helping homeowners to refinance at lower rates across the board to clear up much of the underwater housing market. Here's to hoping this plan really will help the citizens and in turn reduce the deficit which is currently at a staggering $15 trillion. Moving on to Greece. As you may know, its outraged citizens have...

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$1 billion False Claims Settlement Against Bank of America

The government has been investigating the lending practices of Bank of America since 2009. The bank, and Countrywide Financial Corporation which it acquired in 2008, had knowingly been giving FHA-insured loans out to unqualified home-buyers. This has resulted in hundreds of millions of dollars in damages to the FHA. The investigation also looked into whether or not BofA and Countrywide had been defrauding the FHA insurance fund with mortgage loans that were based on inflated appraisals. Finally a settlement has been reached. Bank of America will have to pay $1 billion to correct this wrongdoing. They must pay $500 million upfront to provide a recovery fund for the damages done to the FHA. The second $500 million will be used to fund a loan modification program for Countrywide borrowers...

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Obama's Foreclosure Prevention Plan

How would you like to save $3,000 per year on your mortgage? That's exactly what President Obama is working to do for American Homeowners. He announced on February 1st that he has a plan to help homeowners like you to refinance your mortgage. Why? The goal is to help stabilize and boost the housing market again. Although, this plan is expected to cost between $5 billion and $10 billion to put into effect. Obama plans to get the funds for this by putting a fee on large banks. The programs associated with this plan will give lenders and other stakeholders the tools they need to help borrowers with their mortgage woes and to ultimately increase the country's confidence in the real estate finance system. The Obama Administration, Congress and the National Association of Home Builders will continue...

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Mortgage Rates Reach NEW Record Lows

According to Freddie Mac's Primary Mortgage Market Survey, mortgage rates have dropped even more! They are now at NEW all-time record lows. This includes all rates except for the 1-year ARM which didn't reach a new low. 30-year fixed-rate mortgages (FRM) are averaging at 3.87 percent. This time last year it was at 4.81 percent. The 15-year FRM averaged 3.14 percent which is down from 4.08 percent last year. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.80 this week and was at 3.69 last year. These new record lows make it a great time to get a mortgage. However, economic growth has fallen short of market projections which is why these rates have eased. Although, both residential construction spending and fixed residential investment have increased...

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FHFA's "Pilot Phase" for REO Initiative

Here is some more information about the Federal Housing Finance Agency's new REO Initiative regarding turning REO's into rentals. They are starting off simple with a "pilot phase" that is excepted to include 500 to 1000 homes provided by Fannie Mae. The GSEs have more than one million foreclosure properties in their possession. The purpose of this pilot phase is to examine:Investor interest in various types of assets How investors can maximize the participation of experienced local firms and organizations that can provide the types of services and support needed for stabilization in the community The types of structures and financing that would improve returns to the sellers as well as the value of the homes The process that qualifies these investors and how they participate in sales transactions There...

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REO Initiative to Rent Out Foreclosed Properties

The FHFA has announced the first step of an REO initiative that will aim to help the cities that got hit the hardest nationwide. Investors can pre-qualify to establish eligibility so they can bid on transactions during this initial phase. Qualified investors will be allowed to purchase foreclosed properties but they are required to rent these out for a specified number of years. The hope is that this rental period will provide relief for depressed housing markets that are overwhelmed by foreclosed properties, and will also provide more rental options. This should put the country one step closer to stabilizing communities and maximizing the value of homes. This REO Initiative is partnered with the U.S. Department of the Treasury, the HUD, the FDIC, the Federal Reserve, Fannie Mae and Freddie...

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