Untruth of the Day: Treasury Official Says Housing Goals Not to Blame for Fannie, Freddie Failures - WSJ

An Asst. Treasury Secty has proclaimed to the Mortgage Bankers Association that Fannie Mae and Freddy Mac didn't fail because the government mandated they relax lending standards in order to meet affordable housing goals. Nope, they failed because Fannie and Freddie relaxed lending standards in order to generate more loans and make more money!

Treasury Official Says Housing Goals Not to Blame for Fannie, Freddie Failures - WSJ

Methinks the Asst. Treas. Secty doth protest too much. Fannie, Freddy, and lenders in general

FT.com - Cleaning up toxic mortgage assets a slow task

Nearly all new mortgage lending is coming through government-sponsored entities (GSE's) like Freddie Mac and Fannie Mae.  These entities cap the level of individual mortgages, such that the low end of the market is supported.  But what about the higher end - - homes requiring larger "jumbo" mortgages?  That money comes from private investors, and those sources dried up when the mortgage crisis hit.  Why haven't private sources re-entered the marketplace?  Because they haven't figured out what to do with their existing portfolios yet!  One factor in particular is the struggle from the holders of first and second mortgages.  As this Financial Times article explains, second mortgage holders are no longer willing to allow first mortgage holders to exercise their "first in line" rghts when it comes to loan modifications and collections, slowing the process for all. - David

The Fed's Withdrawl from Morgage Purchases - A Conversation

As the Fed prepares to curtail its purchases of Fannie Mae & Freddie Mac loans on March 31, the obvious pressures on rates will be upward.  How much?  Perhaps mortgage rates will rise 1%, to a level of 6%, says one expert in this RISMedia conversation. - David

Real Estate Definitions : Short Sale

A "Short Sale" is when a home seller sells his home for a lesser amount than what is owed on his mortgage, and the mortgage lender agrees to accept the lesser amount in lieu of a full payoff.
By way of example, a Short Sale may be appropriate for a home seller whose mortgage balance is $250,000 but whose home wouldn't sell for more than $220,000.  Rather than pay the $30,000 difference to the lender at the time of sale, the seller enters into an agreement with the lender by which all sale proceeds are paid to the bank and the deficient balance is forgiven.

More loans going bad, but more get help | Inman News

Across the nation, more loans continue to go bad.  But now there's some good news: More and more of those are getting restructured so as not to end up as foreclosures. - David

More loans going bad, but more get help | Real Estate and Technology News for Agents, Brokers and Investors | Inman News

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Fannie Mae expedites REO sales | Inman News

Hoping to speed the disposition of foreclosed real estate from its portfolios, the Federal National Mortgage Association (Fannie Mae) has announced streamlined sale approval policies.  FNMA carries around 75,000 homes on its books at present; FHLMC has around 40,000. - David

Fannie Mae expedites REO sales | Real Estate and Technology News for Agents, Brokers and Investors | Inman News

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AP Mobile News story - Fannie, Freddie proving too big to shrink

The gov't has decided Fannie & Freddie are here to stay for the foreseeable future. Probably makes sense if done efficiently, a Big If.  But these entities can be effective at keeping the mortgage markets liquid, and their securitization practices are bound to draw intense scrutiny, protecting institutional investors who didn't bother to understand what they were buying last time. Hopefully, a net positive. -David

http://m.apnews.com/ap/db_11751/contentdetail.htm?contentguid=eXr591sF

Gov't stands behind Fannie, Freddie - Inman News

More on Fannie & Freddie, the GSE twins with their share of underwater mortgages. - David

Gov't stands behind Fannie, Freddie - Inman News

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What to do with Fannie & Freddy?

The fate of Fannie Mae (est. 1938) and Freddy Mac (est. 1970), both of whom support the mortgage markets by purchasing, securitizing, and reselling home morgages from mortgage originators, is unclear at best.  Established to facilitate home ownership, this Bloomberg article tells us their effectiveness at that role, and their financial viability, is in serious question. - David