With the economic stimulus (or “e-stim,” as we’ve been calling it) signed into law, President Obama turns his attention to the foreclosure crisis. At an event in Arizona today, he announced the following proposals to help homeowners.
As a rule, banks generally consider renters to be a liability and want nothing to do with them. When a property goes into foreclosure, these renters are usually unceremoniously tossed out and the building resold. Now Fannie Mae has announced a new program whereby renters in good standing will be allowed to stay in their apartments — if the property is owned by the government-controlled home funding company.
As is our habit, we provided Ad Age with a list of our Top 10 Business Debacles of the Year. Are you ready for the pain?
Good news for renters who’ve been dutifully paying their rent while their landlords failed to make the mortgages, and were facing eviction as a result: Fannie Mae will sign new leases with them. [NYT]
The Federal Housing Finance Agency announced plans for allowing Fannie and Freddie to modify more of their loans. The mods will lower interest rates or lengthen the repayment schedule with the goal of bringing payments below 38% of household income. To qualify, borrowers must:
The FBI has launched a fraud probe into Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Sounds kinda like a move to placate the masses. “We’re on it.” No doubt in response to the seething outrage sweeping the nation over the size and audacity of the bailouts, however needed they might be. Sounds like an easy job. Sorta like dipping your hand in a barrel of ink and trying to pull up black stuff.
The government said yesterday that it would forbid Fannie Mae and Freddie Mac from paying their fired CEOs their separation payments or “golden parachutes.” Experts estimate they were together up for $25 million. Political pressure had been mounting, with calls from both presidential candidates and other lawmakers to limit the departing execs’ compensation. Coupling this with the news about the Fed not bailing out Lehman Brothers means only one thing, we’ve entered the funnest part of the sub-prime aftermath, the punishment phase!
Oh dear, all that talk about Freddie and Fannie being “adequately capitalized” was utter bullshit and the government has now announced plans to place the failed government sponsored enterprises into conservatorship. That means the fate of the housing market and the global economy rest squarely on the shoulders of U.S. taxpayers.
Fannie Mae is the nation’s largest mortgage finance company and it’s just not doing too well, says the AP. Increasing losses from foreclosures are wiping out Fannie’s revenue.
Scammers love to tap into national trends to put a new face on an old scam, and the “Fannie Mae, Freddie Mac Equity Prize Draw” scam spotted by the Louisville, KY BBB is no exception.
President Bush signed a massive mortgage relief bill that will help hundreds of thousands of homeowners refinance their unaffordable mortgages into fixed rate government backed loans rather than lose their homes to foreclosure. The bill also put tighter reigns on Freddie and Fannie, says the Associated Press.
This Sunday the Bush administration asked Congress to approve a “rescue package” that would give officials the ability to inject “billions of federal dollars” into Freddie Mac and Fannie Mae. The Federal Reserve also announced that it would make its short-term lending programs available to Freddie and Fannie, said the NYT.
Freddie and Fanny lost about half of their value overnight as investors became more certain that the government was going to have to bail out the two GSEs (Government Sponsored Enterprises.) The New York Times says that senior members of the Bush administration are considering a takeover of Freddie and Fannie that would leave their shares “worth little or nothing,” and where taxpayers would pay “any losses on mortgages they own or guarantee.”
Freddie Mac and Fannie Mae, the “government sponsored” enterprises that are supposed to bail us out of the current mortgage crisis, may be in danger of collapsing, according to William Poole, the former president of the St. Louis Federal Reserve, who told Bloomberg the companies are already “insolvent.”
Fannie Mae lost $2 billion in the first quarter. Whoopsie. [Chicago Tribune ]
My adjustable rate mortgage with Verity Credit Union is due to reset next month. As part of the note there is an option to convert to a fixed rate. The calculation of this fixed rate is clearly defined as equal to Fannie Mae’s required net yield for a 30 year fixed rate covered by an applicable 60-day mandatory delivery commitment plus five-eighths of one percentage point, rounded to the nearest five-eighths of one percentage point. So take the Fannie Mae 30 year 60 day rate add 5/8ths and round to the nearest eighth. The note said the note holder got to decide the day of the rate but Verity was nice enough to let me pick which day I wanted as long as I gave them 15 days notice before the reset date. I patiently watched the rates every day and fortunately right before I was to give them notice rates were steadily declining…
“If I were you, I would want in this time period someone running one of these companies (Fannie Mae and Freddie Mac) to err on the side of pessimism rather than optimism,” he said.
Hey, good point.