Coakley said mortgage giants Fannie Mae and Freddie Mac, currently under the control of the agency, have refused to comply with a 2012 Massachusetts law that allows the sale of homes in foreclosure to nonprofit organizations whose goal is to keep homeowners in their homes.
The state law explicitly forbids banks and lenders from refusing to consider offers from legitimate buyback programs merely because the property will be resold to the former homeowner.
[Boston Community Capital’s CEO Elyse Cherry] said Fannie Mae and Freddie Mac are significant lenders and their refusal to work with nonprofits seeking to keep homeowners in their homes is a problem.
Fannie Mae and Freddie Mac will extend new waivers to lenders allowing them to avoid demands that have resulted in billions of dollars of so-called put-backs, in which banks are forced to repurchase defective mortgages sold to the loan giants.
The changes are significant because some industry analysts and economists have said they could lay the groundwork for lenders to relax credit standards. Lenders and policy makers have faulted ambiguous rules around mortgage put-backs for lending standards that they say are unnecessarily rigid.
In bulletins published Monday, the companies said they were announcing the policy changes at the direction of their regulator, the Federal Housing Finance Agency.
Government-controlled mortgage financers Fannie Mae and Freddie Mac posted solid earnings for the January-March period as the U.S. housing market continued to recover. Gains over recent quarters have enabled the companies to fully repay their taxpayer aid after being rescued by the government in 2008.
The gradual recovery of the housing market has made Fannie and Freddie profitable again. Their repayments of the government loans helped make last year’s federal budget deficit the smallest in five years.
– Daily Finance
Mayor Rahm Emanuel said Tuesday that he does not support the idea of using eminent domain to seize underwater homes and then refinance those mortgages to more affordable terms.
He made the statement as Chicago aldermen were in a committee hearing trying to understand the proposal floated by a California firm.
The concept of using eminent domain to help solve the nation’s housing crisis surfaced in San Bernardino County, Calif., and has since been taken up for discussion in several municipalities.
Last week, the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddie Mac, said it had “significant concerns” about any use of eminent domain to help underwater homeowners.
– Chicago Tribune
This year, Washington housing wonks have fought over “principal reduction”: reducing mortgage loan balances for underwater borrowers to help them stay in their homes. The fight has turned nasty and personal with Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA)—the regulator of Fannie Mae and Freddie Mac—at its center. It’s an insiders’ fight, hardly registering on Main Street or in the election campaign. Regardless of what the FHFA decides in the coming weeks, the fuss over principal reduction underscores the three big lessons about US housing policy: 1) U.S. housing policy is a sloppy patchwork; 2) it’s all about who pays; 3) moral hazard is a political landmine.
– U.S. News & World Report
The regulator for Fannie Mae and Freddie Mac could have a “legal responsibility” to approve loan modifications for certain homeowners now that the U.S. Treasury has offered to share in the cost of mortgage write-downs, said Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development.
In the interview, Mr. Donovan said that the ultimate success of the Obama administration’s housing policies would be determined by the future path of home prices and “whether the average American once again has faith that buying a home is something that is a safe investment in the long term.”