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U.S. Considers Remaking Mortgage Giants
Washington Post (08/06/09) P. A1; Goldfarb, Zachary A.; Cho, David
A proposal to dramatically revamp Fannie Mae and Freddie Mac will be considered by the White House's National Economic Council beginning Aug. 6. The plan would place the firms' toxic assets into new government-backed financial institutions, or "bad banks," that would handle collection activities. Fannie Mae and Freddie Mac would be left with a clean slate, and it is possible that they would be consolidated into a single government agency. Other options include privatizing mortgage finance or retaining the hybrid model.
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Regulator of Fannie, Freddie to Step Down
Wall Street Journal (08/06/09) P. A2; Timiraos, Nick; Holzer, Jessica
James Lockhart has decided to step down as head of the Federal Housing Finance Agency, the main regulator of Fannie Mae and Freddie Mac. He reportedly has been in contact with Obama administration officials regarding succession candidates, but there are no hints as to whom the agency's new director will be. Lockhart is leaving at the one-year anniversary of FHFA, which was established last summer to replace the Office of Federal Housing Enterprise Oversight.
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Eye on Refis
American Banker (08/06/09) P. 9; Hochstein, Marc; Berry, Kate; Terris, Harry
The Mortgage Bankers Association reports that its index of home loan demand rose 4.4 percent last week as interest rates on 30-year fixed mortgages declined 19 basis points to 5.17 percent. Refinance applications increased 7.2 percent, to account for 54.2 percent of all volume; refi requests are now nearly 35 percent higher than the recent low at the end of June. Purchase activity, meanwhile, rose 0.9 percent. MBA said its overall index is up 18 percent from a year ago.
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Drop in Homeownership Likely to Continue
USA Today (08/06/09) El Nasser, Haya
New research from the University of Utah projects that the homeownership rate will decline in the next decade to lows not seen since the 1980s, and the collapse of the realty market could be a contributing factor. The housing crisis may lead fewer speculators to purchase homes as investments, and it will be tougher to buy because lenders are tightening their mortgage rules. Also, smaller households, an influx of immigrants and a desire to save energy could cause the percentage of households that own homes to decline to about 63.5 percent by 2020.
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Business News in Brief: Radian Earnings, Shares Higher
Philadelphia Inquirer (08/06/09)
Radian Group Inc.'s stock soared 83 percent after the Philadelphia-based mortgage insurer recorded a second-quarter profit on lower provisions for losses. The firm's net income totaled $231.9 million for the three-month period versus a loss of $392.5 million during 2008's second quarter. Radian has tightened its oversight, rescinding or rejecting a number of claims on the grounds that false information voids coverage.
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