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HUD Fleshes Out Plan to Clean Up FHA
American Banker (01/22/10) P. 10; Berry, Kate
HUD will conduct a review every three months of all FHA loans originated over the prior two years, as part of its effort to strengthen the agency. It will start with an analysis of loans made through Dec. 31, 2009, ousting any lenders with a default and claim rate that is more than triple the rate of their region and that is higher than the national rate. The criteria for termination will toughen over time; but HUD says it also will consider factors such as a change in a lender's circumstances, volume of loans and whether lenders operate in underserved areas.
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Fed Buys Another $12b of Agency MBS
Housing Wire (01/22/10) Golobay, Diana
During the week ended Jan. 20, the Federal Reserve Bank of New York purchased $12 billion of mortgage-backed securities from Freddie Mac, Fannie Mae and Ginnie Mae. Gross purchases totaled $16.36 billion -- $1.3 billion of Freddie Mac MBS and $12.8 billion of Fannie Mae MBS. J.P. Morgan data indicates the Fed has more than $100 billion left to spend under its $1.25 trillion MBS purchase program.
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Fannie, Freddie Losses May Hit U.S.
Wall Street Journal (01/22/10) P. A6; Timiraos, Nick
The U.S. government's decision to absorb unlimited losses for Fannie Mae and Freddie Mac over the next three years has generated debate over whether it should bring the business operations of the two firms onto its books. President Obama has resisted calls by the GOP to do just that, as such a move could swell the federal deficit. Despite the costs, the Congressional Budget Office argues that Fannie Mae and Freddie Mac's operations should be accounted for in the U.S. budget as if they were federal agencies. It pegs the total costs of bailing them out at $291 billion, with an additional cost of $99 billion in the coming decade.
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30-Year Mortgage Interest Rates Slide Back Below 5 Percent
Los Angeles Times (01/22/10) Reckard, E. Scott
Long-term mortgage rates fell for the third straight week, pushing the average rate on 30-year fixed home loans below 5 percent again, according to Freddie Mac. This week, average interest on 30-year mortgages was 4.99 percent, compared to 5.06 percent last week and 5.16 percent a year ago. Rates on 15-year fixed loans also followed bond yields lower, averaging 4.40 percent, compared to 4.45 percent last week; and adjustable-rate mortgages also fell this week.
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Treasury Weighs Fix to a Program to Fend Off Foreclosures
New York Times (01/22/10) P. B1; Goodman, Peter S.
The U.S. Treasury reportedly plans to alter the Making Home Affordable initiative to help more borrowers avoid foreclosure. The changes likely will not address "underwater" mortgages, but financial industry executives who met recently with Treasury officials say the revamped program could streamline the application process by allowing pay stubs to be used instead of tax documents to verify income. It also could either require direct cash assistance or postponed payments to help borrowers whose incomes have eroded to the point that they can no longer afford their mortgages.
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