Free Republic

Fannie Mae and Freddie Mac are burning a huge hole in the Treasury's pocket. But the Obama administration is getting something very valuable in return: the ability to provide immense support to the housing market with only limited interference from Congress. The credit crunch has displayed yawning democratic deficits, like the inability of Congress to get a proper handle on the Federal Reserve's emergency lending programs. But with Fannie and Freddie, it is the Treasury that gets to freely commit massive amounts of money. Both companies have bought most of the mortgages written in America this year and are modifying...

Economists agree that the home-buyer tax credit is risky and stupid. So why does Washington love the policy? ___ Ted Gayer of the centrist Brookings Institute issued what one CNN blogger described as a "smackdown" of the credit. Simon Johnson, the former chief economist of the International Monetary Fund, and James Kwak, who writes a Washington Post column with Johnson, have called the credit "throwing good money after bad." And conservatives—Kevin Hassett, the director of economic policy studies at the conservative American Enterprise Institute, and Ronald Utt, a senior research fellow at the Heritage Foundation, have penned pieces slamming the...

) today reported its third-quarter 2009 results and filed its quarterly report on Form 10-Q with the Securities and Exchange Commission. The filing provides consolidated financial statements for the third quarter of 2009. The following documents are now available on Fannie Mae’s Web site: News Release reporting third-quarter 2009 financial results Fannie Mae’s quarterly report on Form 10-Q Third-Quarter 2009 Credit Supplement Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to enhance the...

Hot Money HIGHLIGHTS New Financing Source Tied to Immigration Providing "Cheap Equity" for Development Projects in LA This program was started by congress in 1990 to allow high net worth foreign individuals to invest in the US and thereby qualify for citizenship. Segregated by industry and geography. “Pilot” program allows for a regional center to pool these investors. Equity wants only 5-8% yield, so is priced like debt. Program Highlights: LA County only; Census tracts with 150% of national average unemployment rate Construction is best; Hotels, manufacturing, retail, medical office/hospital, and ALF/SNF; This zone specifically targets medical and ALF/SNF; Multifamily...

or nearly two years, home values plummeted to pre-2003 levels. Now, housing markets within the country are showing the first signs of stabilizing. clear pixel According to the latest results from the Standard & Poor’s Case-Shiller Home Price Indexes, which were released last week, 19 of the 20 metropolitan areas show an improvement in their annual rate of return, and 17 of the 20 metropolitan areas saw price increases in August over July. In September, existing-home sales increased to 5.57 million units, up 9.4% from August, according to the National Association of Realtors. “We’ve already seen immediate signs of a housing recovery,”...

Property Values Set to Fall 43% From Current Depressed Levels Michael David White November 02, 2009 Price Trends / WAR OF THE WORLDS: If you use a 20-year time horizon, and assume prices will return to the trend line, then our residential property bubble will bottom after values fall over 40% from current levels (see above (c) aka “(y) - (z)” aka “Loss Today to Bottom”). I make no predictions. I do watch numbers. The chart shows a catastrophe of falling real estate values loaded up on top of our current catastrophe in real estate values. No one would question...

It's time to finally lay to rest claims stretching back as far as 2007 that Goldman Sachs was peddling securities backed by risky home mortgages while it was secretly betting that the US housing market was in trouble. Far from being "secretly" down on the US housing market, very early on Goldman was publicly and privately warning that home prices would decline and that this decline would have an impact on mortgage backed securities. The complaints about Goldman being on both sides of the mortgage trade stretch at least as far back as December, 2007. Ben Stein wrote a column...

The Richmond Fed produced a report that provides some useful information on the issue of non-recourse mortgage loans and their default rates. The report includes a State-by-State breakdown of the rules for defaulting. This report was over my head. For example, the following calculation describes the probability of a short sale in a Recourse State: The conclusions are easier to read. I found this interesting: “For homes appraised at $300,000 to $500,000, borrowers in non-recourse states are 59% more likely to default than borrowers in recourse states. For homes appraised at $500,000 to $750,000, borrowers in non-recourse states are almost...

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

High Exposure To Equities? Be Careful Out There By: The Housing Time Bomb November 01, 2009 I just wanted to hop on tonight and issue a warning to anyone who has participated in this rally or has a high exposure to equities. The price action Friday was absolutely frightening! I guess it was perfect timing considering Halloween was Saturday night. IMO it is time to lighten up considerably if you are on the long side. As most of you know, this blog focuses more on the macro/long term outlook on the economy. I have remained consistently bearish because we have...

Oh boy: (h/t Doug Ross) The [Fannie Mae] "seriously delinquent" rate has gone parabolic, increasing by roughly 5% sequentially and just under 300% YoY [year-over-year]. As mere text will simply not do this metric justice, please enjoy this chart of the dataset from Blytic. It tells you all you need to know about the Fed's containment of the housing problem. The August seriously delinquent single-family number comprised of a 2.87% non-credit enhanced delinquencies and a very bothersome 11.52%, consisting of credit enhanced loans ~~~ The deterioration of FNM's book however did not stop it from increasing the size of its...

Looks like the notorious UN Human Rights Council has taken a break from its constant bashing of Israel and is focusing on (ready for this?) housing violations in US cities, including New York. You didn't know that "adequate housing" (whether you pay for it or not) was universal human birthright? Neither did we. Nonetheless, the panel sent its "special rapporteur on adequate housing," Raquel Rolnik, on a whirlwind tour to sniff out these "violations" -- not to say, crimes -- against humanity. Rolnik launched her US visit last week in the city and is also traveling to places like Chicago,...

WASHINGTON (Reuters) - Sales of newly built U.S. single-family homes unexpectedly tumbled 3.6 percent in September in their first drop since March, but the inventory of new homes available at the end of the month shrank to the smallest in 27 years, government data showed on Wednesday. September single-family home sales totaled 402,000 units at an annual pace. Analysts polled by Reuters had expected new home sales to rise to a 440,000 unit annual pace from a revised 417,000 units in August, which was originally reported as 429,000 units. The median sales price rose in September to $204,800 from $199,900,...

<p>Back in the winter when Congress was debating whether stimulus programs could get money into the economy quickly enough to make a difference, supporters of government efforts to prime the pump argued that tax credits would offer Americans a quick financial shot in the arm. After all, what else does government need to do to process a tax credit except take in applications, verify their accuracy, and then ship the money out the door?</p>

Are you wealthy but homeless? Lucky you. For well-off folks who don't own a home now and don't mind renting for a while, this is a something of a golden era. That's because renting--particularly at the high end--has become such a startlingly good deal in some cities. There's no telling how long this period will last. But sellers of fancy homes, while refusing to drop their asking prices, seem happy to lease them out for a year or two on the cheap. It was true earlier this year, but it's even more so now, thanks to some hefty rent reductions....

As the U.S. housing market has moved from boom in the middle of the decade to bust over the past two years, the sources of mortgage funding have changed dramatically. The government-sponsored enterprises—Fannie Mae, Freddie Mac, and Ginnie Mae—now own or guarantee an overwhelming share of originations. At the same time, non-agency mortgage securitization and loans retained in lender portfolios have largely dried up. This is figure 3 from the Economic Letter. (CLICK LINK TO SEE CHART) This shows the surge in non-agency securitized loans, and loans held in bank portfolios, in 2004 through 2006 (the worst loans).The sources of...

Get Ready: The Case-Shiller Will Show Housing Is Falling Again Vince VenezianiOct. 26, 2009, 12:43 PM The last few Case-Shiller reports have shown sequentially increasing home prices, but that's about to come to an end when the new numbers come out tomorrow. The Altos Research 10-City Composite Index is down 1.1% for the third quarter of 2009. Altos Research: From our October 2009 Real-time Housing Report, The Altos Research 10-City Composite Index was down by 0.5% in September and 1.1% during the third quarter. Using the housing market ask prices and more specifically, looking at the ask prices of new...

In Part I, “Scam in the making”, I explained how Wall Street created the U.S. housing-bubble and its concurrent Ponzi-scheme – with the full assistance of its accomplices: U.S. rating agencies and U.S. regulators. I also explained why it had to be obvious before they started creating this bubble that it would end with an unprecedented wave of foreclosures. Because a big part of the bubble/Ponzi-scheme was “mortgage securitization” (which meant the bank originating the mortgage no longer held title to the mortgage), and because the U.S. financial crime syndicate knew there would be a huge wave of foreclosures, it...

UN Investigator Probes US Housing Crisis And a United Nations investigator has opened a probe into the US housing crisis. Raquel Rolnik, the UN Special Rapporteur on Adequate Housing, will investigate issues including public housing, homelessness and foreclosures. On Thursday, Rolnik held a public meeting with housing activists in New York. UN Special Rapporteur on Adequate Housing Raquel Rolnik: If we take housing as a human right, you have to go back to the idea that housing is a social issue before and more priority than housing as a commodity, as a financial asset. As part of her inquiry Rolnik...

DETROIT (Reuters) - In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

Everybody knows New York City is an expensive place to live. But the United Nations wants to know if affordable housing is so tough to come by that it actually violates human rights.

An article that details the New York Court of Appeals case that dealt with the raising of rent amounts for a group of apartments in the Stuyvesant district. This is what happens when you institute a price floor (see comment for below) First three paragraphs: Tenants and landlords spent much of Thursday struggling to figure out what the state high court’s ruling on the future of Stuyvesant Town and Peter Cooper Village meant for all types of New Yorkers. Real estate moguls feared the news would cripple their industry, and tenants worried about their rents. Despite the lack of clarity,...

In the midst of the raging healthcare debate over who owns your body and can decide what repairs it receives, the media and the public have overlooked the fact that the U.S. House of Representatives has already ruled in H.R. 2454 that the state owns your house and can decide what repairs it receives. Your name might be on the title, the mortgage, the homeowners policy, and the property tax bill, but if H.R. 2454 becomes the law of the land, the federal government will become a dictatorial homeowners association (HOA) with the power to make your house unsalable unless...

Four-Year Old Buys House With Federal Money Vincent Fernando|Oct. 22, 2009, 11:08 AM | The stories about a return to bubble-era lending standards are getting too depressing to bear. There are the no-down payment loans backed by the USDA, the FHA mortgage worth more than 110% of the value of the home, and now this: babies buying homes. Georgia Congressman John Lewis is holding hearings: “We will hear today that taxpayers claiming the credit include those: who already owned a home, who had not yet bought a home, and who are children—some as young as four years old. There are...

Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops—especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years. The Wall Street Journal's quarterly survey of housing-market data in 28 major metro areas shows sharp drops in the number of homes listed for sale across the country. But the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in some areas, notably Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento, Calif., over the...

A few days ago we told the story of Denise Tejada, the 21 year old California woman who bought a house with an FHA backed loan with almost no money down. Readers were outraged. And rightfully so. It's our money on the line and it is simply outrageous that our government is still encouraging these kind of loans to be made. Even if Tejada pays off her loan in full, it was an insane gamble on our behalf to have the government back her loan. But as it turns out, the gamble was even more insane that we originally reported....

Edward Pinto, the former chief credit officer at Fannie Mae, and a consultant to the mortgage industry lays out the sad truth. The government is aggressively making the same pro-homeownership moves that got us into the last mess.

Market Movers That Aren't Housing by: Wall Strategies October 20, 2009 The market is fixated on the less than desirable housing-related reports out Tuesday morning. Such below-consensus readings on starts and permits are a shot across the bow for regulators to cut the smooth talk and extend the housing tax credit. Whether the tax credit has had a huge impact on overall housing demand in recent months is not very supported in the statistics (low mortgage rates arguably a bigger component). But, much could be said about bolstering market psychology, in this case that of homebuilders. Maybe it is time...

The financial pandemic smolders untreated beneath a hastily plugged-in life support of increased overspending that is only masking and prolonging the disease; the final collapse is getting closer. The housing collapse wrung the illusory wealth out of homes and banks as the buildings and their mortgages returned to the real world together. Suddenly bereft of wealth, homeowners cut spending; banks froze. Without buyers, business contracted, hemorrhaging ex-employees who spend even less. Instead of letting the sick banks clean out the worthless loans and securities that infect them, thereafter dying or returning to health as might be, the government has transfused...

Lenders’ actions show they think properties are not worth pursuing. Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t be identified in searches of public real estate and court data without individually pulling case files, experts say. But nobody questions that they are on the increase. David Rothstein, a researcher with Policy Matters Ohio, summarized the way they occur like this: • The lender files a foreclosure, gets the foreclosure judgment in court, takes the property to sheriff’s auction but doesn’t bid on it if no one else does. • The lender files as...

Subprime mortgages: Myths And Reality Kent Cherny & Yuliya Demyanyk 17 October 2009 The global crisis is said to have originated in the US subprime mortgage market. This column argues that many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. Subprime mortgages have received a lot of attention in the US since 2000, when the number of subprime loans being originated and refinanced shot up rapidly. The attention intensified in 2007, when defaults on subprime loans began to skyrocket triggering what was known at the time as the “subprime crisis”...

Following Vietnam’s property market collapse earlier this year, luxury apartment prices have fallen sharply, with a 30% drop in places like Phu My Hung and as much as 60% in other areas. The slump has been particularly hard in the luxury segment. Independent financial expert, Bui Kien Thanh, said local developers had focused too highly on luxury properties. He said the luxury segment is set for more trouble since customers have raised complaints about the quality of the apartments they have bought. Former deputy minister of natural resources, Dang Hung Vo, said that property prices would continue to fall if...

An Oregon apartment complex reversed its ban prohibiting residents from flying American flags from dwellings and parked vehicles after the property manager decided she didn't have the legal standing to do so, KATU in Portland reported Wednesday. The American Civil Liberties Union said that Barb Holcomb's ban at Oaks Apartments did not violate any laws, but Holcomb said her legal cousel led her to believe otherwise so she reversed the decision. "If people want to fly any flag of any nationality, it's their right," she told KATU. "When a tenant rents the unit, the inside of the unit belongs to...

A sturdy bike is a good way to get around the Lower Ninth Ward in New Orleans. The roads are still pretty rough, the distances between places tend to be too long to walk and too short to drive, and on a bike you can easily stop and chat with the residents who have returned. I moved to New Orleans about a year after Hurricane Katrina, and I’ve ridden my bike out here every month or two to see how the rebuilding has been faring. Also, I’ve heard that Brad Pitt likes to bike around when he’s in town. Folks...

Seriously Folks, The Housing Bubble Is Back Joe WeisenthalOct. 15, 2009, 5:51 AM We mentioned this a week ago, though this story has been kind of flying under the radar: The housing bubble is back. No, home prices aren't (yet) at overinflated levels again, but the housing market is seeing a return of enthusiasm, mania, and speculation, the likes of which we haven't seen in a long time. Now CNBC's Diana Olick (via Calculated Risk) is talking about it. Here's an email a realtor sent to a friend of hers. The foreclosure capital of America, Vegas home prices are down...

There were over 900,000 foreclosures in the third quarter as Foreclosures rise 5 percent from summer to fall. The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs. The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this...

The 1977 Community Reinvestment Act, enacted under President Jimmy Carter, was intended to end "redlining," a practice in which banks supposedly ruled off many inner-city neighborhoods on their maps, refusing to issue mortgages within their boundaries. The immediate result was that -- to please regulators who have the power to shut down private banks -- bankers started reducing their financial standards, issuing loans to low-income or low-net-worth customers who might not previously have qualified. These lowered standards led, in part, to the housing market meltdown. But the Community Reinvestment Act did something a lot more troubling than that. It allowed...

Common sense, down-to-earth economist, Thomas Sowell, is a master of taking complicated economic principles and making them clear and understandable. Sowell has authored dozens of books, including his most recent, "The Housing Boom and Bust". Many praise Thomas Sowell's ability to deliver economics to main street America. What Sowell hasn't received enough credit for is his prophetic warning about the housing bust. On May 26, 2005, when virtually no economist, including the wizards at the Federal Reserve and the Treasury Department, were warning of a housing bubble, Sowell wrote predictive op-ed in the Wall Street Journal:

Forget what you've heard about a glut of new houses on the market. For three years, Dallas-Fort Worth builders have sold more homes than they have constructed. So the inventory of finished new houses has fallen so low that homebuyers may encounter a shortage when next year's market kicks off.

Roubini says housing market hasn't bottomed By Walter Brandimarte Thu Oct 8, 12:16 pm ET NEW YORK (Reuters) – U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday. Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks to raise more capital. "The stress is moving from residential mortgages that are still in deep trouble, to commercial real estate, where they...

Fitch Ratings on Tuesday released a wide-ranging look at option ARMs that paints a decidedly negative picture for the mortgage markets over the next 36 months. In fact, the picture is a downright scary one: the bottom line is that most outstanding neg-am mortgages won’t get out of 2011 alive, thanks to forced recasts. Fitch analysts said they now expect roughly $29 billion in option ARMs to recast to higher monthly payments by the end of 2009, and an additional $67 billion to recast in 2010; of this, approximately $53 billion is attributed to early recasts. snip...

Over 5 million YouTube views. Dems will call it "old news." Conservatives will call it "a history lesson from which we need to learn." Who's more the more responsible group of folks here?

Famed for building homes for the poor from scratch, Habitat for Humanity sees a silver lining to thousands of foreclosed homes available for a pittance. ___ Shanta Brown, a nursing assistant in Charlotte, N.C., walked through her soon-to-be home in August, pointing out favorite features — the living room's vaulted ceiling, two full baths and new black countertops she chose for durability. In a few minutes, Brown would stand outside the front door and cut a ribbon, dedicating the first house in Habitat for Humanity Charlotte's ambitious new effort to rehab homes in neighborhoods decimated by foreclosures. Across the country,...

Most of the mobile homes in the U.S. are located in the south, where land is more plentiful, the weather is warmer, and rural poverty is higher. The region is home to over 56% of the mobile housing units in the U.S., according to the U.S. Census Bureau's 2008 American Community Survey data released Monday. Specifically, two cities outside of Jacksonville, Fla., had the country's highest concentration of mobile homes, which are generally about 12-feet wide and include a kitchen, a living and dining area, and one or two smaller bedrooms. While mobile homes make up only 6.17% of the...

Americans have tamed their wanderlust during this recession, according to the latest data released by the U.S. Census Bureau. Only about 2.4% of Americans moved from state to state in 2008, down from 2.5% the previous year. "The mobility rate is lower than it has been in years," said Robert Lang, a demographer with Virginia Tech University. "There's a recession and a housing bust. People can't sell their homes in California and move to Las Vegas or sell their condo in Florida and move to North Carolina." "People are hunkering down, trying to hold on to what they have," added...

Bizarre Logic for High House Prices in China Critics say claim that mothers-in-law are responsible masks political reality By Luo Xi & Jin Xi Epoch Times Staff Sep 14, 2009 One of the cartoons circulating online making light of Gu Yunchang's remarks. The man says "Mother-in-law, this clothing is most suitable for you to wear!" The writing on the clothing says "Rising houseprice scapegoat." (NTDTV) Chinese officials have been putting forward bizarre explanations for China’s rising real estate prices recently, with Secretary-General of the China Academy of Real Estate, Gu Yunchang, blaming the ever rising housing prices on mothers-in-law. Gu...

After posting four straight months of gains, a survey showed Thursday that sales of previously owned U.S. homes unexpectedly fell in August, a minor setback for the housing market's recovery from a three-year slump.

Financial Crisis Roots Unearthed by: Brittany Fortier, September 22, 2009 Critics of free market economics have conveniently blamed “laissez-faire” policies for causing the current worldwide recession. On September 2, 2009, the CATO Institute held a briefing on Capitol Hill to discuss the causes of the financial crisis and evaluate whether deregulation should be blamed for the economic downturn. Johan Norberg, Senior Fellow at the Cato Institute and author of the new book Financial Fiasco: How America’s Infatuation with Home Ownership and Easy Money Created the Economic Crisis, argued that many factors causing the crisis were “global” in nature but that...

A tangled web of ACORN affiliates amassed a real estate empire worth at least $50 million, owns or manages nearly 1,500 housing units and collects an estimated $5.7 million in rents, fees and profits from sales. The properties are controlled by an opaque collection of nonprofits, holding companies and development funds w/ generic names: 385 Palmetto Street Housing Development Fund or the Mutual Housing Association of NY, hiding ties to ACORN conglomerates.....the income supports at least 18 local ACORN affiliates largely based at 2-4 Nevins St, Brooklyn, an address ACORN shares with the left-of-center political entity--the Working Families Party. NY...

It is time to call "BS" on the so-called "reform" in the mortgage lending industry, along with the government's "progress" in this regard. The current FHA report is now out for servicing delinquencies and defaults, and as expected it is indeed worse, not better. The administration continues to LIE about claimed "improvements" in the character of home finance. 22.9% of all FHA loans are either delinquent or in foreclosure. Here's the previous report: Let's see - 30 days are up, 60 days are up, 90+ days are up, default+foreclosure is up and 60+ including foreclosures are of course up. Improvement?...