Entries in Freddie Mac (16)


Mortgage Rates Drop to Record Low Again

Comstock/Thinkstock(NEW YORK) -- Fixed mortgage rates dipped to a record low for the second consecutive week as borrowing costs remain low to support the housing recovery.

The 30-year fixed-rate mortgage fell to 3.31 percent for the week ending Nov. 21, from last week’s 3.34 percent, according to Freddie Mac.  It's also down from a year ago when it was 3.98 percent.

The 15-year fixed-rate mortgage dropped to 2.63 percent from 2.65 percent last week and 3.3 percent a year ago at this time.

Freddie Mac supports one in four home buyers with financing.

“Fixed mortgage rates continued to ease somewhat this week to record lows and should help the ongoing housing recovery,” said Frank Nothaft, Freddie Mac’s vice president and chief economist.

On Tuesday, the Commerce Department reported that construction on new homes rose 3.6 percent in October to an annual pace of 894,000 -- the best rate since July 2008.

Existing home sales increased 2.1 percent in October to an annualized pace of 4.79 million, which was higher than expected.

Copyright 2012 ABC News Radio


Oregon Meth House Owners Deliver Petition to Freddie Mac

Win McNamee/Getty Images(NEW YORK) -- An Oregon family who unknowingly bought a house that had been used as a meth lab is delivering a petition to Freddie Mac to require that the government-sponsored housing organization's homes be tested for methamphetamine residue before being sold on the market.

The Hankins family thought they had a good deal when they bought a foreclosed home in Klamath Falls, less than 20 miles north of the California border.  A realtor showed them the home, which was sold through HomeSteps, a listing service for Freddie Mac.  They purchased it for $36,500.

Jonathan Hankins, 32, and his wife, Beth, 29, started renovating the home in early June and moved into the two-bedroom 850-square-foot home before the end of the month.

After three weeks of living in their home, however, they started having severe headaches.  Their 2-year old son also became sick, past the point of being just a moody toddler.

"We mostly experienced extreme dry mouth and had mouth sores, making it extremely painful to even drink water," Hankins said.

The family moved out of their home and stayed with Beth's parents for six weeks before renting a property 10 blocks away from their home.

"We like to keep an eye out on it," Beth, a nurse, said of their home.

The Hankins were not sure why they were sick until neighbors told them they suspected the home may have been a former illegal methamphetamine drug lab.

The couple said they contacted contractors who advised them to have the home tested for meth residue.  They bought a kit for $50 and swabbed their home.  After submitting their results to a lab, they learned that they had 38 micrograms of methamphetamine residue.  The Oregon Health Authority's minimum to require a homeowner to clean up their home is 0.5 micrograms per square foot.

The family contacted Freddie Mac, trying to get answers about why they were not informed about the home's history.  The problem is the local authorities did not contact the Oregon Health Authority, as is customary, because there were no recent drug-related enforcement actions related to the home.

"It's kind of sad," Hankins said.  "It's a great block.  It's one of those neighborhoods that went through a rough stage and it's on the upward swing.  People are taking care of their yards and homes.  Now it's another abandoned property."

The couple started a petition on to "stop selling former meth labs to unsuspecting buyers," garnering over 200,000 signatures.

They have also been on a national media circuit since earlier this month, trying to spread awareness about an issue that homes across the country have experienced.

A spokesman for Freddie Mac provided a statement to ABC News, saying they bought the home in an "as-is" condition.

"We empathize with the Hankins but neither we nor the listing agent had prior information about the home's history," the statement read.  "If we had, such information absolutely would have been disclosed.  We strongly encourage buyers to inspect homes and to conduct any tests they want to before making a purchase decision."

Freddie Mac said it encourages "home shoppers to see if the addresses of homes that interest them are on the registries state and federal agencies keep of known clandestine meth labs."

The federal registry can be found on the Drug Enforcement Administration's (DEA) National Clandestine Laboratory Register website.

Freddie Mac also said "concerned home shoppers can also check an address with local law enforcement."

Copyright 2012 ABC News Radio


Wall Street Suffers Drop

Hemera/Thinkstock(NEW YORK) -- Stocks were down Thursday, with the Dow having one of its worst days in weeks.  The Dow closed down 251 points, while the Nasdaq lost 71 and the S&P plunged 31 points.

Worries about the economy here and in Europe are to blame, as well as a bleak manufacturing report for May.

A realtor's trade group says sales of previously-owned homes fell one and a half percent in May. Sales are up nearly 10 percent from a year ago, but economists say they're well below what we'd see in a healthy market.

This is a good time to buy a home if you can acquire a mortgage. Freddie Mac says 30-year fixed loans are down to an all-time low average of 3.66 percent.  Fifteen-year adjustable rate mortgages average about 2.95 percent, which is almost rock bottom.

Copyright 2012 ABC News Radio


Nationwide Mortgage Rates Fall 

iStockphoto/Thinkstock(NEW YORK) -- According to Freddie Mac, the average 30-year fixed mortgage is at the lowest ever rate for the seventh time in eight weeks.

The rate is now 3.66 percent down from 3.71 percent last week. The average rate on 15-year fixed mortgages is 2.95 percent, nearly matching the record-low rate of 2.94 percent from two weeks ago.

Chad Wandler, a spokesman for Freddie Mac, says, "The Fed’s extending Operation Twist means we are in for very low mortgage rates for a while to come, so for people who are looking to buy or refinance this is great news.”

Copyright 2012 ABC News Radio


Is Freddie Mac Betting Against Homeowners?

Win McNamee/Getty Images(NEW YORK) -- Is Freddie Mac trying to help homeowners, or hurt them?

A recent investigation into trades made by the taxpayer-owned mortgage giant shows that while Freddie with one hand is helping consumers get mortgages, it is, with its other, making those mortgages harder to refinance. Result: Homeowners trying to refinance their way out of high-interest mortgages say they feel trapped in “financial jail.”

The investigation -- a joint effort between National Public Radio and ProPublica, an independent, non-profit investigative news service -- looked at multibillion-dollar investments made late in 2010 by Freddie. These investments pay off only if homeowners remain locked in high-interest mortgages.

Not only do the investments appear to be at odds with Freddie’s public mandate, they increase the size of Freddie’s investment portfolio at a time when Freddie, under the terms of a 2008 bailout agreement, is supposed to be reducing it. Both Freddie Mac and Fannie Mae were bailed out by the government at U.S. taxpayers' expense in 2008 and are now owned by the public.

The report finds, too, that Freddie’s new investments have increased the volatility of its portfolio.

Securities owned by Freddie fall into two categories. In one are those backed mainly by principal. These pay a low return but are considered low-risk. The second category holds securities backed by mortgage interest payments only.  These pay a higher rate but are considered riskier, since, if the homeowner defaults, Freddie as the insurer must pay the entire value of the mortgage. Known as inverse floaters, these investments are harder for Freddie to offload onto investors.

In 2010 and 2011, Freddie increased its holdings of inverse floaters by $3.4 billion, according to prospectuses for those deals. Interest rates on the underlying mortgages run as high as 7 percent.

In the same way that it’s not in Freddie’s interest to have borrowers default on those mortgages, it’s not in its interest to have them switch to cheaper mortgages, since, when a borrower refinances, he pays off the first loan early, and interest payments stop.

Freddie thus has taken steps to make it harder for homeowners to refinance.

For example, in October 2010 it began refusing to insure new loans for homeowners who have had a short sale in the past two to four years. In short sales, a house is sold for less than the value of the underlying mortgage.


Copyright 2012 ABC News Radio


Economists Predict Housing Rebound to Be a Year Away

Creatas/Thinkstock(SEATTLE) -- The three-year decline in U.S. home values won’t abate for at least another year, according to a national survey of more than 100 economists, real estate experts and investment strategists.

Prices are forecast to continue to decline until the market’s bottom is reached in late 2012 or early 2013, economists in real estate marketplace Zillow’s Home Price Expectations Survey for December reported.  U.S. home prices are expected to decline 1.57 percent in the fourth quarter of 2011 after falling 0.4 percent through September, according to those surveyed.

“Unfortunately, when we look ahead to next year, the unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013,” Zillow chief economist Stan Humphries said in a statement.

After 2013, the respondents said they expect a “relatively steady” annual appreciation rate of about 3 percent through 2016, slightly below the appreciation rates during the pre-bubble years of 1987 to 1999.

Homes in the U.S. are expected to lose $681 billion in value during 2011, though the bulk of the loss occurred earlier in the year, according to Zillow.  The losses in home values are large, but they are still 35 percent less than the $1.1 trillion drop in 2010.

Meanwhile, Freddie Mac, or the Federal Home Loan Mortgage Corporation, announced on Thursday mortgage rates have remained in record lows.  The 30-year fixed rate averaged 3.91 percent for the week, “a new all-time low,” dropping below last week’s 3.94 percent, the previous record low, according to the agency.  The 15-year fixed matched last week’s “all-time record low” at 3.21 percent.

Freddie Mac’s chief economist Frank Nothaft said mortgage rates will likely remain very low, at least through mid-2012.  He predicted housing activity will be better in 2012, “but not robust.”

“A full-fledged recovery in the housing sector will likely elude the U.S. in 2012, but new construction and home sales are expected to be greater than in 2011,” Nothaft wrote in his predictions for next year.

Distressed sales and “sluggish” home-buying demand will continue to keep prices low in many markets.

“We expect U.S. house-price indexes to move lower before bottoming out in 2012, with modest appreciation forestalled until 2013,” Nothaft said.

He said the rental market appears to be leading the housing recovery, as rental prices have risen in most markets, vacancies have decreased, and property values for professionally managed complexes are up in most neighborhoods.

Copyright 2011 ABC News Radio


Former Execs of Fannie, Freddie Charged With Fraud

Mark Wilson/Getty Images)(WASHINGTON) -- Three years after taxpayers footed the bill to bail out mortgage giants Fannie Mae and Freddie Mac, the top six executives at the government-supported lenders were charged by the Securities and Exchange Commission with fraud for failing to disclose billions of dollars in risky subprime mortgages.

“Investors were robbed of the opportunity to make informed investment choices on whether or not to invest in the companies,” said Robert S. Khuzami, the SEC’s director of enforcement. “All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.”

Khuzami said that starting in 2006, as Wall Street banks began to gobble up a larger portion of Fannie and Freddie’s market share, the two companies began downplaying the amount of risky loans they held.

“They sought to maintain the illusion that their businesses involved minimal and manageable credit risk,” Khuzami said. “They led investors to believe that Freddie Mac was disclosing subprime exposures, however that was not the case.”

The SEC suit alleges that while Freddie Mac’s CEO and executive vice president publically stated that the company had basically no subprime exposure, the company was in fact exposed to $141 billion in subprime loans in 2006. By 2008 these risky investments grew to $244 billion, or 14 percent of Freddie Mac’s portfolio.

Fannie Mae, the SEC claims, shares a similar story.

In 2007 Fannie Mae reported that only .2 percent, approximately $4.8 billion, of its Single Family loan portfolio was comprised of loans “made to borrowers with weaker credit histories” when in fact, the exposure to subprime loans was nearly ten times that amount, the SEC alleges.

The federal government took control of the two mortgage giants in 2008 after poor lending practices put them at the brink of bankruptcy.  Fannie Mae and Freddie Mac have cost taxpayers $150 billion.

The commission has filed fraud charges against Freddie Mac’s Board Chairman and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook and Vice President Single Family Guarantees Donald J. Bisenius.

Fannie Mae’s former Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Single Family Mortgages, Thomas A. Lund have also been charged with fraud.

Because the SEC cannot press criminal charges, the executives do not face jail time. Under the civil charges they could be forced to pay fines and penalties that range from the hundreds of thousands into the low millions.

Copyright 2011 ABC News Radio


Foreclosure Law Firm That Mocked Victims Closing

iStockPhoto/Thinkstock(BUFFALO, N.Y.) -- One of the major law firms handling foreclosures in the U.S. is closing its doors after being banned by Fannie Mae and Freddie Mac from receiving new work from lenders and servicers. It's the same firm that threw a Halloween party last year where its employees dressed up as foreclosure victims, mocking people who had lost their homes.

The photos from the party leaked on the Internet, but law firm Steven J. Baum P.C., one of the largest foreclosure law firms in New York state, was also implicated in the robo-signing scandal where landers seeking to foreclose had filed phony paperwork to speed the process.

The firm announced its closure on Monday. Baum handled 40 percent of all foreclosures statewide, according to the Buffalo News.

The firm had been denounced by consumers and consumer advocates for its work on behalf of lenders even before the "robo-signing" controversy thrust it into the middle of a nationwide crisis over the legitimacy of many foreclosures, according to the Buffalo News. The controversy broke nationwide in October 2010, when bank workers or lenders were accused of indiscriminately signing foreclosure documents.

Steven Baum law firm directed ABC News to its spokesman, Earl Wells, who didn't return a request for comment.

"Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices," Steven J. Baum, who owns the firm, said in the statement.

Last month the firm agreed to pay a $2 million fine and change its practices to settle a federal investigation by the U.S. Justice Department that it filed misleading legal papers to expedite foreclosures.

Rep. Elijah Cummings, D-Md., and ranking member of the House Oversight and Government Reform Committee, launched an investigation into the Baum firm, and wrote to the firm to request documents, according to the Buffalo News.

Daren Blomquist, spokesman for RealtyTrac, said the closing of the firm and others has put the spotlight on shoddy practices and a lack of transparency in the foreclosure industry.

"It's good that these questionable practices are coming to light," Blomquist said. "The problem is the foreclosure industry brought this on itself in a way."

One large problem is that it is slowing down the path to a housing recovery, he said.

"It's delaying foreclosure activity that needs to take place for market to reset itself," he said. "It's a good thing that these practices are coming to light, but it's going to mean the markets are going to be bogged down before we can truly recover."

Brad German, Freddie Mac spokesman, said he could not divulge the reasons why the agency told services on Nov. 10 to stop referring new business on its new files to the firm.

A spokesman for Fannie Mae, the Federal National Mortgage Association, confirmed that the federal agency suspended new referrals to the Baum firm on Nov. 15 but said he could not share why. On Monday, the agency distributed broader authorization to transfer existing foreclosure filings to other counsel.

Fannie Mae has processed 960,000 loan workouts, such as modifications and other foreclosure prevention solutions, since 2009. The agency has also opened 12 mortgage help centers across the country, most recently in Washington, D.C. to assist homeowners in trouble.

The average time to close a foreclosure is 336 days, according to RealtyTrac. New York state already has the longest process of any state, with an average of 986 days, which Blomquist says "almost unbelievable."

As a comparison, nationwide in 2007 when the country had a "normal market" the average time to foreclose was 140 days.

Copyright 2011 ABC News Radio


Obama to Announce Help for Struggling Homeowners

Hemera/Thinkstock(WASHINGTON) -- President Obama will announce Monday a new proposal to alleviate the pressure on homeowners who are under water, as he travels to Nevada, the ground zero of the housing bust.

From the front porch of a Las Vegas home, which has one the highest foreclosure rates in the country, the president will promote a plan that would allow struggling homeowners who are backed by federal mortgages to refinance without getting a new appraisal or a full credit check. It also eliminates some risk-based fees for borrowers.

The changes are being spearheaded by the Federal Housing Finance Agency, which oversees government-sponsored Fannie Mae and Freddie Mac. The plan falls under the Home Affordable Refinance Program, which, the agency estimates, has helped 894,000 families.

While administration officials say it will help thousands of homeowners, the program has its caveats. Only those homeowners whose mortgages are backed by Fannie Mae and Freddie Mac will be eligible for refinancing. They must have good credit and must have kept up with their mortgage payments, with no late payment in the past six months and no more than one late payment in the past 12 months. Additionally, the mortgage must have been sold to the agencies before May 31, 2009, and not been refinanced previously under the Home Affordable Refinance Program. The loan-to-value ratio has to be greater than 80 percent.

The changes come as the housing market, which is central to economic recovery, continues to struggle despite record-low interest rates and government programs to help homeowners. As of September, more than 2 million U.S. homes are in foreclosure while more than 4 million homes have delinquent payments, according to real estate services firm LPS.

Copyright 2011 ABC News Radio


Fixed Mortgage Rates Up Sharply, Says Freddie Mac

Stockbyte/Thinkstock(TYSONS CORNER, Va.) -- Freddie Mac reported average fixed mortgage rates increased sharply from the previous week’s record-setting lows following a better-than-expected unemployment report last Friday.

Despite the sharp increase, mortgage rates are still near their 60-year lows.

The government-sponsored mortgage corporation said Thursday the 30-year fixed-rate mortgage average was 4.12 percent for the week ending Oct. 13, up from the previous week’s lowest recorded 30-year fixed-rate of 3.94 percent. On Oct. 6, the conventional 30-year fixed-rate mortgage fell below four percent for the first time in history.

Last year at this time, the 30-year fixed rate average was 4.19 percent.

The 15-year fixed-rate mortgage this week averaged 3.37 percent with an average 0.8 points, up from last week when it averaged 3.26 percent. A year ago at this time, the 15-year fixed-rate mortgage average was 3.62 percent.

Many homeowners are considering re-financing their homes amid the historically low mortgage rates.

According to Freddie Mac’s surveys last quarter, more than 95 percent of people who refinanced chose a fixed-rate product and 77 percent either maintained or reduced their loan amount.

Copyright 2011 ABC News Radio

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