U.S. house prices rose in November, up 0.5 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI). The previously reported 0.5 percent increase in October is unchanged.
The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From November 2014 to November 2015, house prices were up 5.9 percent. The index levels for October and November 2015 exceeded the prior peak level from March 2007.
For the nine census divisions, seasonally adjusted monthly price changes from October 2015 to November 2015 ranged from -0.4 percentin the West South Central division to +1.8 percent in the Mountain division. The 12-month changes were all positive, ranging from +2.6 percent in the Middle Atlantic division to +10.0 percent in the Mountain division.
Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs on the following pages. Complete historical data are available on the Downloadable HPI Data page.
For detailed information on the monthly HPI, see HPI Frequently Asked Questions (FAQ). The next HPI report will be released February 25, 2016 and will include monthly data through December 2015 and quarterly data for the fourth quarter of 2015.
FHFA has published HPI release dates for 2016, which can be found on the HPI Release dates page.
The Home Builders Association of Greenville are your neighbors and community leaders providing education and support for building industry professionals. We create jobs, encourage homeownership, and promote responsible growth throughout the upstate of South Carolina.
Showing posts with label Freddie Mac. Show all posts
Showing posts with label Freddie Mac. Show all posts
Thursday, January 28, 2016
Monday, December 7, 2015
Good News for Home Owners
In an important victory for NAHB and home owners, the House today approved a five-year highway bill that will not use guarantee fees (g-fees) collected by Fannie Mae and Freddie Mac to pay for transportation programs.
The Senate is expected to approve the measure tomorrow and President Obama will sign the legislation into law shortly thereafter.
NAHB led the charge to strip a provision that would have used g-fees to help offset a funding shortfall from the final legislation.
G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against credit-related losses on mortgages they have purchased or mortgage-backed securities they have guaranteed. NAHB has always maintained that these fees should only be used for their intended purpose – to protect against mortgage defaults and ensure the safety and soundness of Fannie Mae and Freddie Mac.
Despite strong opposition from NAHB, Congress voted in 2011 to enact a 10-year, 10 basis point increase in g-fees to fund the extension of the payroll tax cut. To help fund the long-term transportation bill, lawmakers subsequently proposed what would amount to a $1.9 billion tax on home owners by providing a four-year extension of the previous 10 basis point increase through 2025.
In an official statement, NAHB Chairman Tom Woods called it “outrageous” that Congress would consider using a g-fee hike to pay for transportation programs unrelated to the housing government sponsored enterprises.
“With first-time home buyers still hesitant to enter the marketplace, it makes no sense to impose what amounts to a new tax on homeownership that will disproportionately affect low- to moderate-income borrowers. Homeownership cannot, and must not, be used as the nation’s piggybank.”
Working with our Democratic and Republican allies in the House and Senate, NAHB ultimately was able to get the g-fee provision removed from the final transportation bill.
The Senate is expected to approve the measure tomorrow and President Obama will sign the legislation into law shortly thereafter.
NAHB led the charge to strip a provision that would have used g-fees to help offset a funding shortfall from the final legislation.
G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against credit-related losses on mortgages they have purchased or mortgage-backed securities they have guaranteed. NAHB has always maintained that these fees should only be used for their intended purpose – to protect against mortgage defaults and ensure the safety and soundness of Fannie Mae and Freddie Mac.
Despite strong opposition from NAHB, Congress voted in 2011 to enact a 10-year, 10 basis point increase in g-fees to fund the extension of the payroll tax cut. To help fund the long-term transportation bill, lawmakers subsequently proposed what would amount to a $1.9 billion tax on home owners by providing a four-year extension of the previous 10 basis point increase through 2025.
In an official statement, NAHB Chairman Tom Woods called it “outrageous” that Congress would consider using a g-fee hike to pay for transportation programs unrelated to the housing government sponsored enterprises.
“With first-time home buyers still hesitant to enter the marketplace, it makes no sense to impose what amounts to a new tax on homeownership that will disproportionately affect low- to moderate-income borrowers. Homeownership cannot, and must not, be used as the nation’s piggybank.”
Working with our Democratic and Republican allies in the House and Senate, NAHB ultimately was able to get the g-fee provision removed from the final transportation bill.
Wednesday, January 8, 2014
FHFA Directs Fannie Mae and Freddie Mac To Delay Guarantee Fee Changes
In early December, the Federal Housing Finance Agency (FHFA) announced plans to increase the base guarantee fee (g-fee) for all mortgages by 10 basis points, update the up-front g-fee grid, and eliminate the up-front 25 basis point adverse market fee that has been assessed on all mortgages purchased by Fannie Mae and Freddie Mac since 2008 effective in March and April 2014. FHFA announced today that it has directed Fannie Mae and Freddie Mac to delay implementation of these changes.
FHFA Director Melvin L. Watt, who was sworn in as Director on January 6, said that he intends to conduct a thorough evaluation of the proposed changes and their likely impact as expeditiously as possible, and would give not less than 120 days’ notice after completing the evaluation before implementing any changes. “The implications for mortgage credit availability and how these changes might interact with the new qualified mortgage standards could be significant,” said Watt. “I want to fully understand these implications before deciding whether to move forward with any adjustments to g-fee pricing.”
FHFA Director Melvin L. Watt, who was sworn in as Director on January 6, said that he intends to conduct a thorough evaluation of the proposed changes and their likely impact as expeditiously as possible, and would give not less than 120 days’ notice after completing the evaluation before implementing any changes. “The implications for mortgage credit availability and how these changes might interact with the new qualified mortgage standards could be significant,” said Watt. “I want to fully understand these implications before deciding whether to move forward with any adjustments to g-fee pricing.”
Friday, January 3, 2014
FHFA announces increase in Guarantee Fees
The Federal Housing Finance Agency (FHFA) today took additional steps toward fulfilling the Strategic Plan for Enterprise Conservatorships that FHFA published in February 2012. That Plan established a conservator goal of gradually contracting Freddie Mac and Fannie Mae’s dominant presence in the marketplace while simplifying and shrinking their operations. The basic premise behind the “contract” goal is that with an uncertain future and a general desire for private capital to re-enter the market, the companies’ market presence should be reduced gradually over time.
When FHFA set forth the 2013 Conservatorship Scorecard in March, it also set an expectation that guarantee fees would continue to be gradually increased in 2013 in furtherance of the strategic plan. Today, FHFA directed Freddie Mac and Fannie Mae to raise guarantee fees in three components:
approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the
third quarter of 2013. This represents an average increase of 14 basis points on typical 30-year
mortgages and 4 basis points on 15-year mortgages. This increase follows FHFA-directed
increases of 10 basis points each announced in December 2011 and August 2012.
“Today’s price changes improve the relationship between g-fees and risk,” said FHFA Acting
Director Edward J. DeMarco. “The new pricing continues the gradual progression towards
more market-based prices, closer to the pricing one might expect to see if mortgage credit risk
was borne solely by private capital. The price changes provide better protection of and return
to taxpayers, who are providing the capital support that keeps these companies operating.
These changes should encourage further return of private capital to the mortgage market,”
DeMarco said. Today’s increases not only advance the previously stated conservatorship goals and
commitments, they also advance:
framework, are important steps to enabling Freddie Mac and Fannie Mae to deepen and
broaden the risk-sharing transactions with private investors they initiated this year. In the
coming years, FHFA expects risk-sharing transactions to cover a growing portion of the
companies’ new business and for the amount of risk transferred to private capital to continue to
increase.
Elimination of the across-the-board adverse market fee (except as noted) provides recognition that the nationwide stress in housing markets has eased. The experience with mortgage defaults the past several years, however, has amply demonstrated that mortgage investors and guarantors have significantly greater costs carrying out foreclosures in the few states that stand far apart from the rest of the country. As described in more detail in the paper entitled State-Level Guarantee Fee Analysis, maintaining the 25-basis-point adverse market fee in New York, Flordia, New Jersey, and Connecticut will provide taxpayers, as investors in Freddie Mac and Fannie Mae, an approximate compesnation for the difference in foreclosure costs in those states relative to the average costs across the country. FHFA anticipates that this adverse market fee will be re-evaluated and refined at least annually. While the broad adverse market fee is being eliminated, other changes to the up-front pricing grid offset this decrease for certain mortgages.
For loans exchanged for mortgage-backed securities, the price changes will be effective with
settlements starting April 1, 2014. For loans sold for cash, the price changes will be effective
with commitments starting March 1, 2014. Freddie Mac and Fannie Mae will work directly
with lenders to implement the changes.
Also today, FHFA released its fifth annual report on single-family guarantee fees, covering the
years 2011 and 2012. The g-fee changes being announced today respond in part to the findings
in this report regarding shortfalls in the risk-based pricing at the two companies.
When FHFA set forth the 2013 Conservatorship Scorecard in March, it also set an expectation that guarantee fees would continue to be gradually increased in 2013 in furtherance of the strategic plan. Today, FHFA directed Freddie Mac and Fannie Mae to raise guarantee fees in three components:
- The base g-fee (or ongoing g-fee) for all mortgages will increase by 10 basis points;
- The up-front g-fee grid will be updated to better align pricing with the credit risk characteristics of the borrower; and
- The up-front 25 basis point adverse market fee that has been assessed on all mortgages purchased by Freddie Mac and Fannie Mae since 2008 is being eliminated except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average.
approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the
third quarter of 2013. This represents an average increase of 14 basis points on typical 30-year
mortgages and 4 basis points on 15-year mortgages. This increase follows FHFA-directed
increases of 10 basis points each announced in December 2011 and August 2012.
“Today’s price changes improve the relationship between g-fees and risk,” said FHFA Acting
Director Edward J. DeMarco. “The new pricing continues the gradual progression towards
more market-based prices, closer to the pricing one might expect to see if mortgage credit risk
was borne solely by private capital. The price changes provide better protection of and return
to taxpayers, who are providing the capital support that keeps these companies operating.
These changes should encourage further return of private capital to the mortgage market,”
DeMarco said. Today’s increases not only advance the previously stated conservatorship goals and
commitments, they also advance:
- the statutory directive in the Temporary Payroll Tax Cut Continuation Act of 2011 foradjusting g-fees based on risk levels;
- the 2013 Financial Stability Oversight Council recommendation that g-fee increases beused to attract private capital to the mortgage market; and
- the President’s August, 2013 request for FHFA to reduce taxpayers’ credit exposure by accelerating actions to draw private capital into the market to stand ahead of the Fannie Mae and Freddie Mac guarantee.
framework, are important steps to enabling Freddie Mac and Fannie Mae to deepen and
broaden the risk-sharing transactions with private investors they initiated this year. In the
coming years, FHFA expects risk-sharing transactions to cover a growing portion of the
companies’ new business and for the amount of risk transferred to private capital to continue to
increase.
Elimination of the across-the-board adverse market fee (except as noted) provides recognition that the nationwide stress in housing markets has eased. The experience with mortgage defaults the past several years, however, has amply demonstrated that mortgage investors and guarantors have significantly greater costs carrying out foreclosures in the few states that stand far apart from the rest of the country. As described in more detail in the paper entitled State-Level Guarantee Fee Analysis, maintaining the 25-basis-point adverse market fee in New York, Flordia, New Jersey, and Connecticut will provide taxpayers, as investors in Freddie Mac and Fannie Mae, an approximate compesnation for the difference in foreclosure costs in those states relative to the average costs across the country. FHFA anticipates that this adverse market fee will be re-evaluated and refined at least annually. While the broad adverse market fee is being eliminated, other changes to the up-front pricing grid offset this decrease for certain mortgages.
For loans exchanged for mortgage-backed securities, the price changes will be effective with
settlements starting April 1, 2014. For loans sold for cash, the price changes will be effective
with commitments starting March 1, 2014. Freddie Mac and Fannie Mae will work directly
with lenders to implement the changes.
Also today, FHFA released its fifth annual report on single-family guarantee fees, covering the
years 2011 and 2012. The g-fee changes being announced today respond in part to the findings
in this report regarding shortfalls in the risk-based pricing at the two companies.
Wednesday, December 4, 2013
FHFA Announces Fannie Mae and Freddie Mac Conforming Loan Limits for 2014
The Federal Housing Finance Agency (FHFA) today announced that the 2014 maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will remain at $417,000 for one-unit properties in most areas of the country.
The conforming loan limit in all markets in South Carolina is $417,000.
The Housing and Economic Recovery Act of 2008 (HERA) establishes the maximum conforming loan limit that Fannie Mae and Freddie Mac are permitted to set for mortgage acquisitions. HERA also requires annual adjustments to these limits to reflect changes in the national average home price.
A description of the methodology used in determining the loan limits can be found in the attached addendum. Questions concerning the conforming loan limits can be addressed to LoanLimitQuestions@FHFA.gov.
Further information on potential future changes in the maximum size of loans that Fannie Mae and Freddie Mac guarantee will be forthcoming.
Link to maximum conforming loan limits for 2014.
The conforming loan limit in all markets in South Carolina is $417,000.
The Housing and Economic Recovery Act of 2008 (HERA) establishes the maximum conforming loan limit that Fannie Mae and Freddie Mac are permitted to set for mortgage acquisitions. HERA also requires annual adjustments to these limits to reflect changes in the national average home price.
A description of the methodology used in determining the loan limits can be found in the attached addendum. Questions concerning the conforming loan limits can be addressed to LoanLimitQuestions@FHFA.gov.
Further information on potential future changes in the maximum size of loans that Fannie Mae and Freddie Mac guarantee will be forthcoming.
Link to maximum conforming loan limits for 2014.
Monday, December 2, 2013
FHFA Announces Overhaul of Fannie Mae and Freddie Mac Mortgage Insurance Master Policy Requirements
The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac have completed the first major overhaul of mortgage insurance master policy requirements in many years. FHFA’s 2013 Conservatorship Scorecard calls for Fannie Mae and Freddie Mac to develop aligned requirements for master policies.
Through this ongoing effort, Fannie Mae and Freddie Mac, with FHFA oversight, have worked with the mortgage insurance industry to address and update gaps in the existing master policy framework. The new requirements will, among other things, facilitate timely and consistent claims processing.
Key improvements include:
Mortgage insurance master policies specify the terms of business interaction between seller-servicers and mortgage insurers. Mortgage insurers will incorporate the aligned requirements into new master policies, which will be filed with state insurance regulators for their review and approval. FHFA, Fannie Mae and Freddie Mac anticipate that the master policies will go into effect in 2014, pending review and approval by state insurance regulators. In the coming weeks, Fannie Mae and Freddie Mac will provide guidance to lenders and servicers regarding specific effective dates.
Through this ongoing effort, Fannie Mae and Freddie Mac, with FHFA oversight, have worked with the mortgage insurance industry to address and update gaps in the existing master policy framework. The new requirements will, among other things, facilitate timely and consistent claims processing.
Key improvements include:
- Loss mitigation – requires that master policies support various loss mitigation strategies that were developed during the housing crisis to help troubled homeowners.
- Claims – establishes specific timeframes for processing claims, including requests for
additional documentation. - Assurance of coverage – sets standards for determining when, and under what circumstances, coverage under the mortgage insurance policy must be maintained and when it may be revoked. Enhanced communication – promotes information sharing among mortgage insurers, servicers and Fannie Mae and Freddie Mac.
Mortgage insurance master policies specify the terms of business interaction between seller-servicers and mortgage insurers. Mortgage insurers will incorporate the aligned requirements into new master policies, which will be filed with state insurance regulators for their review and approval. FHFA, Fannie Mae and Freddie Mac anticipate that the master policies will go into effect in 2014, pending review and approval by state insurance regulators. In the coming weeks, Fannie Mae and Freddie Mac will provide guidance to lenders and servicers regarding specific effective dates.
Monday, May 6, 2013
FHFA Releases Fannie and Freddie Reports on Viability of Their Multifamily Businesses Without Government Guarantees
The Federal Housing Finance Agency (FHFA) today released reports prepared by Fannie Mae and Freddie Mac (the Enterprises) on their multifamily businesses. The reports were conducted at the direction of FHFA pursuant to its goal of contracting Fannie Mae and Freddie Mac’s overall market footprint and generating potential value for taxpayers. As part of the 2012 Conservatorship Scorecard, the Enterprises were directed to analyze the viability of their multifamily businesses absent a government guarantee and review the likelihood of these models operating on a stand-alone basis after attracting private capital and making any adjustments for pricing if needed.
The reports conclude that without government guarantees, the multifamily businesses of Fannie Mae and Freddie Mac have little inherent value. The reports further conclude that the sale of these businesses would return little or no value to the U.S. Treasury and to taxpayers. The reports also highlight the fundamental tensions inherent in the government sponsored enterprise model that policymakers will have to consider as part of housing finance reform.
2012 Conservatorship Scorecard:
The Enterprises’ Reports on a Multifamily Future StateWithout a U.S. Government Guarantee
One of the goals in the Federal Housing Finance Agency’s (FHFA) 2012 Strategic Plan for Enterprise Conservatorshipsis to gradually contract the overall market footprint of Fannie Mae and Freddie Mac (the “Enterprises”). The basic premise is that with an uncertain future and a general desire for more private capital to re-enter the market, the presence of Fannie Mae and Freddie Mac in both the multifamily and single-family housing markets should be reduced gradually over time.
The multifamily lending businesses of Fannie Mae and Freddie Mac are fundamentally different from their single-family businesslines. Multifamily loans are generally much larger than singlefamily loans, they are collateralized by income-producing properties of five or more units, and multifamily lending occupies a much smaller segment of the overall housing market. Moreover, unlike in the single-family market where Fannie Mae and Freddie Mac share risk only on certain loan types, most of the multifamily loans that the Enterprises buy involve some type of risksharing with private capital. Fannie Mae and Freddie Mac’s multifamily businesses are also much less dominant in the marketplace than their single-family businesses and they generally weathered the housing crisis better, generating positive cash flow. New multifamily originations at the Enterprises increased during the financial crisis but have since returned to more normal levels.
Given these differences, FHFA determined that the goal of contracting Fannie Mae and Freddie Mac’s overall market footprint should be approached differently with respect to their multifamily businesses, and it may be accomplished using a much different and more direct method. To evaluate how to accomplish this goal and generate potential value for taxpayers, in the 2012 Conservatorship Scorecard FHFA directed the Enterprises to undertake a market analysis of the viability of their multifamily operations without the government guarantee. Fannie Mae and Freddie Mac were asked to include in their reviews the likely viability of their multifamily business models operating on a stand-alone basis after attracting private capital and adjusting pricing if needed.
The reports from Fannie Mae and Freddie Mac (see attached) conclude that there is little inherent value in their current multifamily businesses without the government guarantee, and that the sale of these businesses without the guarantee would return little or no value to the U.S. Treasury and to taxpayers. In the early years after the sale, the new “stand-alone” businesses would primarily depend on the portfolio asset management fees as a primary source of revenue until their loan production activities were established. Without a government guarantee backing the securities they issue, Fannie Mae and Freddie Mac project that their multi-family businesses would likely occupy a much smaller footprint in the multifamily finance market, with reduced production volume. The businesses would likely be monoline niche specialty finance companies with a focus on non-prime lending and secondary and tertiary market transactions. Their cost of funds and lending rates would be higher and the businesses would rely on the private securitization market or the participation of equity investors to be viable.
While the magnitude of the market impacts cited in the reports deserve further study, the reports highlight a fundamental tension that policymakers will have to consider as part of housing finance reform. Without a government guarantee a fully private company may not provide the same level and scope of services in the marketplace, at least at current prices. For example, Fannie Mae and Freddie Mac conclude that lending on affordable multifamily housing properties, in particular those that satisfy the housing goals, or providing loans to small multifamily properties, may not be practical due to the high cost, relatively low profitability and difficulties with securitization. In addition, without a government guarantee, there may be additional volatility in funding availability under certain economic conditions,similar to other commercial real estate markets.
The reports themselves represent the analysis and views of the Enterprises’ current management teams as reported to FHFA as conservator. FHFA is releasing the reports to enhance public policy discussion of the role of the government in multifamily housing finance, not as an endorsement of the reports’ conclusions.
Without a clear policy path on the future of housing finance reform, including Fannie Mae and Freddie Mac’srole in the multifamily market, and given the limited availability of economically viable disposition options highlighted in the reports, FHFA must still provide direction as conservator and overseer of the Enterprises’ multifamily businesses.Consistent with the goal of contracting Fannie Mae and Freddie Mac’s dominant market presence, FHFA’s 2013 Conservatorship Scorecard put in place a 10 percent volume reduction for the Enterprises’ new multifamily business in 2013. Going forward, FHFA will evaluate how this process worked in 2013, and intends to consider options to continue a path of gradual contraction while awaiting a legislative resolution of the conservatorships.
Links to Reports:
Fannie Mae Report
Freddie Mac Report
The reports conclude that without government guarantees, the multifamily businesses of Fannie Mae and Freddie Mac have little inherent value. The reports further conclude that the sale of these businesses would return little or no value to the U.S. Treasury and to taxpayers. The reports also highlight the fundamental tensions inherent in the government sponsored enterprise model that policymakers will have to consider as part of housing finance reform.
2012 Conservatorship Scorecard:
The Enterprises’ Reports on a Multifamily Future StateWithout a U.S. Government Guarantee
One of the goals in the Federal Housing Finance Agency’s (FHFA) 2012 Strategic Plan for Enterprise Conservatorshipsis to gradually contract the overall market footprint of Fannie Mae and Freddie Mac (the “Enterprises”). The basic premise is that with an uncertain future and a general desire for more private capital to re-enter the market, the presence of Fannie Mae and Freddie Mac in both the multifamily and single-family housing markets should be reduced gradually over time.
The multifamily lending businesses of Fannie Mae and Freddie Mac are fundamentally different from their single-family businesslines. Multifamily loans are generally much larger than singlefamily loans, they are collateralized by income-producing properties of five or more units, and multifamily lending occupies a much smaller segment of the overall housing market. Moreover, unlike in the single-family market where Fannie Mae and Freddie Mac share risk only on certain loan types, most of the multifamily loans that the Enterprises buy involve some type of risksharing with private capital. Fannie Mae and Freddie Mac’s multifamily businesses are also much less dominant in the marketplace than their single-family businesses and they generally weathered the housing crisis better, generating positive cash flow. New multifamily originations at the Enterprises increased during the financial crisis but have since returned to more normal levels.
Given these differences, FHFA determined that the goal of contracting Fannie Mae and Freddie Mac’s overall market footprint should be approached differently with respect to their multifamily businesses, and it may be accomplished using a much different and more direct method. To evaluate how to accomplish this goal and generate potential value for taxpayers, in the 2012 Conservatorship Scorecard FHFA directed the Enterprises to undertake a market analysis of the viability of their multifamily operations without the government guarantee. Fannie Mae and Freddie Mac were asked to include in their reviews the likely viability of their multifamily business models operating on a stand-alone basis after attracting private capital and adjusting pricing if needed.
The reports from Fannie Mae and Freddie Mac (see attached) conclude that there is little inherent value in their current multifamily businesses without the government guarantee, and that the sale of these businesses without the guarantee would return little or no value to the U.S. Treasury and to taxpayers. In the early years after the sale, the new “stand-alone” businesses would primarily depend on the portfolio asset management fees as a primary source of revenue until their loan production activities were established. Without a government guarantee backing the securities they issue, Fannie Mae and Freddie Mac project that their multi-family businesses would likely occupy a much smaller footprint in the multifamily finance market, with reduced production volume. The businesses would likely be monoline niche specialty finance companies with a focus on non-prime lending and secondary and tertiary market transactions. Their cost of funds and lending rates would be higher and the businesses would rely on the private securitization market or the participation of equity investors to be viable.
While the magnitude of the market impacts cited in the reports deserve further study, the reports highlight a fundamental tension that policymakers will have to consider as part of housing finance reform. Without a government guarantee a fully private company may not provide the same level and scope of services in the marketplace, at least at current prices. For example, Fannie Mae and Freddie Mac conclude that lending on affordable multifamily housing properties, in particular those that satisfy the housing goals, or providing loans to small multifamily properties, may not be practical due to the high cost, relatively low profitability and difficulties with securitization. In addition, without a government guarantee, there may be additional volatility in funding availability under certain economic conditions,similar to other commercial real estate markets.
The reports themselves represent the analysis and views of the Enterprises’ current management teams as reported to FHFA as conservator. FHFA is releasing the reports to enhance public policy discussion of the role of the government in multifamily housing finance, not as an endorsement of the reports’ conclusions.
Without a clear policy path on the future of housing finance reform, including Fannie Mae and Freddie Mac’srole in the multifamily market, and given the limited availability of economically viable disposition options highlighted in the reports, FHFA must still provide direction as conservator and overseer of the Enterprises’ multifamily businesses.Consistent with the goal of contracting Fannie Mae and Freddie Mac’s dominant market presence, FHFA’s 2013 Conservatorship Scorecard put in place a 10 percent volume reduction for the Enterprises’ new multifamily business in 2013. Going forward, FHFA will evaluate how this process worked in 2013, and intends to consider options to continue a path of gradual contraction while awaiting a legislative resolution of the conservatorships.
Links to Reports:
Fannie Mae Report
Freddie Mac Report
FHFA Limiting Fannie Mae and Freddie Mac Loan Purchases to "Qualified Mortgages"
The Federal Housing Finance Agency (FHFA) announced today that it is directing Fannie Mae and Freddie Mac to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the “ability to repay” requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank). In January, the Consumer Financial Protection Bureau (CFPB) issued a final rule implementing the “ability to repay” provisions of Dodd-Frank, including certain protections from liability for loans that meet the criteria of a qualified mortgage as outlined in the rule.
Beginning January 10, 2014, Fannie Mae and Freddie Mac will no longer purchase a loan that is subject to the “ability to repay” rule if the loan:
Fannie Mae and Freddie Mac will continue to purchase loans that meet the underwriting and delivery eligibility requirements stated in their respective selling guides. This includes loans that are processed through their automated underwriting systems and loans with a debt-toincome ratio of greater than 43 percent. Loans with a debt-to-income ratio of more than 43 percent are not eligible for protection as qualified mortgages under the CFPB’s final rule unless they are eligible for purchase by Fannie Mae and Freddie Mac under the special or temporary qualified mortgage definition.
Adoption of these new limitations by Fannie Mae and Freddie Mac is in keeping with FHFA’s goal of gradually contracting their market footprint and protecting borrowers and taxpayers.
Link to Fannie Mae’s Lender Letter
Link to Freddie Mac’s Lender Letter
Beginning January 10, 2014, Fannie Mae and Freddie Mac will no longer purchase a loan that is subject to the “ability to repay” rule if the loan:
- is not fully amortizing,
- has a term of longer than 30 years, or
- includes points and fees in excess of three percent of the total loan amount, or such other limits for low balance loans as set forth in the rule.
Fannie Mae and Freddie Mac will continue to purchase loans that meet the underwriting and delivery eligibility requirements stated in their respective selling guides. This includes loans that are processed through their automated underwriting systems and loans with a debt-toincome ratio of greater than 43 percent. Loans with a debt-to-income ratio of more than 43 percent are not eligible for protection as qualified mortgages under the CFPB’s final rule unless they are eligible for purchase by Fannie Mae and Freddie Mac under the special or temporary qualified mortgage definition.
Adoption of these new limitations by Fannie Mae and Freddie Mac is in keeping with FHFA’s goal of gradually contracting their market footprint and protecting borrowers and taxpayers.
Link to Fannie Mae’s Lender Letter
Link to Freddie Mac’s Lender Letter
Wednesday, December 12, 2012
NAHB's plan for reforming the housing finance system
The National Association of Home Builders (NAHB) in March 2012 announced a new comprehensive framework for housing finance system reform that would transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages.
“Our plan seeks to overhaul the housing finance system to ensure that housing credit is available and affordable in the future and is delivered through a competitive, efficient, sound, safe and stable system,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla.
To achieve this goal, Rutenberg said the system must include private, federal and state sources of housing capital; offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation; and provide a federal backstop to ensure that 30-year, fixed-rate mortgages are available at reasonable interest rates and terms.
Replacing Fannie Mae and Freddie Mac with a new securitization system for conventional mortgages backed by private capital and a privately funded federal mortgage-backed securities fund must be done in an orderly fashion over time. During this phase-in period, Fannie Mae and Freddie Mac would remain operational until the alternative system is fully functioning.
Under this scenario, Fannie Mae and Freddie Mac would be gradually replaced by private housing finance entities (HFEs) that would be chartered to purchase single-family and multifamily mortgages from loan originators and package the loans into securities for sale to investors worldwide. The federal government would guarantee the securities, not the mortgages.
The HFEs would only purchase mortgages that are well understood and have reasonable risk characteristics, such as standard 30-year fixed-rate loans. The HFEs would operate under the oversight of a strong independent regulatory agency to ensure all aspects of safety and soundness. NAHB believes the 12 regional Federal Home Loan Banks could serve as HFEs.
Federal support to the conventional mortgage of the future would consist of a privately funded insurance fund where the government would guarantee its solvency in a manner similar to the Federal Deposit Insurance Corporation’s backing of the fund that insures savings deposits. Under this system, mortgage originators would pay premiums to capitalize the insurance fund, which would cover losses and ensure full payment to investors. The federal government would be required to pay investors only if the insurance fund was depleted.
“The intent is for the government to be in a secondary position and to be the insurer of last resort in order to reduce the risk to taxpayers,” said Rutenberg.
NAHB’s housing finance reform blueprint also proposes to:
“Our plan seeks to overhaul the housing finance system to ensure that housing credit is available and affordable in the future and is delivered through a competitive, efficient, sound, safe and stable system,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla.
To achieve this goal, Rutenberg said the system must include private, federal and state sources of housing capital; offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation; and provide a federal backstop to ensure that 30-year, fixed-rate mortgages are available at reasonable interest rates and terms.
Replacing Fannie Mae and Freddie Mac with a new securitization system for conventional mortgages backed by private capital and a privately funded federal mortgage-backed securities fund must be done in an orderly fashion over time. During this phase-in period, Fannie Mae and Freddie Mac would remain operational until the alternative system is fully functioning.
Under this scenario, Fannie Mae and Freddie Mac would be gradually replaced by private housing finance entities (HFEs) that would be chartered to purchase single-family and multifamily mortgages from loan originators and package the loans into securities for sale to investors worldwide. The federal government would guarantee the securities, not the mortgages.
The HFEs would only purchase mortgages that are well understood and have reasonable risk characteristics, such as standard 30-year fixed-rate loans. The HFEs would operate under the oversight of a strong independent regulatory agency to ensure all aspects of safety and soundness. NAHB believes the 12 regional Federal Home Loan Banks could serve as HFEs.
Federal support to the conventional mortgage of the future would consist of a privately funded insurance fund where the government would guarantee its solvency in a manner similar to the Federal Deposit Insurance Corporation’s backing of the fund that insures savings deposits. Under this system, mortgage originators would pay premiums to capitalize the insurance fund, which would cover losses and ensure full payment to investors. The federal government would be required to pay investors only if the insurance fund was depleted.
“The intent is for the government to be in a secondary position and to be the insurer of last resort in order to reduce the risk to taxpayers,” said Rutenberg.
NAHB’s housing finance reform blueprint also proposes to:
- Restart a carefully regulated fully private mortgage-backed securities system. NAHB believes reforms are needed in the system for rating mortgage-backed securities and is supporting the development of new securities ratings agencies that would use criteria developed by securities investors to assure objective evaluations and avoid conflicts of interest.
- Continue the role of the federal government housing agencies. The housing finance support roles of the Department of Housing and Urban Development, Federal Housing Administration, the Department of Veterans Affairs, the Department of Agriculture and the Government National Mortgage Association (Ginnie Mae) would be preserved.
- Enhance the position of state and local housing finance agencies (HFAs) as a source of housing funds. The HFAs should have a more prominent housing finance role through the development of original programs for new homes and multifamily rental units involving partnering with federal and private providers of housing capital.
- Expand the role of the Federal Home Loan Banks (FHLBanks) in the housing finance system. The FHLBanks should continue their current activities to serve as an ongoing liquidity source for institutions providing housing credit. Existing programs, such as the FHLBanks’ mortgage purchase programs, should be enhanced by allowing the banks to move beyond portfolio purchases to securitization.
- Repair flaws that produced the housing boom and bust. It is extremely important to continue and complete steps to close the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets. This should be done by undertaking a series of comprehensive reforms to ensure sound mortgage products and prudent underwriting; requiring sound mortgage securities structures and full transparency for investors; and imposing adequate oversight on previously unregulated segments of the mortgage and financial markets.
Monday, June 4, 2012
NAHB's Top 12 Actions, Number 3: a comprehensive framework for housing finance reform
Builder Review Daily continues to highlight the Top 12 actions your HBA has taken on your behalf at the Federal level.
Number 3, release of a comprehensive framework for housing finance reform and active discussions with lawmakers:
Because our members’ businesses depend upon the existence of an accessible and reliable housing finance system, NAHB has been deeply engaged in policymakers’ conversations about how best to reform the system, wind down Fannie Mae and Freddie Mac, and ensure a stable supply of credit for both home buyers and rental housing. NAHB made a major contribution to this debate with the recent release of a comprehensive framework for housing finance reform that includes our specific recommendations.
Developed through a specially appointed NAHB working group and approved by NAHB's Board of Directors in Orlando, this plan stresses that any transition away from the current housing finance system must be done in a careful and deliberate manner to avoid further disruptions to an already fragile market. It is also built upon the recognition that, as the private market assumes a greater role in the marketplace, it is vital to maintain an appropriate level of government support to preserve financial stability, promote investor confidence and ensure liquidity/stability for homeownership and rental housing. In keeping with these core directives, NAHB's plan seeks to:
Number 3, release of a comprehensive framework for housing finance reform and active discussions with lawmakers:
Because our members’ businesses depend upon the existence of an accessible and reliable housing finance system, NAHB has been deeply engaged in policymakers’ conversations about how best to reform the system, wind down Fannie Mae and Freddie Mac, and ensure a stable supply of credit for both home buyers and rental housing. NAHB made a major contribution to this debate with the recent release of a comprehensive framework for housing finance reform that includes our specific recommendations.
Developed through a specially appointed NAHB working group and approved by NAHB's Board of Directors in Orlando, this plan stresses that any transition away from the current housing finance system must be done in a careful and deliberate manner to avoid further disruptions to an already fragile market. It is also built upon the recognition that, as the private market assumes a greater role in the marketplace, it is vital to maintain an appropriate level of government support to preserve financial stability, promote investor confidence and ensure liquidity/stability for homeownership and rental housing. In keeping with these core directives, NAHB's plan seeks to:
- Include private, federal and state sources of housing capital.
- Offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation.
- Transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages.
- Consider the 12 regional Federal Home Loan Banks for this securitization role.
- Phase in the new system over time and allow Fannie and Freddie to remain operational until the alternative system is fully functioning.
- Provide a federal backstop to ensure that conventional 30-year home loans and adjustable rate mortgages are available at reasonable interest rates and terms.
- Structure the federal support to the conventional mortgage market through a privately funded insurance fund similar to the FDIC’s backing of the fund that insures savings deposits. This will allow the government to be the insurer of last resort in order to reduce the risk to taxpayers.
- Continue role of federal housing agencies (HUD, FHA, VA, USDA, Ginnie Mae).
- Expand the role of the Federal Home Loan Banks in the housing finance system.
- Restart a carefully regulated fully private mortgage-backed securities market through reforms to the securities ratings system to remove conflicts of interest.
- Repair other flaws that produced the housing boom and bust by closing the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets.
Thursday, February 23, 2012
NAHB Chairman Barry Rutenberg on the importance of Home Building to the economy
The following editorial appeared Wednesday, February 22, 2012, in the Washington Times
A plan to end government support for homeownership ("Get the Fed out of the housing market," Commentary, Friday) is a recipe for economic disaster that would surely throw the economy back into recession.
Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) currently guarantee or insure more than 90 percent of all home mortgage activity. Even those arguing to abolish Fannie Mae and Freddie Mac admit this would need to be a years-long transition because the private market is not operating today. Private lenders have shown little inclination to step up to the plate and fill the void that would result if the government backstop essential to ensuring liquidity and stability for homeownership were abruptly halted.
Housing is the key to long-term prosperity. Residential construction usually accounts for 5 to 6 percent of total economic output, yet it stands at a meager 2.5 percent today. We don't have an excess supply of housing; we have record-low new home inventories and a dearth of housing demand resulting from high unemployment, stagnant income growth and a drop in household formations.
The Federal Reserve is offering ideas to stimulate demand because Fed policymakers understand that there can be no sustainable economic recovery without a housing recovery. Building 100 homes generates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that sustain local schools and communities across the land. New homes are needed in scores of markets that are experiencing renewed growth and confidence, but this demand is going unmet because of a lack of credit for homebuyers and homebuilders alike.
Maintaining a federal role for housing and providing credit for qualified homebuyers and builders with viable homebuilding projects is a necessary first step to restore the health of the housing market, create jobs and to keep the economic expansion moving ahead.
BARRY RUTENBERG
Chairman
National Association of Home Builders
Washington
Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) currently guarantee or insure more than 90 percent of all home mortgage activity. Even those arguing to abolish Fannie Mae and Freddie Mac admit this would need to be a years-long transition because the private market is not operating today. Private lenders have shown little inclination to step up to the plate and fill the void that would result if the government backstop essential to ensuring liquidity and stability for homeownership were abruptly halted.
Housing is the key to long-term prosperity. Residential construction usually accounts for 5 to 6 percent of total economic output, yet it stands at a meager 2.5 percent today. We don't have an excess supply of housing; we have record-low new home inventories and a dearth of housing demand resulting from high unemployment, stagnant income growth and a drop in household formations.
The Federal Reserve is offering ideas to stimulate demand because Fed policymakers understand that there can be no sustainable economic recovery without a housing recovery. Building 100 homes generates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that sustain local schools and communities across the land. New homes are needed in scores of markets that are experiencing renewed growth and confidence, but this demand is going unmet because of a lack of credit for homebuyers and homebuilders alike.
Maintaining a federal role for housing and providing credit for qualified homebuyers and builders with viable homebuilding projects is a necessary first step to restore the health of the housing market, create jobs and to keep the economic expansion moving ahead.
BARRY RUTENBERG
Chairman
National Association of Home Builders
Washington
Tuesday, January 3, 2012
Fannie, Freddie to raise mortgage guarantee fees to fund payroll tax break
Included in the two-month extension of the payroll tax break passed by Congress was an additional fee on mortgages guaranteed by agencies under the supervision of the Federal Housing Finance Agency.
The additional .1 percent fee will be added to the existing average .26 percent fee already collected on all new mortgages guaranteed by Fannie Mae and Freddie Mac. The new fee will take effect on April 1.
The fee increase is expected to add $15 to the monthly mortgage payment of a new $200,000 30-year mortgage, or $5,400 over the life of the loan. The new fee was part of a package that lowers the payroll tax on wage earners by 2 percentage points through February 28. The payroll tax break has been in effect since January 1, 2011. Congress is expected to further extend the payroll tax break through December 31, 2012.
The additional .1 percent fee will be added to the existing average .26 percent fee already collected on all new mortgages guaranteed by Fannie Mae and Freddie Mac. The new fee will take effect on April 1.
The fee increase is expected to add $15 to the monthly mortgage payment of a new $200,000 30-year mortgage, or $5,400 over the life of the loan. The new fee was part of a package that lowers the payroll tax on wage earners by 2 percentage points through February 28. The payroll tax break has been in effect since January 1, 2011. Congress is expected to further extend the payroll tax break through December 31, 2012.
LA Times: Record low mortgage rates have not rescued housing
Real estate experts commenting for an article in the Los Angeles Times, including Freddie Mac and Mortgage Bankers Association executives, commented that historically low interest rates are not enough and that mortgage applications fell in 2011. Could it be the problem is in the big housing markets like Los Angeles?
Read the entire article in the LA Times by clicking here.
Read the entire article in the LA Times by clicking here.
Wednesday, November 30, 2011
FHFA: Maximum Conforming Loan Limits to Remain Unchanged in 2012
The Federal Housing Finance Agency (FHFA) announced last week that the maximum conforming loan limits for loans originated by Fannie Mae and Freddie Mac will remain unchanged in 2012. The current conforming loan limit for all counties in South Carolina is $417,000 for a single-family home, and $533,850 for a two-family home.
You can read the entire release at fhfa.gov by clicking here.
You can see the conforming loan limits for the entire country at fhfa.gov by clicking here.
Higher loan limits that were established for certain high cost counties, that were enacted in 2008, expired in September of this year. The loan higher loan limits for Federal Housing Authority (FHA) loans were recently restored by Congress. Greenville, Pickens, and Laurens counties were impacted by the lowered FHA loan limits. However, no South Carolina counties were impacted by the lowering of loan limits for Fannie Mae or Freddie Mac.
You can read the entire release at fhfa.gov by clicking here.
You can see the conforming loan limits for the entire country at fhfa.gov by clicking here.
Higher loan limits that were established for certain high cost counties, that were enacted in 2008, expired in September of this year. The loan higher loan limits for Federal Housing Authority (FHA) loans were recently restored by Congress. Greenville, Pickens, and Laurens counties were impacted by the lowered FHA loan limits. However, no South Carolina counties were impacted by the lowering of loan limits for Fannie Mae or Freddie Mac.
Thursday, November 3, 2011
Call to action: contact your member of Congress about lowered loan limits
The National Association of Home Builders issued a call to action today asking HBA members to contact their members of Congress and seek their support for extending the conforming loan limits for Federally-backed home mortgages.
If you and your customers want to continue to receive the types of mortgages you have become used to getting, the ones with the best interest rates, lower fees, a lower down payment requirement, and less stringent credit requirements, you need to tell your U.S. Representative to extend the conforming loan limits for home mortgages backed by the Federal government.
If you and your customers want to continue to receive the types of mortgages you have become used to getting, the ones with the best interest rates, lower fees, a lower down payment requirement, and less stringent credit requirements, you need to tell your U.S. Representative to extend the conforming loan limits for home mortgages backed by the Federal government.
"Conforming Loans" are those mortgage loan amounts that qualify to be backed by the Federal government under programs run by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). On September 30 Congress allowed the maximum limits for loans backed by the Federal government to expire, and the average loan limit fell by about 10 percent.
For the Upstate, the conforming loan limits did not change for Fannie Mae and Freddie Mac. The limits did change, however, for FHA-backed mortgages. The limit dropped 8 percent to $271,050 on a home with a maximum price of $280,881 in Greenville, Pickens, and Laurens counties. According to NAHB, 2.24 percent of Greenville County's owner-occupied housing stock no longer qualifies for an FHA mortgage. In Pickens County, 1.61 percent of owner-occupied homes no longer qualify, and in Laurens County 1.82 percent no longer qualify.
Fannie Mae, Freddie Mac, and FHA guarantee most traditional mortgages in America today. What are the consequences of these changes? The next time you, your family, or your customers seek a mortgage that are higher than these lowered limits, you will be required to seek what is called a Jumbo Mortgage. These mortgages come with higher rates, higher fees, higher down payment requirements, and stricter credit requirements.
Friday, October 21, 2011
U.S. Senate votes to reinstate federal loan limits
The U.S. Senate voted this week to reinstated the Federal loan limits for mortgage loans guaranteed by Fannie Mae, Freddie Mac, and the Federal Housing Administration. The higher loan limits expired September 30 and the new limits are an average of about 10 percent lower.
From South Carolina, Senator Lindsay Graham voted in favor of restoring the loan limits. Senator Jim DeMint voted against restoring the loan limits. The proposal now heads to the U.S. House for its consideration.
Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev., issued the following statement regarding the Senate action to reinstate higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30:
"The National Association of Home Builders commends the Senate for approving an amendment offered by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.) that is essential to help mend the struggling housing market, provide affordable mortgages for creditworthy home buyers and move the economy forward. The 60-to-38 vote demonstrates bipartisan support for pro-housing policies that will help our industry to create jobs and spur economic growth.
"Restoring the higher loan limits for the housing government sponsored enterprise and the FHA will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.
"Congress must act soon to ensure that this measure is enacted into law. Otherwise, the current drop in mortgage loan limits will reduce housing demand, and place downward pressure on home prices in major markets. This will exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery."
From South Carolina, Senator Lindsay Graham voted in favor of restoring the loan limits. Senator Jim DeMint voted against restoring the loan limits. The proposal now heads to the U.S. House for its consideration.
Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev., issued the following statement regarding the Senate action to reinstate higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30:
"The National Association of Home Builders commends the Senate for approving an amendment offered by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.) that is essential to help mend the struggling housing market, provide affordable mortgages for creditworthy home buyers and move the economy forward. The 60-to-38 vote demonstrates bipartisan support for pro-housing policies that will help our industry to create jobs and spur economic growth.
"Restoring the higher loan limits for the housing government sponsored enterprise and the FHA will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.
"Congress must act soon to ensure that this measure is enacted into law. Otherwise, the current drop in mortgage loan limits will reduce housing demand, and place downward pressure on home prices in major markets. This will exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery."
Monday, September 19, 2011
NAHB Call to Action: Congress Must Extend Conforming Loan Limits Now
NAHB issued the following Call to Action. Consider writing your member of Congress and ask him or her to support extending the conforming loan limits on mortgages.
In two short weeks, on October 1, 2011, the conforming loan limits for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) will be lowered. The disruption that would occur with the lowering of the current loan limits would further damage the already fragile housing market and impede the economic recovery of our nation.
The housing finance system is under a cloud of uncertainty. The federal government, through the GSEs and the FHA, is currently accounting for nearly all mortgage credit flowing to home buyers and rental properties. Lowering the loan limits will only further restrict overall mortgage liquidity in the marketplace and place further downward pressure on home prices.
Talking Points:
Write Your Members of Congress at www.capitolconnect.com/builderlink
In two short weeks, on October 1, 2011, the conforming loan limits for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) will be lowered. The disruption that would occur with the lowering of the current loan limits would further damage the already fragile housing market and impede the economic recovery of our nation.
The housing finance system is under a cloud of uncertainty. The federal government, through the GSEs and the FHA, is currently accounting for nearly all mortgage credit flowing to home buyers and rental properties. Lowering the loan limits will only further restrict overall mortgage liquidity in the marketplace and place further downward pressure on home prices.
Talking Points:
- Urge your members of Congress to support immediate efforts to extend the current loan limits for Fannie Mae, Freddie Mac and the FHA;
- A drop in these mortgage loan limits would reduce home prices in major markets all across the country;
- This is not the time to reduce housing demand and exacerbate the current housing downturn.
- Call Your members of Congress at (866) 924-NAHB (6242);
- Write your members of Congress at www.capitolconnect.com/builderlink.
Friday, July 8, 2011
Will expiring loan limits impact the Upstate?
By Matt Vaughn, Sales Manager
Homeowners Mortgage
Effective October 1, 2011, there will be a decrease in the GSE (government-secured enterprise) and FHA loans. This will decrease a bank’s opportunity to originate loans higher than the approved loan limit. Companies like Fannie Mae or Freddie Mac offer securities and guarantees to lenders that help grant favorable rates and loan securitization, thereby decreasing the risk to lenders origninating the loans.
As we close in on the deadline when the loan limits will expire, it is important to evaluate how that may effect our local market in the Upstate. The expiration of the loan limits, which have been statutorily higher since 2008, will directly affect 204 counties nationwide. None of those counties are located in South Carolina.
The limits were set in place under the 2008 stimulus package when financing was scarce for homebuyer’s whose loan amounts exceeded the $417,000 limits. Sensing a need to provide homeownership to borrowers in higher-priced markets where buyers could not afford the larger down payments for more expensive homes, the government assigned a new loan size to each county to 25 percent greater than its median home prices, not to exceed $729,750.
The new rule lowers the temporary increase to 15 percent from 25 percent above the median home price, not to exceed $625,000, effective October 1, 2011.
Another change taking place this fall will affect FHA loans. These changes will take place in 620 counties throughout the nation affecting 59 percent of all homes. That means changes in South Carolina for the following counties: Beaufort, Berkeley, Charleston, Dorchester, Georgetown, Greenville, Horry, Jasper, Laurens, Pickens, and York. For the Greenville market, the 3 counties located in the Upstate will see their FHA loan limit drop to $271,050 from $295,000.
When dropping the price threshold and assuming the minimum 3.5 percent down payment investment, according to NAHB 2,538 families in Greenville County will be affected by the reduced FHA loan limit. That may seem like a lot of families, but in order to understand the impact of changes in FHA loans it is important to focus on the statistics of borrowers obtaining FHA financing. According to HUD, 107,125 people used FHA loans to purchase homes last year with an average loan amount of $179,000 with an average credit score of 703; 77 percent of these loans went to first time home buyers. For those working, building and buying in Greenville County this means that the changes should not have a large impact on home sales in our area.
The average sales price of a home in Greenville County is between $160,000 and $170,000. Most homes here will not be affected by any upcoming changes. For those selling and building at a higher price, the good news is that conventional mortgage insurance companies have started to become more competitive now that FHA monthly premiums have increased, and should attract a larger percentage of buyers with money to put down looking for better payments.
Homeowners Mortgage
Effective October 1, 2011, there will be a decrease in the GSE (government-secured enterprise) and FHA loans. This will decrease a bank’s opportunity to originate loans higher than the approved loan limit. Companies like Fannie Mae or Freddie Mac offer securities and guarantees to lenders that help grant favorable rates and loan securitization, thereby decreasing the risk to lenders origninating the loans.
As we close in on the deadline when the loan limits will expire, it is important to evaluate how that may effect our local market in the Upstate. The expiration of the loan limits, which have been statutorily higher since 2008, will directly affect 204 counties nationwide. None of those counties are located in South Carolina.
The limits were set in place under the 2008 stimulus package when financing was scarce for homebuyer’s whose loan amounts exceeded the $417,000 limits. Sensing a need to provide homeownership to borrowers in higher-priced markets where buyers could not afford the larger down payments for more expensive homes, the government assigned a new loan size to each county to 25 percent greater than its median home prices, not to exceed $729,750.
The new rule lowers the temporary increase to 15 percent from 25 percent above the median home price, not to exceed $625,000, effective October 1, 2011.
Another change taking place this fall will affect FHA loans. These changes will take place in 620 counties throughout the nation affecting 59 percent of all homes. That means changes in South Carolina for the following counties: Beaufort, Berkeley, Charleston, Dorchester, Georgetown, Greenville, Horry, Jasper, Laurens, Pickens, and York. For the Greenville market, the 3 counties located in the Upstate will see their FHA loan limit drop to $271,050 from $295,000.
When dropping the price threshold and assuming the minimum 3.5 percent down payment investment, according to NAHB 2,538 families in Greenville County will be affected by the reduced FHA loan limit. That may seem like a lot of families, but in order to understand the impact of changes in FHA loans it is important to focus on the statistics of borrowers obtaining FHA financing. According to HUD, 107,125 people used FHA loans to purchase homes last year with an average loan amount of $179,000 with an average credit score of 703; 77 percent of these loans went to first time home buyers. For those working, building and buying in Greenville County this means that the changes should not have a large impact on home sales in our area.
The average sales price of a home in Greenville County is between $160,000 and $170,000. Most homes here will not be affected by any upcoming changes. For those selling and building at a higher price, the good news is that conventional mortgage insurance companies have started to become more competitive now that FHA monthly premiums have increased, and should attract a larger percentage of buyers with money to put down looking for better payments.
Wednesday, February 2, 2011
FHFA proposes rule to prohibit GSEs from backing mortgages encumbered by private transfer fees
FHFA today sent a proposed rule to the Federal Register to begin formal rulemaking on private transfer fees.
This rulemaking, which addresses comments received on a previously proposed guidance, would limit Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants and in certain related securities. Transfer fees are contractual arrangements where an owner pays a fixed amount or a percentage of the sales price at the time of transferring the property.
Your Home Builders Association of South Carolina is carefully monitoring legislation that would restrict the use of private transfer fees in South Carolina.
The proposed Federal rule would allow private transfer fees paid to homeowner associations, condominiums, cooperatives, and certain tax-exempt organizations that use private transfer fee proceeds to benefit the property. However, fees that do not directly benefit the property would be barred.
Private transfer fees set up to benefit the developer, or investors in some instances, have become increasingly common around the country. The fees are controversial and in some cases have become an impediment to real property sales, according to the National Association of Realtors.
With limited exceptions, the proposed Federal rule would apply only prospectively to private transfer fee covenants created on or after the date of publication of the proposed rule. With this formal rulemaking, comments are again being solicited and are due 60 days from publication in the Federal Register. Regulated entities are required to comply with the final rule within 120 days after its publication.
To read the proposed rule, click here.
This rulemaking, which addresses comments received on a previously proposed guidance, would limit Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants and in certain related securities. Transfer fees are contractual arrangements where an owner pays a fixed amount or a percentage of the sales price at the time of transferring the property.
Your Home Builders Association of South Carolina is carefully monitoring legislation that would restrict the use of private transfer fees in South Carolina.
The proposed Federal rule would allow private transfer fees paid to homeowner associations, condominiums, cooperatives, and certain tax-exempt organizations that use private transfer fee proceeds to benefit the property. However, fees that do not directly benefit the property would be barred.
Private transfer fees set up to benefit the developer, or investors in some instances, have become increasingly common around the country. The fees are controversial and in some cases have become an impediment to real property sales, according to the National Association of Realtors.
With limited exceptions, the proposed Federal rule would apply only prospectively to private transfer fee covenants created on or after the date of publication of the proposed rule. With this formal rulemaking, comments are again being solicited and are due 60 days from publication in the Federal Register. Regulated entities are required to comply with the final rule within 120 days after its publication.
To read the proposed rule, click here.
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