Fannie, Freddie Halt Foreclosures for the Holidays

Mortgage financing giants Fannie Mae and Freddie Mac announced they will suspend foreclosure evictions during the holiday season. The holiday moratorium, which the government-sponsored enterprises have done for the last few years, will begin Dec. 18 and run until Jan. 3, 2016.

During that time, Fannie Mae and Freddie Mac say they will not conduct any eviction lockouts and allow families to remain in their homes during the holidays. However, legal and administrative proceedings for evictions will continue during that time, but families will be permitted to stay in their homes.

The moratorium will apply to all foreclosed, occupied single-family homes as well as 2-4 unit properties on which Freddie Mac or Fannie Mae guarantees or owns the mortgages.

“As we have done in past years, we are suspending evictions during the holidays,” says Joy Cianci, senior vice president of credit portfolio management for Fannie Mae. “We also continue to remind home owners who may be struggling with their mortgages to reach out for help. Options are available to avoid foreclosure, and we want to help pursue those options whenever possible.”

Source: “Fannie Mae, Freddie Mac Suspend Foreclosure Evictions During Holidays,” HousingWire (Dec. 10, 2015)

72% Rejected by Feds ‘Asset Relief Loan Program’

An alarming number of borrowers are being rejected from a federal mortgage-assistance program that sets out to help make monthly mortgage payments more affordable so owners can remain in their homes, a federal watchdog report shows.

Seventy-two percent of struggling borrowers who apply to the Troubled Asset Relief Program are rejected from mortgage servicers.

“There is a massive lost opportunity for an emergency program designed to help home owners through the crisis if only 20 percent to 30 percent of families seeking help from HAMP actually get into HAMP,” says Christy Romero, special inspector general.

The report says the U.S. Treasury Department’s requirements for mortgage servicers fail to provide a “clear picture of why home owners were denied.”

Source: “72% of Struggling Borrowers Rejected From Federal Mortgage-assistance Program,” MarketWatch (July 29, 2015)

Bankruptcy Won’t Wipe Out 2nd Mortgages

The U.S. Supreme Court ruled this week that second mortgages on underwater homes cannot be voided during bankruptcy. The ruling involved a case in which two home owners in Florida had filed for Chapter 7 bankruptcy. Prior courts had ruled that the home owners in bankruptcy could void a second mortgage when the debt owed to the holder of the first mortgage is more than the home’s current value. As such, the lender would then lose its ability to foreclose on the property even if the value of the home increases.

Bank of America, which in this case was the second mortgage holder, argued that the prior court’s ruling was different than other appeals courts across the country.

The Supreme Court agreed, voting unanimously that home owners who declare bankruptcy cannot void their second mortgage obligations even if they’re home is underwater, meaning they owe more on it than it is currently worth.

Source: “U.S. Top Court Says 2nd Mortgages on ‘Underwater’ Homes Cannot Be Voided in Bankruptcy,” Reuters (June 1, 2015)

FHFA Allows Ex-Owners to Buy Back Homes

The Federal Housing Finance Agency announced a new policy that will permit some foreclosed home owners to purchase the homes back that they once had lost at fair market value.

To regain ownership, the ex-owners must be able to pay the full current value of the property, and they still must wait at least three years after their foreclosure to regain ownership, which is required to purchase any home using a Freddie Mac or Fannie Mae–guaranteed loan following a foreclosure.

The FHFA, the regulator of Fannie Mae and Freddie Mac, says the new policy likely will lower the principal on the loans of the former home owners if they elect to buy their former homes back. Prior to the policy, the FHFA had required borrowers who had gone through foreclosure and who wanted to buy back their home to pay the entire debt they owed on the mortgage, even if it was much higher than the home’s current value.

“This is a targeted but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” says FHFA Director Melvin L. Watt. “It expands the number of potential buyers of REO properties and is consistent with the enterprises’ practice of requiring fair-market value for those properties.”

The new policy applies only to buyers’ former primary residence. Second homes and investor properties are not eligible.

Source: “Regulator OKs Some Fannie, Freddie Foreclosure Buybacks at Fair Value,” Los Angeles Times (Nov. 25, 2014) and the Federal Housing Finance Agency

Home Buyers Facing Less Competition From Cash Buyers

The percentage of cash sales fell to 33 percent of total home sales in June, marking the lowest share since September 2008, CoreLogic reports. A year ago, cash sales stood at 36.3 percent of the market; they have been falling steadily since January 2013.

Historically, cash sales make up about 25 percent of total home sales, according to data prior to the housing crisis. In 2011, cash sales peaked at 46.2 percent of sales nationwide, CoreLogic reports.

Buyers are using cash mostly to purchase real estate–owned properties, or REOs. Fifty-five percent of REOs are all-cash transactions, followed by nearly 33 percent of resales, about 32 percent of short sales, and 16 percent of newly built homes.

Source: “Cash Sales Accounted for One in Three Home Sales in June,” HousingWire (Sept. 9, 2014)

$22B Still Unclaimed in Government Mortgage Relief

Nearly $22 billion remains available to help struggling home owners reduce their monthly mortgage payments and avoid foreclosure through the government’s Making Home Affordable program, according to a quarterly report by the special inspector general for the Troubled Asset Relief Program. TARP has only spent $12.8 billion to date of the $45.6 billion in funds it’s been allocated for housing programs. An additional $3.4 billion is still available for the Hardest Hit Funds Program as well.

The “Treasury should improve coordination between these programs so that they work together as seamlessly as possible to provide effective, sustainable mortgage relief to as many struggling home owners as possible,” the report states.

HAMP has suffered from low participation. Only 1 in 6 home owners who have applied for HAMP have received a permanent loan modification, according to the report. The program has had a high redefaulting rate. To date, 389,222 home owners who have participated in HAMP have not been able to keep up with their new modified mortgage payments. Twenty-nine percent of home owners who qualified for HAMP have had to drop out of the program.

Many home owners are soon set for an increase in their rate. After five years, the rate on HAMP loans rises 1 percent until reaching its previous rate prior to the loan modification.

Source: “$22B in Government Mortgage Relief Still Left for Struggling Homeowners,” Housingwire (July 30, 2014)

Authorities Uncover Growing ‘Mortgage-Relief Scams’

Federal and state officials have filed dozens of lawsuits against companies they say have been duping a growing number of home owners who are facing foreclosure with big promises to lower their mortgage payments or rescue them from foreclosure while collecting millions of dollars in illegal upfront fees from home owners.

Dubbed Operation Mis-Modification, federal and state officials are uncovering pockets of law firms and counseling services that they say are falsely offering assistance to modify mortgage terms or payments for struggling home owners.

Officials say it’s against federal law for companies to collect fees from home owners until they have received a written modification offer from their lender or mortgage servicer.

In a crackdown on such cases, the Consumer Financial Protection Bureau recently filed three lawsuits against eight companies. The agency alleges that the companies collected more than $25 million in illegal upfront fees for services like modifying a mortgage or trying to prevent a foreclosure. The agency has issued warnings to consumers to be cautious about such mortgage-related scams, looking for such red flags like companies that demand upfront payments and guarantees that a modification or other assistance can be obtained.

Source: “Authorities Crack Down on Mortgage-Relief Scams Nationwide,” Los Angeles Times (July 23, 2014)

Fannie Mae Announces Expansion of HomePath for Short Sales Website

Fannie Mae (FNMA/OTC) today announced the expansion of the HomePath® for Short Sales website, a communication tool created to help real estate professionals efficiently complete short sales and resolve challenges directly with Fannie Mae.  The new functionality will allow agents to contact Fannie Mae sooner in the short sale process and preempt potential challenges, decreasing the need to escalate concerns further down the road. The website is open to any real estate professional working on a short sale involving a Fannie Mae-owned loan.

Through the expanded HomePath Short Sale Portal, listing agents can work directly with Fannie Mae to:

  • Request list price guidance prior to listing a property
  • View the status of submitted cases
  • Negotiate and receive first lien approval on a short sale directly from Fannie Mae (This feature will be rolled out over the next few months through individual servicers.)

“This is an important step in continuing to build a strong relationship with the real estate community, which will ultimately contribute to the stabilization of neighborhoods,” said Tim McCallum, Vice President for Short Sales, Fannie Mae. “Allowing real estate professionals to negotiate an offer directly with Fannie Mae is the next step in streamlining the short sale process. Our goal is to provide transparency throughout these transactions and arrive at an agreement that benefits all parties involved.”


‘Built-to-Rent Homes’ Come Down Off Highs

The market for single-family homes that are built to be rentals is showing signs of declining from its post-recession highs, according to the National Association of Home Builders.

The market share for built-to-rent single-family homes stood at 3.3 percent in the first quarter of 2014. That remains higher than historical averages of 2.8 percent but has dropped from its 5.8 percent share a year ago, NAHB’s analysis shows.

During the recession, the share of built-to-rent homes soared while the foreclosure and financial crises forced more Americans to become renters.

But “it appears the market is returning to historical averages after recent peaks in this form of construction,” according to NAHB’s Eye on Housing blog.

About 20,000 built-to-rent homes were started nationwide in the last four quarters.

Source: “Single-Family Built for Rent Market Remains Off Recent Market Highs,” National Association of Home Builders’ Eye on Housing Blog (May 26, 2014)

Spring Fling? Faster Sales, More Buyer Traffic

Properties sold faster in March — at a median of 55 days — due to low inventories of homes for sale nationwide, according to the latest REALTORS® Confidence Index. The index is based on a survey of more than 3,800 REALTORS® about their transactions in March.

About 37 percent of real estate professionals report that properties sold in March had been on the market for less than a month. In February, 34 percent of practitioners reported the same.

Buyer traffic was also up in March, although demand was softer than a year ago, according to the report.

Still, REALTOR® confidence about current market conditions ticked up in March, reflecting a typical seasonal increase. Their confidence about the outlook for the next six months also improved but is lower than what it was a year ago, according to the report. The biggest concerns among REALTORS® remain low levels of inventories, tight credit conditions, and uncertainty about flood insurance regulation, according to the REALTORS® Confidence Index.

REALTORS® continue to be confident that prices will increase over the next 12 months but at a “modest pace.” They expect prices to increase at a median of about 4 percent over the next 12 months. The states that have the most optimism about price increases — expecting increases of about 5 percent to 7 percent over the next 12 months — are California, Oregon, Nevada, Georgia, Florida, and Hawaii. States that expect a 3 percent to 5 percent price increase are Washington, North Dakota, Texas, Michigan, New York, and the Washington, D.C., metro area.

“Low inventory compared to demand is expected to continue to buttress prices, as well as the declining share of distressed sales in the market,” the report notes.

Source: “Properties Sold Faster in March, Typically at 55 Days in March 2014,” National Association of REALTORS®’ Economists’ Outlook Blog (May 5, 2014) and REALTORS® Confidence Index for March