Fannie Mae and Freddie Mac Foreclosures Surge

Fannie Mae and Freddie Mac Foreclosures Surge

According to this Real Estate Economy Watch article, Fannie Mae’s Delinquencies Rise 163 Percent in 12 Months, Fannie Mae (the Federal National Mortgage Association, or FNMA) in October 2009, mortgage loan delinquencies rose significantly.  The percentage of "seriously delinquent mortgage loans" in Fannie Mae's portfolio increased 26 basis points for a new total of 4.98%. In September 2008, when the US Treasury took over Fannie Mae and Freddie Mac (the Federal Home Loan Mortgage Corporation, or FHLMC) and placed these government-sponsored enterprises (GSE's) into conservatorship, that same "seriously delinquent mortgage loans" figure was just 1.89%. That is an increase of 309 basis points, or 163%.  Single family mortgage loans are defined as "seriously delinquent mortgage loans" if they are 90 days or more past due, or in the foreclosure process.  Multifamily mortgage loans aredefined as "seriously delinquent" if they are are 60 days or more past due. According to the article "Seriously delinquent loans eat into the company’s capital and forced borrowing from the U.S. Treasury."  Freddie Mac’s single family mortgage loan delinquency increased to a new record of 3.54% of its portfolio.  According to the article, this was the 30th straight month in which delinquencies have increased.  This is probably why the US Treasury has removed the limit on the Fannie Mae/Freddie Mac loan guarantees - they know that the losses will far exceed the previous limit.  As I have been saying since early-mid 2006, this is only going to get worse.  Fannie Mae, Freddie Mac, Ginnie Mae (buys FHA loans) and commercial banks will all be forced to handle more short sales, or risk being deluged by an overwhelming number of foreclosures.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Fannie Mae and Freddie Mac Need More Government Aid

Fannie Mae and Freddie Mac Need More Government Aid

According to this Bloomberg article, Fannie, Freddie Overseer May Seek More Treasury Aid (Update2), the annual dividend payments owed by Fannie Mae and Freddie Mac (Government Sponsored Entities, or GSE's) to the US treasury exceed the total earned by both GSE's, and as a result, the GSE's are actually needing to borrow more bailout money from the US Treasury in order to pay the annual dividend payments they owe the US Treasury. Unfortunately, this sounds all to familiar. You cannot become a profitable company by borrowing more to pay your current debts. It is a recipe for more financial disaster. No doubt that this is all due to the incredibly high number of bad loans and foreclosures. The article states "Treasury and Federal Housing Finance Agency officials are also debating whether to lower the mortgage-finance companies’ dividend payments on their Treasury borrowings, according to these people, who requested not to be identified describing the internal deliberations. Fannie Mae and Freddie Mac, the largest sources of mortgage money in the U.S., have used $111.6 billion of their $400 billion in backup financing in less than a year. The companies say their 10 percent annual dividend payment, which comes to about $5 billion each, costs more than either have earned in most years and adds to their draws on Treasury." According to the article, the US treasury is considering reducing the GSE's annual dividend payments in order to prevent the need for another government bailout. This all seems like a lot of wasted time, energy and money to keep 2 insolvent GSE's from failing.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Housing Faces Upcoming Challenges

Housing Faces Upcoming Challenges

According to this Real Estate Economy Watch article, The Last Days of the Homebuyer Tax Credit, there are 2 upcoming issues that will hurt housing.

1. Permanent Expiration of the Housing Tax Credit - According to the article, "This is it. No more extensions. When April 30 comes and goes, the tax credit for everyone is over and buyers have only until June 30 to close. With the prospect of getting more than they bargained for in the short term, the housing lobby agreed." In essence lawmakers made representatives of the National Association of REALTORS (NAR) promise that they would not come back and ask for another extension of the housing tax credit.  Therefore, buyers have until April 30, 2010 to sign a contract to buy a home and June 30, 2010 to close in order to get the tax credit.  That's it.
2. Government Mortgage Purchasing Will Decrease Dramatically - According to the article, "About the same time the credit goes away, something more serious will hit the housing markets, the end of the Federal Reserve’s programs to buy up $1.25 trillion of mortgage-backed securities and to lend as much as $175 billion to Fannie Mae and Freddie Mac to do the same. Mortgage-backed securities are sold to investors and the better the market for them, the lower the interests that consumers pay. These government programs to buy mortgage securities have helped to prop up the mortgage-backed securities markets and keep mortgage rates at record low levels for nearly a year. The Fed announced two weeks ago that both are going away April 10."

In my opinion, the effectiveness of the tax credit will wane much sooner than April 30, 2010.  After the first group of buyers took advantage of the tax credit, most of the buyers that did not do so were probably not interested in buying.  I will agree that some simply simply were not ready to buy the tax credit extension may spur some of them to buy now, but I believe that a majority simply felt that $8,000 was not enough.  The tax credit would have to be larger to get this next group of first time buyers off the fence.  Since the tax credit was not increased I predict a lesser tax credit effect this 2nd time around.  I believe that you will see an initial surge of tax credit buyers followed by a long lull followed by a surge near the end as procrastinators try to close before June 30, 1010.  The overall results will be disappointing.

The upcoming decrease in government mortgage is a much bigger problem.  Per my previous blog post, Our Phony Real Estate Market, right now the housing market is almost entirely being supported by artificial government intervention.  When that government intervention ends the housing market will have to survive based on the fundamentals (think jobs and income).  Therefore, it will be a difficult time for housing if unemployment is still around 10% or worse and all these government housing subsidies expire.  This does not even factor in the coming wave of Option ARM foreclosures caused by a large number of Option ARM mortgages resetting starting in the spring of 2010.  Because of these issues I predict another decline in housing beginning in 2010. The gist of the matter is that there will be more short sales and foreclosures and this will drive the price of homes down further. Some areas will be harder hit than others, but the effects will be felt nearly everywhere.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

US Government Provides Funding For 95% Of Mortgages

US Government Provides Funding For 95% Of Mortgages

According to this article, Recent Developments in Mortgage Finance, in the October 26, 2009 edition of the Federal Reserve Bank of San Francisco newsletter, the US government (via Fannie Mae, Freddie Mac and Ginnie Mae) are now providing unprecedented support for the US housing market by "owning or guaranteeing almost 95% of the new residential mortgage lending."  In other words, the US government is currently providing the funding for 95% of all residential mortgage loans.  Therefore, when you hear that "the banks are starting to lend again", what is really happening is that the banks are operating as little more than glorified loan brokers by selling nearly all their loans to the federal government via Fannie Mae, Freddie Mac and Ginnie Mae (see the graph below courtesy of the FRBSF).

The article goes on to state "This shift in mortgage finance has had a profound impact on the types of borrowers receiving loans. In the fourth quarter of 2006, approximately 10% of originations in our sample were labeled by originators as "subprime." For the entire universe of mortgages, subprime loans are estimated to have made up about 20% of originations in 2006. By the first quarter of 2008, the subprime share was effectively zero. Since then, increased FHA lending—identified here by Ginnie Mae's share—has revived this segment of the market. After plummeting in early 2008, the share of borrowers with FICO credit scores lower than 660 has returned to just higher than 20%, the same share as when subprime securitization peaked in 2006. The collapse of nonconforming loan originations has had a particularly strong impact on the higher end of the market. The share of jumbo mortgages was nearly 9% at the peak in 2006. By the end of 2008, jumbo loans accounted for just 3% of new originations. Meanwhile, in another big shift, option ARMs made up about 6% of originations in the fourth quarter of 2006. By year-end 2008, option ARMs had vanished from the data set." What this means is that the US government has taken the place of the subprime lenders that went belly up due to making too many bad loans and that the US government, as a % of total loans made, is making just as many subprime loans as the now defunct subprime lenders did during the peak of the subprime feeding frenzy. In my opinion, the result of this will be more foreclosures and short sales which will cause massive losses that the US taxpayer has to ultimately pick up all because we refuse to tell people that they cannot afford to buy a home. Common sense has truly left this country.

The article concludes "With the vast majority of current mortgage lending now intermediated in some form by the GSEs, it will be difficult for the housing market to return to normal." What this means is that it is going to be nearly impossible for the housing market to be weaned off of artificial and unsustainable government support. The end result will be disastrous when the government "market proppping" is eventually discontinued. That is why I know for sure that the housing market is not recovering. What we are seeing is a mirage created by artificial artificial support. Even the mirage is not that pretty, so the reality is that much worse. The US housing market will continue to suffer for the next several years with the worst to come within the next 3 years.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage (due to losing your job, having your income reduced, illness, health problems, etc.), or your home is already in foreclosure, or you owe more than your home is worth, please contact me to discuss your options including loan modifications or short sales. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN. If you do need to short sell your home (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home), or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Fannie Mae and Freddie Mac Offer Incentives to Buy Their Foreclosed Homes and Properties

Fannie Mae and Freddie Mac Offer Incentives to Buy Their Foreclosed Homes and Properties

According to this New York Times article, Help From Fannie and Freddie for Foreclosed Homes, Fannie Mae and Freddie Mac are currently offering fairly attractive incentives for buyers who purchase their foreclosed properties. According to the article, and information gathered from the websites of the Fannie Mae HomePath Financing Program and the and Freddie Mac HomeSteps SmartBuy Program, the incentives are as follows:

Fannie Mae HomePath Financing Program

• Low down payment (minimum of 3%), which can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.
• Flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only).
• Somewhat lenient credit requirements.
• Available to investors in addition to owner occupants.
• Loans available without Private Mortgage Insurance.
• No appraisal fees.
• Closing cost assistance is is available (if you ask for it) on a property by property basis. There is no cap on the amount of closing cost assistance. According to the article, "the average homeowner has received payments equivalent to 3.75 percent of the loan’s value."
• HomePath Mortgage financing is available from a fairly large number of lenders. Click here for a list of HomePath Mortgage lenders.
• Renovation funds are available to complete light renovations through the HomePath Renovation Mortgage. Click here for a list of HomePath Renovation Mortgage lenders.

Freddie Mac HomeSteps SmartBuy Program (for initial offers received by October 30, 2009 and closed by December 31, 2009)

• Comprehensive 2 year Home Warranty paid for by Freddie Mac.
• Closing cost assistance up to a 3.5% of the purchase price (must be requested in initial offer).
• Appliance Discount of up to 30% name brand appliances.

If you are a home buyer in Middle Tennessee who is interested in purchasing a Fannie Mae foreclosure, a Freddie Mac foreclosure, another foreclosure or REO, a short sale, or other distressed real estate in order to get a great home at a low price, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN. I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

Fannie Mae and Freddie Mac Have Nearly 100,000 Foreclosures (REO's)

Fannie Mae and Freddie Mac Have Nearly 100,000 Foreclosures (REO's)

According to this HousingWire.com article, GSE REO Portfolio Near 100,000, according to 10-Q filings with the Securities and Exchange Commission (SEC), the total REO foreclosure inventory now held by government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac is almost at a combined level of 100,000 single-family properties. That is staggering, especially considering that foreclosures continue to pile up and the rate of new foreclosure filings exceeds the rate at which those properties are being sold (per my previous blog post this is partially a result of the banks holding back REO inventory).

According to the article, "Freddie’s portfolio is nearly 35,000 properties, while Fannie’s is closing in on double that figure at nearly 64,000. While the rate of growth in the two portfolios has declined, Freddie acknowledges it expects to experience further losses from REO properties." The SEC filing stated “While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended.” According to the article, "Fannie’s REO portfolio nearly doubled from the first half of 2008 compared to H109. Fannie held 33,729 properties during H108. The number of properties increased in all regions of the US except the Midwest, which experienced a decrease from 15,265 to 14,626 properties." The article stated that Freddie Mac indicated that their pool of Alt-A interest-only loans and loans made in 2006-2007 make up the biggest share of its portfolio. These types of loans are now major contributors to the declining quality of the Freddie Mac loans. It appears that the continuing decline in home values is the main culprit. As I have stated in previous blog posts, as home prices decline and homeowners become "upside down" or "underwater" the number of delinquencies, short sales and foreclosures increase.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage and your home is worth less than the amount(s) you owe, please contact me to discuss selling your home via a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

You can find out more information about me via my website JimTheRealEstateExpert.com and my Active Rain profile Jim McCormack's Active Rain Profile - Short Sale REALTOR and Real Estate Expert.

Fannie Mae Loses $14.8 Billion in 2nd Quarter of 2009

According to this Fannie Mae News Release, Fannie Mae Reports Second-Quarter 2009 Results, Fannie Mae lost $14.8 billion in the 2nd quarter of 2009. The news release states "Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment." Translation: loan defaults and foreclosures are killing them. Mark my words, this is only going to get worse.

Obama Administration Expands Housing "Rescue Plan"

According to this BusinessWeek article, Obama administration expands housing plan, the Obama Administration is expanding the coverage of its previous $50 billion housing rescue plan in order to cover more distressed homeowners. The previous plan has helped 55,000 homeowners avoid foreclosure via loan refinances and payment modifications. This new expansion will only aid homeowners by making it easier to give their homes back to the banks, or complete a short sale. While these add ons are certainly needed it still does not address the problem of the banks having too many REO's, or losing money and becoming insolvent. Of course, in my previous blog posts I beat up the initial plan since it omitted investors and homeowners whose homes were worth far less than the mortgage amount. These remain a source of a lot of foreclosures. In short, this new plan will do little to nothing to stop the decline of the housing market.

Fannie Mae and Freddie Mac Becoming Large Landlords

According to this Forbes article, Meet Your Landlords: Fannie And Freddie, collectively Fannie and Freddie own 1 out of every 9 foreclosed properties with Fannie owing 64,000 single family homes and Freddie 29,000. The article mentions that foreclosures are going to accelerate due to the moratorium on foreclosures being lifted. Both GSE's are working on greatly increasing loan modifications and programs that allow foreclosed former homeowners to remain in the properties as tenants. The article mentions that this landlord role may be difficult for Fannie and Freddie. Also, the article quotes Rick Sharga, Vice President of RealtyTrac, as saying that Fannie and Freddie will need to seize more properties as prime conforming loans start to default more. He goes on to say that the rental programs may help the housing market by preventing a flood of foreclosures from entering the market at the same time. While I agree that there will be more foreclosure, I disagree that holding back foreclosures is a good idea. Americans need this problem to end now. Fannie, Freddie and private banks need to just dump the properties now and push down prices to get the market to hit bottom ASAP so that people can feel confident that the worst is over. This continuous market meddling is dragging this nightmare out far too long.