White House deems home equity an unalienable right within the Declaration of Independence

Once again, the U.S. Government is initiating yet another

program to remove the burden of responsibility off the

shoulders of a specific group of American citizens.

According to the present administration, our

unalienable rights within The Declaration of Independence

 include life, liberty, the pursuit of happiness

and guaranteed home equity.

"Responsibility" Food For Thought

• Responsibility is the price of greatness. (Winston Churchill)
• We are responsible for actions performed in response to circumstances for which we are not responsible. (Allan Massie)
• You cannot escape the responsibility of tomorrow by evading it today. (Abraham Lincoln)

By Nick Timiraos and Alan Zibel

The Wall Street Journal
12/7/10 

Fannie Mae and Freddie Mac are in talks with Obama administration officials to join fledgling government programs aimed at reducing loan balances of mortgages where borrowers owe more than their homes are worth, according to people familiar with the situation.

An agreement with the two government-owned mortgage giants to write down so-called underwater loans could reduce the threat to the U.S. housing market from the glut of homeowners believed at risk of default should their personal finances or home prices worsen. A deal would deepen losses at Fannie Mae and Freddie Mac, which already have cost taxpayers about $134 billion.

Fannie Mae and Freddie Mac, which own or guarantee about half of all first-lien mortgages in the U.S., have been highly reluctant to reduce loan balances, especially for borrowers who are still making payments.

The Obama administration is pressuring Fannie Mae and Freddie Mac, through their primary regulator, the Federal Housing Finance Agency. The administration wants the firms to join a program run by the Federal Housing Administration that allows banks and other creditors, which agree to write down mortgages, to essentially hand off the reduced loans to the FHA.

Federal officials estimate that 500,000 to 1.5 million homeowners could benefit from the program—a fraction of the estimated 11 million borrowers who were underwater as of June 30, according to CoreLogic Inc. That figure represents about 23% of all U.S. households with a mortgage. Complete article and chart








If people concentrated on their responsibilities, others would have their rights. (Stuart Briscoe)

Fannie Mae and Freddie Mac have spent more than $2 billion this year on foreclosed property expenses

By Julie Schmit and Stephanie Armour,
USA TODAY
11/8/10

Taxpayer-funded Fannie Mae and Freddie Mac have spent more than $2 billion this year on foreclosed property expenses after acquiring tens of thousands of homes through foreclosures.

The mortgage giants owned more than 240,000 foreclosed homes on Sept. 30, they reported last week. That's about 25% of all lender-owned homes in the U.S., according to RealtyTrac.

Fannie and Freddie, which buy mortgages from lenders and package them into securities to sell to investors, own or guarantee half of all U.S. mortgages. Together, they have more than twice as many foreclosed homes now as they did this time last year, with a combined value of $24 billion.

The U.S. Treasury has invested $148 billion in preferred stock in Fannie and Freddie — and received almost $17 billion in dividends — since taking them over two years ago. Their losses have narrowed, but further Treasury investments are expected. Excluding dividends, the government's cumulative cost could range from $142 billion to $259 billion by December 2013, estimates their regulator, the Federal Housing Finance Agency. Invested...come on!

The longer foreclosed homes stay on their books, the larger taxpayers' expenses will be. "Taxpayers are covering their losses. We are the ultimate deep pocket," says Lawrence White, a New York University economics professor.

As of Sept. 30, Freddie Mac owned 74,897 foreclosed single-family homes, up 82% from a year ago, according to its third-quarter financial report. From January through September, Freddie spent $842 million — vs. $480 million in the same time last year — on properties acquired in foreclosures. Costs include legal fees, insurance, taxes, cleaning and maintenance, Freddie said last week.

Fannie owned 166,787 foreclosed single-family homes on Sept. 30. Its foreclosed property expenses approached $1.3 billion from January through September.

Those include costs to clean and maintain homes and accounting adjustments reflecting reduced values of those properties, says Fannie spokeswoman Amy Bonitatibus.

Freddie and Fannie set limits on what they'll pay companies to clean and maintain homes or real estate firms, who hire contractors to do the work. Freddie, for instance, pays up to $400 for an initial cleaning of a foreclosed property and up to $125 to have the grass cut twice a month in the summer.

Freddie's and Fannie's property costs are likely to rise as more houses go into foreclosure.

Properties also may take longer to sell because of state and federal investigations into whether foreclosure documents were properly executed.

That could "prolong the foreclosure process nationwide and may delay sales," Freddie said in its third-quarter report.

Freddie Mac costs Grandchildren Another $4.1 Billion

CEO Charles E. Halderman, Jr:

"We have helped to keep the housing finance and broader capital markets functioning smoothly, and since the beginning of 2010 have made it possible for 1.2 million American families to take advantage of historically low interest rates to buy or refinance a home."

(all for the low taxpayer investment of $63.2 billion and our

12th quarterly loss in the prior 13 quarters...sorry about that kids)

11/3/10
McLean, VA – Freddie Mac (OTC:FMCC) today reported a net loss of $2.5 billion for the quarter ended September 30, 2010, compared to a net loss of $4.7 billion for the quarter ended June 30, 2010. After the dividend payment of $1.6 billion on its senior preferred stock to the U.S. Department of the Treasury (Treasury), Freddie Mac reported a net loss attributable to common stockholders of $4.1 billion, or $1.25 per diluted common share, for the third quarter of 2010, compared to a net loss attributable to common stockholders of $6.0 billion, or $1.85 per diluted common share, for the second quarter of 2010.

The company had a net worth deficit of $58 million at September 30, 2010, compared to a net worth deficit of $1.7 billion at June 30, 2010. The deficit in net worth for the third quarter resulted from several contributing factors, including a dividend payment of $1.6 billion to Treasury, which exceeded total comprehensive income of $1.4 billion. To eliminate the third quarter net worth deficit, the Federal Housing Finance Agency (FHFA), as Conservator, will submit a request on the company's behalf to Treasury for a draw of $100 million under the Senior Preferred Stock Purchase Agreement (Purchase Agreement).

"As we near the end of 2010, the housing market remains fragile, and has recently come under renewed pressure from slowing economic growth, weaker employment and foreclosure uncertainties," Haldeman said. "We believe that it will be a considerable time until the housing market has a sustained recovery." Freddie "Krueger" Mac Report

Fannie and Freddie Bailout to cost our Grandchildren between $221 and $363 Billion

On Christmas Eve of 2009,

Tim Geithner announced his decision

to lift the caps on how much bailout money

failed mortgage giants Fannie Mae and

Freddie Mac would receive to stay in business.

(The Geithner Gift that Keeps on Giving)

FHFA Report

The Federal Housing Finance Agency (FHFA) today released projections of the financial performance of Fannie Mae and Freddie Mac (the Enterprises) including potential draws under the Preferred Stock Purchase Agreements (PSPAs) with the U.S. Department of the Treasury. To date, the Enterprises have drawn $148 billion from the Treasury Department under the terms of the PSPAs. Under the three scenarios used in the projections, cumulative Enterprise draws range from $221 billion to $363 billion through 2013.

The projected credit losses in each scenario primarily reflect possible further losses on the Enterprises’ pre conservatorship mortgage business. As time passes, Enterprise dividend payments on Treasury preferred stock make up larger portions of the draws. Under the scenarios used in the projections, if dividend payments on preferred stock were excluded, cumulative Enterprise draws range from $142 billion to $259 billion. FHFA Report

The New York Times

By: Binyamin Appelbaum
10/21/10
WASHINGTON — The federal bailout of Fannie Mae and Freddie Mac could cost taxpayers another $124 billion over the next three years if housing prices continue to fall sharply, according to new government projections.

On the other hand, if the economy continues to recover, the troubled mortgage companies could require as little as $6 billion in additional aid, the Federal Housing Finance Administration said Thursday.

The Treasury Department has pumped $148 billion into the two companies since they were seized by the government in 2008, to cover their losses on soured mortgage loans. The government is propping up the companies to make sure that money remains available for new home mortgage loans. In return, the companies have paid dividends to the federal government totaling $13 billion, making the net cost to the Treasury $135 billion so far.

The new projections suggest that the companies will not need much more money, so long as the economy does not falter. The housing finance administration, which oversees Fannie and Freddie, said that it was publishing the numbers to inform public debate about the future of the two companies. The Obama administration plans to propose changes to the government’s role in housing finance early next year.

“These projections are intended to give policy makers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac,” said Edward J. DeMarco, the agency’s director.

The projections offer three situations. In the most dire, the economy starts shrinking again, driving down prices and increasing defaults. The companies could then require another $215 billion from Treasury. But in this situation they would return $104 billion to Treasury in the form of dividend payments in return for the aid, including the $13 billion already paid to the government. The total cost to taxpayers: $259 billion, including the $148 billion given to the companies since 2008.

In its most optimistic assumption, the agency projected that housing prices would merely stay flat over the next three years. The companies would then require $73 billion in additional aid, and return $67 billion in new dividend payments in addition to the $13 billion already paid. The total cost to taxpayers: $141 billion.

The intermediate assumption is the agency’s best guess about what the future holds. Housing prices would fall a little farther, and then begin to recover. Fannie and Freddie would take about $90 billion in additional aid and return about $71 billion in new dividend payments on top of the $13 billion already paid. The total cost to taxpayers: $154 billion.

Special Thanks to Barney Frank...

Back at a 2003 hearing, Frank pooh-poohed Republican and regulator concerns about the size and scope of Freddie and Fannie, saying he didn’t want to emphasize “safety and soundness.” Instead, he said, “I want to roll the dice a little bit more in this situation towards subsidized housing.”

FHFA reports House prices drop 0.5% during August and a huge downward revision for July

WASHINGTON, DC – U.S. house prices fell 0.5 percent on a seasonally adjusted basis from June to July, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. The previously reported 0.3 percent decline in June was revised to a 1.2 percent decline. The unusually large revision mainly reflects the addition of new data from late June that show considerably weaker prices than earlier in the month. For the 12 months ending in July, U.S. prices fell 3.3 percent. The U.S. index is 13.8 percent below its April 2007 peak.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from June to July ranged from -1.6 percent in the South Atlantic Division to +1.1 percent in the Pacific Division.

The regulator's index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae or Freddie Mac.

Sept. 22 (Bloomberg)

U.S. home prices dropped 3.3 percent in July from a year earlier, the eighth consecutive decline, as foreclosed properties flooded the market.

Prices fell 0.5 percent from June, the Federal Housing Finance Agency in Washington said in a report today. Economists had projected a 0.2 percent decline from the previous month, based on the average of 15 estimates in a Bloomberg survey.

Foreclosures are boosting the supply of available properties and reducing prices, even as mortgage rates tumble to record lows. The time it would take to clear the market of homes for sale was 12.5 months in July, the highest in more than a decade of data, according to the National Association of Realtors. Banks seized a record 95,364 properties from delinquent borrowers in August, according to RealtyTrac Inc., an Irvine, California-based seller of housing data.

“We have a lot of homes for sale, and a lot of them are distressed properties,” said Thomas Lawler, founder and president of Lawler Housing and Economic Consulting in Leesburg, Virginia. “That is putting downward pressure on home prices.”

Sales of existing homes in July plunged 27 percent to a 3.83 million annual pace, the lowest level on record, NAR said Aug. 24. July sales of new homes dropped to an annual pace of 276,000, the fewest since data began in 1963, the Commerce Department reported Aug. 25.