Obama's Foreclosure Fix

The highly anticipated news du jour, Courtesy of CNBC

Housing Fix: $275 Billion To Help 9 Million Families
"President Obama unveiled his much-anticipated plan Wednesday to fight the housing crisis, pledging up to $275 billion to help stem a wave of foreclosures sweeping the country.

A total of 8.1 million U.S. homes, or 16 percent of all households with mortgages, could fall into foreclosure by 2012, according to a report by Credit Suisse.

An Obama administration official said the total plan commits up to $275 billion for housing, including $50 billion from funds already committed in the country's financial sector bailout. It aims to help up to 9 million American families."

Real Estate Investors Get A Break

Fannie Mae announced Friday that they will be changing the rules regarding investment and second home properties. In September '08, Fannie issued a rule which restricted investors to four financed properties when seeking a new Fannie Mae mortgage.

Under new guidelines, effective March 1, 2009, investors will be allowed to have up to 10 financed properties.

From Bloomberg, 2/11

Fannie to Expand Mortgage Rules for Realty Investors
"Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to increase housing demand.The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site.“Bona-fide, experienced investors bringing significant equity to the table will play a key role in the housing recovery,” Brian Faith, a spokesman for the company, said today in an e-mailed statement."

New guidelines:


25% downpayment
720 min. credit score
No bankruptcies/foreclosures in last 7 years
No delinquencies in last 12 months on any mortgages
6 months liquid reserves for each investment property owned

Let's hope that there are more than a few investors out there who can qualify. And just maybe the rules change will have a positive impact on the national real estate market.

Fannie/Freddie Friday Links

Fannie Mae to Loosen Refinancing Rules (Washington Post 2/06)
"The District company, which accounts for more than 40 percent of the $12 trillion in U.S. residential mortgage debt, is seeking to break a "logjam" in refinancing and allow more homeowners to take advantage of near-record low interest rates, according to Brian Faith, a spokesman for Fannie Mae, which like its rival, Freddie Mac, is under government control."

Fannie Mae sent out email notification of the "enhancements" on Wednesday. Their announcement can be viewed HERE (pdf).

Complexes with many deadbeats may lose out on Fannie Mae loans (palmbeachpost.com, 2/02)
"Yet another barrier to landing a mortgage after the housing crash: Mortgage giant Fannie Mae isn't buying loans backed by condos in developments where more than 15 percent of unit owners are behind on their monthly fees."

Feds say virus plot could have destroyed all Fannie Mae data (USA Today, 1/30)
"The Justice Department says it has foiled an alleged plan by a fired Fannie Mae contract employee to unleash a virus that would have destroyed data on all of the finance company's 4,000 computers on Saturday, the Associated Press reports."

Fixed Mortgage Rates Rise to 5.25%, Freddie Mac says (Bloomberg, 2/05)

Freddie Mac launches plan for high-risk loans (bizjournals.com, 2/04)
"A selected portfolio of higher risk mortgages that are at least 60 days delinquent will handed off to a specialty servicer for intensive attention using Freddie Mac’s workout opportunities."

Freddie Mac to keep borrowers in foreclosed homes (LA Times, 1/31)
"Freddie Mac, the government-sponsored mortgage finance institution, said Friday that it would allow some borrowers whose houses are in foreclosure to remain in their homes as renters. The new policy's direct effect will be modest. Freddie Mac has only about 8,500 properties in foreclosure, and many are vacant. Nationwide, various estimates place the number of homes in foreclosure at more than 2 million."

MBS Tally 70 Billion So Far

Broker Universe reports that the Feds have so far purchased $70 billion in GSE (government sponsored enterprise) mortgage-backed securities.  It's part of what might be upwards of $500 billion spent in this way to help push down rates and, thus, help stabilize the housing market.  

The Fed purchases began in early January.  And they've had some success.  From the article:

"The Fed succeeded in narrowing the spread between the 10-year Treasury rate and mortgage rates, according to Mahesh Swaminathan, a Credit Suisse mortgage strategist. "The Fed's buying of mortgages is definitely a positive on the whole, but it doesn't guarantee lower mortgage rates if Treasury rates continue to sell off," he said."