Do You Have A Fannie Mae Loan?

One of the first requirements in qualifying for a refinance or modification through Fannie Mae's Making Home Affordable program is actually having a Fannie Mae Loan.

Now you can find out with Fannie Mae's recently release online tool:

Fannie Mae Loan Lookup


And if you're loan isn't with Fannie Mae, it could be with Freddie Mac (who also has Making Home Affordable programs):

Freddie Mac Loan Lookup

HASP Refinances Clarified - GSE's Home Affordable Refinance Program

Along with the Obama Adminstration's announcement of the Homeowner Affordability and Stability Plan on Wednesday, Fannie Mae & Freddie Mac has also released information about their role in the plan.

Termed the "Home Affordable Refinance", the two GSEs will be relaxing certain guidelines and price adjustments on refinances to help homeowners reduce their housing costs. Here are the significant features of the new refinance program:

1.) Allows up to 105% Loan to Value (LTV) and no maximum Combined LTV (1st and subordinate loan combined).
2.) No minimum credit score.
3.) May not require an appraisal (appraisal waiver) or exterior-only appraisal.
4.) Eligible property types - primary residence, 2nd/vacation home & investment properties
5.) Limited cash out only - no additional equity allowed to be taken out, but closing costs and up to $2,000 may be included. Existing subordinate loan(s) must be re-subordinated.

The BIG Caveat: The Home Affordable Refinance is for existing Fannie Mae or Freddie Mac mortgages only. No subprime, Alt-A, Jumbo, Reverse or Government loans.

Want to know if you're eligible? Visit www.financialstability.gov/makinghomeaffordable

Here are the new Matrices, showing the credit score, LTV & property type price adjustments.

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."

"I Remember When Mortgage Rates Were So Low, That..."

That's how the conversation will begin when you're sitting in your rocking chair, grandkids at your feet, being asked what life was like in 2008/2009. You'll go on to say how you saved X amount of money because you had the foresight to lock in an historically low rate. And they'll be impressed.

Okay, so maybe that won't impress any of the kids. And the story may include recollections of how the stock market dropped 40% that year and World Market filled your inbox with "Up To 75% OFF!" emails.

But here's my point:

30 year fixed mortgage rates are currently in the 5% range, a level that hasn't been seen since 1971, the year Freddie Mac began it's weekly rate survey. It's a once-in-a-generation type of thing.



Of course this doesn't mean you should go out and get a mortgage loan at all costs. No mortgage rate is worth making yourself worse-off. But those who are in the market for a home or anyone who could significantly reduce their current monthly mortgage payment should seriously consider pulling the trigger on a new home loan or refinance. Sure, not everyone can take advantage of these rates - credit issues, no downpayment, NO INCOME. Yet there are many who can, and it's not hard to find out by calling your loan officer.

Yeah, there's a conflict of interest in me saying all this (I'm "talking my book"). After all, I make a living originating mortgage loans. But it doesn't take a rocket scientist to figure out that jumping on these low rates could save you money. And I believe I would be remiss not to inform those around me (clients, readers, etc). In fact, it was a conversation I had on Christmas Eve in St. Louis, MO while visiting family that encouraged me to do this post. While chatting about work life, a friend admitted he didn't follow economic/business news and had no idea what was going on with mortgage rates. There are many I've run into who are in the same boat.

Contact your financial advisor. Talk with one (or several) of the many reputable mortgage professionals here in town. Get quotes and crunch some numbers. Call a local Realtor if you're thinking of buying. And seriously consider making a move if it fits your situation/goals/wants/needs.

Fannie/Freddie Friday Links

Freddie Mac: 30-year fixed mortgage rate at 37-year low (MarketWatch.com, 12/18)
"The average rate fell to 5.19% with an average .7 point for the week ending Dec. 18, down from 5.475% last week and 6.124% a year ago."

"... lowest since the survey began in April 1971."

Fast Track Workouts for Delinquent Borrowers with Freddie Mac-Owned Mortgages Underway (MarketWatch.com 12/18)

Fannie Mae, Freddie Mac foreclosures slow-regulator (Reuters.com 12/16)
"Fannie Mae and Freddie Mac, the largest providers of funding for U.S. home mortgages, slowed the pace of foreclosure starts on delinquent loans for the second straight quarter, their regulator said on Tuesday."
"...but loans reinstated by the former's HomeSaver Advance loan program to borrowers jumped to 27,277 last quarter from 16,658 in the second quarter, the FHFA said."

Loan terms can now be modified before you're late (Chicago Tribune 12/19)
"Starting immediately, Fannie Mae—the mortgage giant with an estimated 18 million home loans in its portfolio or in mortgage bond pools it guarantees—will allow borrowers who face imminent financial difficulties to request "early workout" loan alterations, even if they've never been late."

Homeowners Are Rushing To Refinance As Rates Fall (CNBC, 12/18)
I concur.

Grill On The Hill

Former Fannie/Freddie chiefs testified at a House Financial Services Committee hearing on Tuesday (CSPAN Video).






Raines Faults Regulators For Fannie, Freddie Missteps (Bloomberg 12/09)

Fannie, Freddie Ignored Risky Loan Warnings (ABC News 12/09)
Fannie and Freddie Execs Defend Their Decisions as House Members Question Motives

Evading Fiscal Responsibility (op ed from Charlottesville's Daily Progress 12/10)

The rate rollercoaster

Lately, watching the action in the mortgage backed securities (MBS) markets has been like watching a car full of screaming teenagers hang on through the peaks and valleys of a world class roller coaster. In other words, it's been wild ride.

Just since September, we have seen the 30yr fixed mortgage rate fluctuate nearly 3/4 1 percent - between 5.625% and 6.375% 6.5% (stay up-to-date with our free daily rates email).

In normal markets, one can often get a general sense of the direction. Fundamentals can be followed and trends can be observed. But what we're witnessing in MBS is not the gradual inclines or declines of a functioning market. We're seeing wild swings in prices and reversals that occur in a matter of days.

Yesterday, Bloomberg reported on the difference in yields on MBS vs. US Treasuries. Fannie-Freddie Mortgage Bond Spreads Hit Widest Since March. The recent increased spreads have been driving MBS prices down and rates up.

"Agency mortgage-bond spreads have fluctuated since their record drops on Sept. 8 after the U.S. seized control of Fannie and Freddie. The spreads have widened on days when concern mounted that buyers relying on borrowed money including banks and hedge funds will have less demand for the debt -- including the past five trading sessions. Spreads have tightened when investors heeded a government pledge to support the market."

Predicting the direction of mortgage rates with accuracy in a stable market is a difficult task. But in current conditions it's nearly impossible.

So how does how does this translate for consumers? If you have a purchase contract on a home and plan on closing within the next 60 days, go ahead and lock your rate. Waiting for a particular rate that may or may not come is not worth the risk to your plans or your deposit. And the same goes for those who plan to refinance within the next 6 months - take advantage of the current historically low rates. Keep in mind that the average 30yr fixed rate since 1978 is 9.5% (Freddie Mac)

I'm not trying to "talk up my book" (giving advice or making an argument that bolsters one's position). Just pointing out what I see.

Visual evidence:

FNMA 30yr

The Right Man at the Right Time

By now most know about the Fannie Mae & Freddie Mac "bailout". It's been blogged, reported & commented about for months. So if you didn't catch it on every major news channel & site this morning, you will.

While some are questioning whether the largest bailout in US history was really necessary, most (experts) say that it was and the fallout from other options (receivership or equity injection) would have been worse.

Paulson: "We had no choice"


And former Secretary of Treasury John Snow said it best on Squawk Box this morning (interviewed in front of the Rotunda at UVA), "This action was necessary in the face of the realities of the financial markets, the need to stabilize housing and the larger issues of the US economy and it's spill over affects on the rest of the world. So we are where we are, I guess now the question is can we find a good path out of this so that we get a permanent solution coming out of the next congress..."


Realty Check (CNBC) on the the housing market will react.
Questions is, "How much and how soon"
Mark Zandi of Moody's Economy, "It will help the housing market, it won't bring an end to the housing downturn immediately though."


I truly feel sorry for the thousands of employees at Fannie Mae & Freddie Mac. This is like Enron times two. "Fannie Mae’s workers had $116 million in the employee stock ownership plan at the end of 2006. Today, it’s more like $17.5 million. Ouch."

Friday Links

Breaking news on WSJ, Treasury Is Close to Finalizing Plan to Backstop Fannie, Freddie. It sounds more like a major liquidity injection, rather than a plan to "nationalize". Apparently the fact that Fannie & Freddie are very profitable right now isn't going to keep the Feds from intervening. But according to CNBC, Paulson & Co don't have many options.

I guess it's not official until someone comes out with a study and announces it: "Housing Bubble Has Popped". Yeah, I'd say...

Folks, you might want to stock up on a few supplies and batten down the hatches. It's going to get wet & windy this weekend.

On a lighter note-
I've heard of (and seen) homes in which house cats have the run of the place, but this is ridiculous: Bobcats on a bank owned roof (LA Times blog). "Taking advantage of a slump in local real estate, a family of bobcats has moved into a foreclosed Lake Elsinore home, lolling about on fences and walls and riveting an entire neighborhood."

Last but not least (I couldn't help myself)-
A new foreclosure avoidance (scam) book: "Save My House, Save My A**". This is not an endorsement. I haven't read it, nor do I plan to.