Mae And Freddie

WASHINGTON -- The Bush administration said yesterday that it would support allowing two government-sponsored mortgage giants to buy and sell "jumbo" mortgages, a move that could boost housing markets in expensive locales. Treasury Secretary Henry M. Paulson Jr. told the House Financial Services Committee that the White House would support giving Fannie Mae and Freddie Mac the power to buy and sell high-value loans. "There is little question that allowing [Fannie and Freddie] to securitize jumbo mortgages would give a short-term lift," Paulson said at a hearing where lawmakers sought suggestions for remedying the mortgage industry's ills.

Freddie Mac and Fannie Mae have announced that they will raise the limit on conventional loans for single-family homes from $240,000 to $252,700.The 5.3 percent change was made to keep pace with the increase in the national average home price between October 1998 and October 1999 as recorded by the Federal Housing Finance Board.Freddie Mac estimates that the higher loan limit will allow more than 150,000 additional families to qualify for conventional loans.The increase takes effect Jan. 1.Fannie Mae and Freddie Mac buy mortgages issued by banks, thrift institutions and other mortgage lenders, and then package the loans and sell them to investors as mortgage-backed securities.

IN A little-publicized but far-reaching shift in practice, mortgage lenders are allowing growing numbers of homeowners who've missed multiple monthly payments to remain in their homes, rather than pushing them toward foreclosure, as they traditionally have done.During the past two years alone, the change has allowed thousands of families nationwide to avoid the financial nightmare of losing their homes. Simultaneously, it has enabled lenders, investors and mortgage insurers to save millions of dollars in losses from foreclosures per year.

LAST WEEK'S Commerce Department report that sales of new single-family homes rose to an all-time high in April was one of many pieces of good news the housing market has received lately. Consumer confidence dropped a bit in May, but at 135.2 still hovered around February's 30-year high of 137.4. The average rate on 30-year fixed-rate mortgage has been near 7 percent for several months, and sales of existing homes in the area were up 22.4 percent in April compared to the same time last year -- the eighth consecutive month of higher sales.

FOR THOUSANDS of American homeowners, the question of the week is not whether to refinance their mortgage, but whether to pull out extra cash when they do refinance.Put another way: Mortgage rate decreases since the summer have rendered the refinance question a no-brainer for lots of people.If you can cut your fixed mortgage rate from the mid- or upper-7 percent range to the mid-6 percent range at a cost you can recoup in 12 months to 18 months, then the answer is virtually always yes to a refinance.

LEGISLATION THAT would correct a problem confronting thousands of homeowners -- overpayment of private mortgage insurance premiums -- is stuck in a Senate committee because of an intraparty fight among Republicans.Sen. Alfonse D'Amato, the New York Republican who chairs the Senate banking committee, has been unable to persuade Republican colleagues on the committee to support his bill that would give borrowers nationwide the right to have their private mortgage insurance (PMI) terminated automatically when their equity stake reaches 20 percent of the original loan amount.

ANY HOMEOWNER who pays private mortgage insurance premiums every month should take note of two important new court cases involving when -- and how -- consumers can save money by obtaining cancellation of their loan insurance coverage.In one case, a federal judge in Texas dismissed a class-action suit that charged Fannie Mae -- the giant home loan investor -- with unfair and deceptive practices nationwide in its use of private mortgage insurance. The suit argued that Fannie Mae has a legal duty to inform consumers that they may obtain termination of their loan insurance payments when their equity in their home is 20 percent or greater.

WASHINGTON -- A report to Congress raised questions yesterday about whether the government should continue to provide financial benefits to two private companies established by the government to make mortgages more readily available to low- and middle-income homebuyers.The report by the Congressional Budget Office is certain to intensify a long-running debate over whether the companies, known as Fannie Mae and Freddie Mac, should retain an implicit government guarantee of the debt securities they issue in purchasing home mortgages from lenders and selling them to investors.

Freddie Mac raises mortgage limit to $207,000Freddie Mac has increased to $207,000 from $203,150 the amount for single-family mortgage loans it will purchase from originating lenders. The other giant purchaser of mortgages, Fannie Mae, is keeping its limit at $203,150.This is the first time the two government-chartered organizations have adopted different limits on the size of mortgages they will buy. Their charters require them to base mortgage purchase limits on an index of home prices put out by the Federal Housing Finance Board.

Washington -- Homeowners who missed mortgage payments because of temporary financial squeezes should be less likely to lose their homes to foreclosure, thanks to new policies quietly put into place by the nation's two biggest lenders.Both Fannie Mae and Freddie Mac -- which together own millions of American home mortgages -- are now aggressively seeking to identify and work with delinquent borrowers who are on the fast track to foreclosure. For those whose financial situations are short-term or curable, both companies are now far more likely to approve "modifications" of loan terms.

WASHINGTON - In an attempt to keep struggling homeowners from losing their houses, federal officials announced yesterday a simpler and quicker procedure for modifying loans held by mortgage giants Fannie Mae and Freddie Mac and expressed hope that it would be adopted by the entire industry. The plan targets people who have missed three or more mortgage payments, live in the home and have not filed for bankruptcy protection. The goal is to make cut the payments to no more than 38 percent of a household's monthly gross income by reducing the interest rate, deferring payments on part of the principal and extending the term of the loan to as long as 40 years.

Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been - with banks unwilling to lend even to other banks. But what about mortgages and real estate? Can you still get a home loan with less than a 20 percent or 30 percent down payment? Or with a credit score below 720? Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light there than in most other financial sectors.

The American people spoke last week, and their rulers ignored them. That's nothing new, I know, but the passage of the bill to rescue Wall Street and other corporate interests from being grievously injured by what they themselves created in a frenzy of runaway greed is the most egregious, morally repugnant piece of legislation to be signed into law since - well, since when? I can't think of anything more ghastly in not only what it does but also what it implies about the future of this nation of ours.

WASHINGTON - If everything breaks right, the hit to taxpayers from a broadening government rescue of the nation's tottering financial markets could be minimal. But if it doesn't, there's a big bill waiting for us all. "These measures will require us to put a significant amount of taxpayer dollars on the line," President Bush acknowledged yesterday as his administration continued to work on a multipronged plan to restore confidence in financial markets. "But I'm convinced that this bold approach will cost American families far less than the alternative."

30-year mortgages lowest since February WASHINGTON : Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months, as rates continue to decline after the government's takeover of mortgage giants Fannie Mae and Freddie Mac. Freddie Mac reported yesterday that its nationwide survey found 30-year, fixed-rate mortgages declined to 5.78 percent this week, down from 5.93 percent last week. It was the fifth consecutive weekly decline and pushed the 30-year mortgage to the lowest level since it stood at 5.72 percent the week of Feb. 14. The decreases have accelerated over the past two weeks since the government announced on Sept.

'Significant' charge at Glen Burnie Bancorp Glen Burnie Bancorp, parent company of the Bank of Glen Burnie, reported yesterday that it would record a "significant" charge against earnings during the third quarter because of losses from investments in Fannie Mae and Freddie Mac, according to a regulatory filing. The company said it held preferred stock in Fannie Mae and Freddie Mac that were AAA-rated at the time of purchase but sank in value from $3 million at the end of June to $163,000 after the federal government took control of the nation's two largest mortgage finance companies last week.

Average cost of Md. hospital stay rises 6% The average cost for a hospital stay in Maryland rose 6.3 percent to $10,038 in fiscal year 2007, up from $9,440 in the previous fiscal year, according to a report released yesterday by the Maryland Health Services Cost Review Commission. Maryland's cost is higher than the national average increase of 5.3 percent but slightly lower than the Consumer Price Index for hospital and related services of 6.4 percent, the commission said. Wegmans recalls bagels, may contain metal pieces Wegmans Food Markets Inc. is voluntarily recalling all varieties of fresh bagels and bialys purchased in its bakeries between Aug. 24 and Sept.

Privatization proves taxing for taxpayers The collapse of Fannie Mae and Freddie Mac is an example of a short-term solution resulting in a long-term failure, and of the victory of ideology over reasoned analysis ("U.S. takes over mortgage giants," Sept. 8). Fannie Mae, formerly a governmental agency, was sold to private investors in 1968. Freddie Mac was privatized in 1989, and both privatizations were rooted in the ideology that private enterprise always does a more efficient and effective job than the federal government, and that less governmental regulation always is better than more regulation.

Yesterday's favorable reaction of markets to the federal takeover of Fannie Mae and Freddie Mac should not be interpreted as a sign that the nation's real estate woes are over or that financial institutions have only smooth sailing ahead. It's more like a collective sigh of relief - a government bailout keeps the system afloat - but it comes at a steep price for taxpayers and investors. Make no mistake, it was the right move. With so many trillions of dollars in mortgages at stake, Treasury Secretary Henry M. Paulson Jr. could not allow matters to get worse, nor could he simply bail out the quasi-public corporations without also assuming primary ownership.

The government bailed out mortgage giants Fannie Mae and Freddie Mac yesterday, belying dozens of Fannie and Freddie executives who said year after year that such a thing would never - could never - happen. "The U.S. government does not guarantee, directly or indirectly, our securities or other obligations," Fannie said in its last annual report. "We are a stockholder-owned organization, and our business is self-sustaining and funded exclusively with private capital." The companies are about to receive what we can conservatively estimate will be tens of billions in taxpayer dollars.