Mae And Freddie

WASHINGTON - Fannie Mae and Freddie Mac said last week that they raised the limit on the size of single-family home mortgages they buy from banks by 7.3 percent to $322,700, widening the field of homebuyers eligible for lower-cost financing. The new loan ceiling, up from $300,700, matches the increase in the U.S. average home price in October from a year earlier, according to the Federal Housing Finance Board. The government charters for Fannie Mae and Freddie Mac require them to base annual increases in their maximum loan size on the October price increase.

The federal agency overseeing Fannie Mae and Freddie Mac failed to stop abuses by the mortgage giants' network of foreclosure attorneys for years before problems surfaced in news accounts, according to a report released Tuesday. The inspector general for the Federal Housing Finance Agency looked into the agency's oversight of foreclosure attorneys for the mortgage financiers after Rep. Elijah E. Cummings in February sought an investigation of alleged abuses. The mortgage companies, which buy loans and mortgage securities, are regulated by the FHFA.

Fannie Mae and Freddie Mac no longer need federal benefits to support the U.S. housing market, allowing Congress to strip them of government sponsorship and reduce risk to taxpayers, the Congressional Budget Office says. Fannie Mae and Freddie Mac "could gradually be relieved of the responsibilities and benefits of their current status as government-sponsored enterprises and be required to operate as fully private organizations," Douglas Holtz-Eakin, the budget office's director, told the Senate banking committee Thursday.

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.

Foundation investments $367 million Gates Foundation investments in stocks, bonds or securities of 20 of the top 25 sub-prime lenders and other large sub-prime companies.$1.9 billion The amount of stocks and securities the foundation holds issued by Fannie Mae and Freddie Mac.$2.2 billion The foundation's overall investments in sub-prime companies or their securities in 2005. [Source: Gates Foundation '05 tax returns]

Fannie Mae and Freddie Mac, the two biggest providers of money for residential loans, lag in their efforts to make housing more affordable to low-income home buyers, said Alphonso R. Jackson, Secretary of the U.S. Department of Housing and Urban Development. "Fannie Mae and Freddie Mac are doing a good job," Jackson told a Mortgage Bankers Association conference in San Francisco last week. "The question, though, is whether it's good enough." HUD, which oversees Fannie Mae and Freddie Mac, has proposed a rule to require the companies to direct 57 percent of their mortgage financing by 2008 toward homes for people with incomes no greater than the median of their areas.

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.

A credit crunch that has choked off mortgage funding for millions of Americans, forced thousands of homeowners into foreclosure and placed hundreds of banks and investment firms in jeopardy appears unlikely to ease until a continuing crisis at Fannie Mae and Freddie Mac is resolved. An early resolution of the crisis is an urgent priority. The two quasi-public corporations holding or insuring roughly half of all the home mortgages in the nation have reported losses in the billions stemming from the subprime mortgage crisis and the subsequent credit crunch and housing slump.

WASHINGTON -- The House passed legislation yesterday creating a stronger regulator for Fannie Mae and Freddie Mac that falls short of constraints that the Bush administration sought to impose on the companies' combined $1.4 trillion in mortgage assets. The bill passed 313-104. The legislation gives a new regulator the power to alter reserve requirements for Fannie Mae and Freddie Mac, sell their assets in the event of default, bar them from new lines of business and force a reduction in the companies' mortgage assets when the portfolios threaten the soundness of the companies.

WASHINGTON - Fannie Mae and Freddie Mac, the biggest sources of U.S. home mortgage financing, pose risks of instability in financial markets that might loom larger than their benefits in expanding homeownership, U.S. Comptroller General David Walker told a Senate panel yesterday. "It is difficult for Congress, accountability organizations and the public to determine whether the benefits provided by the GSEs' activities are in the public interest and outweigh their financial risks," Walker told the Senate Banking Committee.

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.

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.

Fannie Mae and Freddie Mac are raising by 7.8 percent the limit on the size of mortgages for single-family homes, increasing the pool of homebuyers who can qualify for lower-cost financing. The new loan ceiling will be $359,650 in 2005, up from $333,700 this year, the Washington-based Office of Federal Housing Enterprise Oversight said in a statement last week. The government requires the federally chartered mortgage financiers to base annual increases for their maximum loan size on the percentage gain of average home prices in October from a year earlier.

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.