Fannie Mae in Bigger Trouble than Imagined?

The New York Times reports today on Airing the Depth of Troubles at Fannie Mae.

• The hole at Fannie Mae may be even deeper than feared.

• a number of analysts fear that Fannie Mae’s vast holdings of risky home mortgages, some of which they say are designated as safer loans, are deteriorating rapidly along with the housing market.

• Of particular concern is how Fannie Mae accounts for subprime mortgages and so-called Alt-A home loans, which are technically a rung above subprime. Some critics say that Fannie Mae defines these loans loosely, which could expose the company to new, gaping losses.

• In a recent statement, Fannie Mae said it classified loans as subprime if they had been originated by lenders specializing in subprime mortgages or by subprime divisions of large lenders. Amy Bonitatibus, a spokeswoman for the company, declined to comment on Monday on whether its nonsubprime categories contained subprime loans, saying only that “we believe that credit scores alone do not provide sufficient information to determine whether a loan should be classified as subprime.”

There's a lot about Fannie Mae and its sister, Freddie Mac, that will continue to be revealed in the days, weeks and months ahead. Some of it will not be pleasant.

Stephen M. Flatow

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.
Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com

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Mortgage Delinquencies, Foreclosures Rise to Record

Bloomberg News reports that

"One in 10 American homeowners fell behind on mortgage payments or were in foreclosure during the third quarter as the world’s largest economy shed jobs and real estate prices tumbled."

The share of mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs in a survey that goes back 29 years, the Mortgage Bankers Association said in a report today. The gain in delinquencies was driven by an increase of loans with payments 90 days or more overdue.

“Until we see a turnaround in the job situation, we’re not going to see these numbers improve,” said Jay Brinkmann, chief economist of the Washington-based bankers group, in an interview. “We’re seeing more loans build up in the 90-days bucket as lenders work to modify loans and states put in place programs that delay foreclosures.”

While the number of foreclosure actions in New Jersey is readily available, it is difficult to get current figures on delinquency. The good news is that New Jersey and neighboring Pennsylvania are below the US foreclosure rate. So says the Philadelphia Inquirer.

What happens next? "Federal Reserve Chairman Ben S. Bernanke yesterday urged using more taxpayer funds for new efforts to prevent home foreclosures, saying the private sector is incapable of coping with the crisis on its own.

"The Fed chief outlined four possible options, including buying delinquent mortgages and providing bigger incentives for refinancing loans. He called for addressing the “apparent market failure” where lenders aren’t modifying mortgages even in cases where it’s in their own economic interest to do so."

Now, that's not a surprise.

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.

Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com. http://www.vested.com/

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Mortgage rates down, but can you get one? - Inman News Report

Inman News reports a rise in mortgage applications as interest rates have fallen "since the Federal Reserve said it would spend $600 billion to buy mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae, but tightened underwriting standards mean many people won't be able to take advantage of them."

"The Mortgage Bankers Association said applications for refinance loans shot up 203 percent on an adjusted basis for the holiday-shortened week ending Nov.28. Applications for purchase loans were up a more modest 38 percent."

"But," warns the report, "tightened underwriting standards will disqualify many with less-than-stellar credit scores, and an estimated 12 million homeowners who owe more than their homes are worth may also find it difficult to purchase or refinance a home."

Well, here's to anything that gets this market going. It's worth a wait and see attitude.

Reprinted with permission of Inman News.

Stephen M. Flatow

Vested Title Inc.,648 Newark Ave., P.O. Box 6453, Jersey City, NJ 07306
Tel. 201-656-9220. Fax 201-656-4506.

E-mail vti@vested.com. Web www.vested.com

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From the Wall Street Journal - Sheila Blair's Mortgage Miracle

Our settlement department was busy a few years ago closing what are now called sub-prime mortgage loans. They varied from "interest only" loans to those featuring locked-low payments with interested adjusting to LIBOR ever few months and the possibility of negative amortization up to 125% of the original principal balance of the loan. If you have a problem understanding that sentence, join the borrowers who lined up to cash in on the their so-called equity. These folks were in over their head the moment they walked away with the leftover cash from their refinance.

Now comes the FDIC with a plan "to prevent an estimated 1.5 million foreclosures by the end of 2009. She plans to accomplish this feat by modifying more than two million loans at what she estimates would be a taxpayer cost of $24 billion. This may be wonderful politics, but the real-world evidence suggests it will be far more difficult and expensive."

For more details on the plan and its likelihood of success read the Wall Street Journal article Sheila Blair's Mortgage Miracle

Stephen M. Flatow

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306. Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com Sphere: Related Content

Creative Solution - Move Homeless into Vacant Homes

A glut of empty houses in Miami, Florida, vacated because of foreclosure or abandonment, are being recycled to the homeless. This is not part of the bailout package but the work of one Max Rameau who has taken it upon himself to act as a one-man relocation program.

According to reports,

Max Rameau delivers his sales pitch like a pro. "All tile floor!" he says during a recent showing. "And the living room, wow! It has great blinds."

But in nearly every other respect, he is unlike any real estate agent you've ever met. He is unshaven, drives a beat-up car and wears grungy cut-off sweat pants. He also breaks into the homes he shows. And his clients don't have a dime for a down payment.

While Miami is struggling with the burden of homes without owners, Rameau is working to get those homes occupied. Unorthodox? Ya think? But getting people off the street, out of the weather, and encouraging them to maintain the property, might just be a good thing.

Check out the reports at FOXNews.com.

Stephen M. Flatow

Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306. Tel 201-656-9220. Fax 201-656-4506. E-mail vti@vested.com Sphere: Related Content