Michael's Feed

Fannie, Freddie To Monitor Originator, Appraiser Performance Come 2010; HVCC Still Necessary?

Sun, 31 May 2009 09:20 GMT

The Federal Housing Finance Agency, Fannie and Freddie's regulator, announced this week that as of Jan. 1, 2010, the Enterprises are required to obtain "loan-level identifiers" for the loan originator, loan origination company, field appraiser and supervisory appraiser.

Director Lockhart:

"This represents a major industry change. Requiring identifiers allows the Enterprises to identify loan originators and appraisers at the loan-level, and to monitor performance and trends of their loans." ...

"If originators or appraisers have contributed to the incidences of mortgage fraud, these identifiers allow the Enterprises to get to the root of the problem and address the issues." ...

Read entire News Release (*.PDF)

...

If the agencies are going monitor professional performance on a loan-by-loan basis, is the 'Home Valuation Code of Conduct' still necessary? Could Fannie and Freddie's new role of 'big-brother' incent and align best practices, or is the notion of good industry stewardship just too unrealistic?

...

News Release (*.PDF)

Letter to Fannie Mae

Letter to Freddie Mac

H.R. 3221, Title V, the S.A.F.E. Mortgage Licensing Act

National Mortgage Licensing System (NMLS)

Conference of State Bank Supervisors (CSBS)

...

Update 05/31/09: Edited for brevity.

Also: Fannie Mae Announcement 09-11 Requires Submission of Electronic Appraisal Reports in MISMO XML Standard

(h/t Appraisal Scoop)

FHA To Permit $8,000 Tax Credit As Downpayment

Tue, 12 May 2009 15:35 GMT

Gather around kiddos, looks like Christmas came early this year.

MarketWatch is reporting that HUD secretary Shaun Donovan at today's real estate summit before thousands of Realtors® said that the FHA's tweaking the first-time home buyer tax-credit for use as down-payment.

I don't know any details but you can read the story here.

Hat tip HousingWire (saw it there first).

UPDATE #1: VIDEO | HUD Sec. Shaun Donavan speaking with CNBC in more detail.

The House Price Conundrum

Fri, 01 May 2009 11:42 GMT

Not too long ago I commented to a friend that the most fortunate aspect of the credit saga -- if a bright spot was to be found -- is that it was global. Had it not been, the economic "decoupling" that many economists had predicted might have left the US in a perilous situation. The main reason being that the outflows of capital from the US to "safer havens" could have, and probably would have, risked sparking bouts of uncontrollable deflation. But because the problem was so widespread, investors simply had nowhere else on the planet to hide. (Note: I purposely oversimplified the issue here.)

So, when all hell broke loose following Lehman's bankruptcy last September, investors predictably sought Treasury- and Dollar-safety. (Remember when Treasury yields went negative?) While the US was in bad shape and obviously getting worse, stashing investments in other parts of the world was an even riskier proposition thus the herd came rumbling back to the stables. So in sort of a weird way, selling misrated junk securities abroad was a good thing after all. Who knew?

Humor aside -- this leaves us with an even bigger problem, one that is sure to vex even the most Pollyannic hopeful. As the economy improves and signs of life begin to emerge, the "fear bubble" that drove the Treasury binge that wrestled mortgage rates into submission through artificially suppressed yields (with Fed assistance, of course), may have popped. Already in the past few days in spite of Federal Reserve support of the Treasury market, yields have swelled. (10YT @ ~3.20 by the time this was published from ~3.09 only 48 hours earlier...)

In other words, we're faced with a radical conundrum -- paradox, if you will -- wherein the most destabilizing threat to the real estate market, is an economic recovery.

Yes, you read me right. I know it's entirely counterintuitive, but it remains fact that the more investor sentiment improves, the less the safety of UST's really matter. And unlike the last bubble -- when everyone and their mothers were convinced their mortgage bets were fully hedged or that reinsurance capacity was all but endless -- this time Wall Street cannot "window dress" iffy mortgages nor can AIG "reinsure" them. To borrow a thought from one of my favorite authors; the "risk-management-based-on-insurance" strategy that real estate prices were built upon is essentially dead.

Nevertheless, an "orderly unwind" in Treasury positions is still possible and likely is already underway. Treasurys again took it on the chin this morning. But so long as "orderly" is what's actually happening, then upticks in mortgage rates will probably soften house prices a bit more, but so goes the real estate tango. But what would happen if investors (hedgefunds, investment banks - electronic algorithms, really) that hedged alike aggressively unwind safety positions in unison? What , then, would happen to mortgage rates? Or more to the point, house prices? I don't think it would take much of a spike in mortgage rates to zap the life out of the "affordability high" we're currently seeing.

The Fear Bubble (or Treasury Bubble) is real and not some arcane phenomena elsewhere in equities or commodity markets. Isn't it ironic, though, that the safe-haven asset class that's provided real estate with far-reaching benefits as system shocks unfolded, may now risk causing more than a mere aftershock as trends reverse? What a pickle. Though not to worry, there is a counteracting force in play - albeit, unnatural.

As I alluded to here months ago, the yet-to-be-explained phenomena of REOs NOT making it to market has clearly given price support to housing in recent quarters. While most would like to credit any leveling in prices to lower interest rates -- or that silly little buyer-tax credit thingy -- tangible benefits, in my view, are mostly coming from supply/demand rebalancing due to the widespread slowdown in REO disposition. Whether one calls it intentional price-fixing by banks to bolster their books, or a consequence of tranche warfare culminating in REO stalemates; the reduced supply of housing via the REO holiday (not to be confused with foreclosure moratorium - that's an entirely separate topic) appears to be, in fact, stabilizing prices -- AND IMPROVING SENTIMENT.

So, on the same day the Federal Open Market Committee (FOMC) DOES NOT not reach for the Rosary, and Paul Volker utters the words, "leveling off"; Treasury yields swell to November levels despite the Feds clear commitment to purchase $300 billion in Treasurys alone. Not to mention the $1.25 trillion in Agency MBS. Exactly how they intend to handle this mother-of-all conundrums is anyone's guess. But it's a story that is slowly - but surely - catching on.

Blood Into Gold

Fri, 20 Mar 2009 00:12 GMT

Thought I would share the work of someone who I've come to admire on many levels. Dr. David Martin of M-CAM, author at www.invertedalchemy.blogspot.com, inspired this terrific Peter Buffett, AKON collaborative for the UN International Day of Remembrance of the Victims of Slavery and the Transatlantic Slave Trade.

From his blog:

Following a meeting with Peter Buffett in January, I had a dream in which I saw all of the attempts at alchemy in the world. In the dream I saw that the only thing that had been successfully turned into gold was the blood of humanity - both those explicitly oppressed and those who are enslaved by their obsessions. Peter and recording artist AKON took that dream and created a masterful song calling for accountability which will be debuted at the UN International Day of Remembrance of the Victims of Slavery and the Transatlantic Slave Trade, March 25, 2009. Please share this video with all you know and join in the effort to see the wealth in the essence of things and people rather than in the gold that from them can be extracted...

Charlie Rose: A conversation with Timothy Geithner, U.S. Treasury Secretary

Wed, 11 Mar 2009 01:20 GMT

On financial regulation, stress tests and the future of the financial system and capitalism.

Tuesday, March 10, 2009

53:46