Word: loan
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...eight of its lenders, hired its first chief risk officer and taken other steps to beef up its controls. But some bad calls - whether from a lack of resources (it has long begged Congress to fund computer upgrades) or a lack of judgment - will haunt the agency for years. Loans it backed in 2006 and 2007 are souring at a particularly high rate because of seller-financed down payments; when a home buyer isn't the one ponying up equity, there is more than twice as much chance that the loan will go bad. That practice is now gone...
Fannie Mae has brought in a property-management company to run its rental program, but even with that imported expertise, the number of people who wind up as tenants probably won't be large. There are many alternatives that must be pursued first, including loan modification and trying to sell the house for less than it's worth. Only people who exhaust other options and are eligible for a deed in lieu of foreclosure - a process of handing over the deed in exchange for loan forgiveness - will have the option to rent. In the first nine months of 2009, Fannie...
...none of that means rent-backs won't eventually take off. There are plenty of examples in the recent past of housing policies starting at the federal housing agencies and later expanding industry-wide thanks to strong-arming from some combination of the Obama Administration and Congress. Loan modifications are the quintessential example. Perhaps one more relevant bit here is the law that was passed earlier this year requiring banks that repossess houses to honor the terms of existing leases (i.e., to not immediately kick out any existing renters). Fannie Mae already had such a policy in place. Over...
After all, the big Administration push has been loan modifications. Earlier this week, Treasury reported that through October more than 650,000 homeowners have received trial modifications under the government's Making Home Affordable plan. How long lasting that help will be, though, is a different question: as of Sept. 1, only 1,711 borrowers had successfully completed the trial phase and received permanent changes to their loan terms, according to a report by the Congressional Oversight Panel...
...loan modifications aren't the long-term success the Administration is banking on, people will wind up losing their homes to foreclosure anyway, and the number of repossessed properties owned by banks will again swell. According to foreclosure tracker RealtyTrac, the number of foreclosure notices nationwide has been ticking down past three months, but the number of notices are still running about 19% higher than last year. Considering high unemployment and how many people still owe more on their mortgages than their houses are worth, there might be a chance yet for attention to turn to the idea of renting...