DesperateHouseWise.com » fannie mae

Americans equate homeownership with liberties

DHW — Mon, 08 Mar 2010 19:57:11 +0000

A great article published in the New York Times taps into the American psyche when it comes to homeownership. The author, Robert J. Shiller (one half of the super Swedish rock group Case/Shiller), provides a brief history behind the creation of The Federal Housing Administration (FHA) and Fannie Mae in the 1930’s. Mr. Shiller notes these institutions were created to prop up the housing market and thus stimulate employment. (One-third of the unemployed during The Great Depression were identified with the building trade.)

Mr. Shiller questions the financial soundness of having the taxpayer continue to finance (or at least insure) the American Dream. He feels the driving force behind this call to action is Americans’ belief that homeownership means the preservation of certain liberties. While few can argue with this observation, the article leaves out another important side of the story.

Prior to the advent of FHA, Americans were losing a home to foreclosure at a rate of 1,000 a day. At the time, it was not uncommon for homeowners to have multiple mortgages (each with short terms and high rates). Sound familiar? FHA mortgages were created to cure this ailment by allowing at-risk homeowners to refinance these high cost loans with low, fixed rate mortgages. The program was later expanded to help homebuyers finance their purchases. What FHA brought to the table for the first time was an amortized mortgage. Overtime, this instrument helped Americans build equity in their homes as well as build their personal wealth.

While Mr. Shiller is right to question the risk of supporting these institutions, it’s also important to look at the wealth building opportunities these lending programs have provided to disadvantaged populations. Rather than reinventing the wheel to get us out of The Great Housing Depression, we’d be wise to revisit history and learn what we can from the FHA.

DHW asks: What do you think?

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Loan modifications improving but still failing

DHW — Wed, 13 Jan 2010 03:14:23 +0000

Although the numbers are improving, a third of loans modified by Fannie Mae and Freddie Mac early last year were delinquent after six months.

These loans were modified prior to implementation of Obama’s Home Affordable Modification Program.

DHW asks: Do you think loan modifications are making a difference?

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Treasury Dept says ‘no deal’ for Fannie

DHW — Sun, 08 Nov 2009 03:30:12 +0000

Citing a loss too great for taxpayers, the US Treasury Department blocked Fannie Mae’s nearly $3 billion sale of unused low-income housing tax credits to Goldman Sachs Group and Berksire Hathaway.

DHW asks: Do you agree with the Treasury’s decision?

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Fannie Mae strikes deal to sell $2.6 billion in unused tax credits

DHW — Fri, 06 Nov 2009 02:56:20 +0000

In a deal that still needs Treasury Department approval, government run Fannie Mae reached an agreement with unnamed buyers to sell approximately $2.6 billion in unused low-income housing tax credits. The Treasury Department said it would approve the sale “if it was clearly in the interest of taxpayers.”

DHW asks: Do you think this deal is in the best interest of taxpayers?

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Fannie Mae expands ‘Deed for Lease’

DHW — Thu, 05 Nov 2009 18:43:23 +0000

Fannie Mae is expanding its ‘Deed for Lease’ program to help thousands of homeowners facing foreclosure. The program is designed for those who want to stay in their homes but do not qualify for President Obama’s loan modification program. Participants transfer their title to Fannie Mae and rent back for up to one year.

Some facts about the program:

Fannie Mae has hired an outside agency to manage the properties (name of agency has not been released)
Rent cannot exceed 31% of the homeowners’ pretax income
Homeowners must be able to prove they can afford the market rent (established by the management company)
Participants must use the home as their primary residence

DHW asks: Do you think ‘Deed for Lease’ is a good idea?

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Higher loan limits extended by Congress

DHW — Mon, 02 Nov 2009 20:48:07 +0000

Last Thursday, the US congress passed a resolution to extend the current loan limits for FHA, Fannie Mae and Freddie Mac through calender year 2010. The resolution will require President Obama’s signature, which is expected shortly.

Visit these sites to find current loan limits in your area.

FHA

Fannie Mae

Freddie Mac

DHW asks: Will the higher loan limits help you purchase a home?

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