Items of Interest:
The Fannie and Freddie doomsday scenario -- It's time to wonder what would happen if Fannie Mae and Freddie Mac failed.
ere's a scary, and relevant, question to ponder as the housing market continues to slide: What would it take for the government to step in and help Fannie Mae and Freddie Mac, and how would a rescue affect you, the taxpayer?
A Lehman analyst's note on Monday sent shares of both companies plunging. Though they've recovered some, the fall, and Fed Chairman Ben Bernanke's downbeat outlook for housing issued Tuesday, is forcing investors to consider what would happen if a bailout is needed.
Fannie Mae and Freddie Mac are government sponsored enterprises that help the mortgage market function by purchasing pools of loans and packaging them into securities. If one or both couldn't function, the result would be chaos...
U.S. MBA's Mortgage Applications Index Increased 7.5% Last Week -- Mortgage applications in the U.S. rose for a second straight week, a sign that falling home prices are attracting some buyers.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan gained 7.5 percent to 513.4 in the week ended July 4, from 477.7 the prior week. The group's purchase index increased 6.7 percent and its refinancing gauge climbed 8.7 percent.
Declining prices are making U.S. homes more affordable for some consumers who qualify for mortgage loans, while others are waiting for a further drop in values. At the same time, rising borrowing costs and a glut of unsold homes indicate the deepest housing slump in a quarter century is unlikely to be over anytime soon.
``Unprecedented declines in home prices are beginning to work to level off the sales,'' said Bill Hampel, chief economist at the Credit Union National Association in Washington. ``But the housing market isn't out of the woods yet.'' ...
Mortgage Applications Continue to Paint Mixed Picture -- Things certainly aren’t getting much easier for prepayment researchers on Wall Street and at various hedge funds and agency mortgage REITs this week, as data from two key application indexes again found mortgage applications heading in opposite directions.
Well-publicized application data from the Mortgage Bankers Association on Wednesday morning suggested that mortgage applications increased 7.5 percent to 513.4 for the holiday-shortened week ended July 4, although applications remained off 18.1 percent from year-ago levels. The MBA application index is calibrated to March 16, 1990; a reading of 513.4 means that application activity was roughly five times greater than when the index was first established.
Which means loan demand is set to increase, right? Not so fast.
A separate index maintained by Mortgage Maxx LLC, a company that provides prepayment data to Wall Street researchers, reached a much different conclusion earlier in the week: the company’s Max index found that applications actually fell slightly, off 0.2 percent from the week before...
Cool Tool: Housing + Transportation Affordability Index -- Center for Neighborhood Technology has a very cool interactive site going: Housing + Transportation Affordability Index. It covers 52 metropolitan areas in the US, looking at median income, housing costs for renting and owning, and transportation expenses.
You can look at Rentals, Owned Homes, and Transportation separately or combined...
New book examines Wall Street’s role in credit crisis -- Paul Muolo, who has written about the mortgage industry for 25 years, called me last year and asked me to write a book with him on how Wall Street changed the landscape of home lending and eventually lead America off a cliff.
His vision was to write a comprehensive book, something similar to the New York Times Bestseller he co-wrote on the collapse of savings and loans: Inside Job, the Looting of America’s Savings and Loans (McGraw-Hill)...
Muolo discussed the book [Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis] with NPR’s Terry Gross on Fresh Air. CLICK HERE to listen.
- Great Credit And Plenty Down: Still Tough To Get A Mortgage - Realty Check, CNBC
- Consensus Subprime Mortgage Loss Estimates: Mathematically Impossible? - Seeking Alpha