Finding replacements to head Fannie and Freddie easier said than done

Posted on September 27, 2018 in Uncategorized | Add Your Voice

Finding replacements to head Fannie and Freddie easier said than done

Over the summer, Fannie Mae CEO Timothy Mayopoulos announced his intention to step down from his role by the end of 2018. Earlier this month, Freddie Mac CEO Donald Layton followed suit by making public his plans to leave the government-sponsored enterprise (GSE) by mid-2019. Tim Rood, chairman of The Collingwood Group, a Situs company, thinks it may be difficult to find candidates to fill the two critical job openings in the housing finance space.

“I think the new CEO [at each company] is going to quickly be confronted with a new FHFA director who is going to be looking to shrink the GSE footprint, and likely going to find a way to recapitalize and release Fannie and Freddie from conservatorship,” Rood recently told National Mortgage News.

In addition to an unpredictable future, Rood suggests it may be challenging for Fannie Mae and Freddie Mac to compete with private market salaries considering the mandated $600,000 limit on annual compensation. “The money is nothing to scoff at, but it seems like a paltry sum compared to what executives at investment or large, money-center banks command,” he said.

While no replacements have been named, the Board of Directors at Fannie Mae and Freddie Mac made multiple promotions following the announcements and are reportedly examining potential candidates both internally and externally.

To read the complete article at National Mortgage News, click here.

The rising value of seniors’ homes

Seniors are sitting on huge piles of home equity, according to a report from the National Reverse Mortgage Lenders Association (NRMLA). The NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) found that in Q2 2018, the total housing wealth of homeowners aged 62 and older in the US grew to $6.9 trillion, a $130 billion increase in senior home equity over Q1 2018.

NRMLA President and CEO Peter Bell notes that for most homeowners, the home represents the largest chunk of personal wealth.

“If you consider that the typical retiree household might have one or two incomes from Social Security, a modest pension and/or limited income from low-yielding fixed-income instruments, and, perhaps, a diminished 401(k) account, then home equity becomes their greatest asset and an important resource for funding their future,” said Bell.

Read more: DS News

HECM endorsements rise 2.6%, volume expected to increase

While volume remains low, overall Home Equity Conversion Mortgage endorsements rose by 2.6% in July, according to Reverse Market Insight’s most recent data.

Up from 2,833 in June, lenders endorsed a total of 2,907 loans last month. The increase was driven entirely by wholesale endorsements, which were up 12.2% over June for the first recorded increase since January, the month when endorsements reached their post-October 2 peak. Retail numbers lagged behind with a 3% decrease.

Of the top 10 lenders, American Advisors Group led the pack with 825 endorsements — a decrease from June’s 906. Following AAG were Finance of America of Reverse and Reverse Mortgage Funding, which both saw increases over June.

By comparing this data with January’s, RMI made some interesting observations about the top 10 lenders. For example, all lenders experienced a decline ranging from 24% to 73.2%. Faring the best was One Reverse Mortgage, which fell from 296 loans in January to 225 endorsements in July.

Read more: Reverse Mortgage Daily

HUD, GSA partner in Centers of Excellence Initiative

The US Department of Housing and Urban Development (HUD) and the US General Services Administration (GSA) announced Tuesday they are teaming up for a discovery sprint as part of GSA’s Centers of Excellence (CoE) initiative.

The purpose of the CoE initiative is to accelerate the modernization of information technology (IT) across the federal government by leveraging private sector innovation and existing government services while centralizing best practices and expertise. By bringing the CoE model to HUD, GSA will utilize the expertise of the Technology Transformation Services (TTS) team within GSA’s Federal Acquisition Service (FAS) to begin a comprehensive assessment of the IT needs and challenges facing the department.

“I’m thrilled HUD is teaming up with GSA to transform this agency into a more effective and efficient servant on behalf of the American people,” said HUD Secretary Ben Carson. “This is an important moment for HUD as we embark upon a campaign to modernize our aging technology and bring true financial integrity to everything we do.”

Read more: Department of Housing and Urban Development

Fixed-rate mortgages still the loan of choice

According to Fitch Ratings, 90 percent of Residential Mortgage Backed Securities (RMBS) contain fixed interest rates for their full term this year, meaning US mortgage borrowers still choose fixed-rate mortgages as their loan of choice. Fitch notes that even with the upcoming termination of the London Interbank Offered Rate (LIBOR) in 2021, the most commonly used index for US adjustable-rate mortgages (ARMs).

The percentage of RMBS containing fixed-rate mortgages increased from 80 percent to 90 percent year over year in 2018, with Fitch noting that market interest rates for ARMS have “not been highly compelling.” According to Fitch, “hybrid” form ARMS, or those with fixed rates for the first five or 10 years, after which they adjust based on movements in LIBOR, have been impacted by slow moving long term rates. Current seven-year hybrid ARM rates are typically only 0.25 percent to 0.375 percent lower than available fixed-rate loans, which Fitch notes is not enough to entice borrowers.

Though most borrowers tend to lean toward fixed-rate loans, for non-prime mortgage borrowers, hybrid ARMs are an attractive lending alternative as even small differences in mortgage rates can increase affordability during the initial level payment period. Currently, over 50 percent of non-prime loans currently being originated are five- to 10-year hybrid ARMs with LIBOR cited as the reference index for the adjustable term.

Read more: The MReport

New York City housing market healthy after crisis, but there are safer investments

New York City real estate has recovered well from the recession, but it still may not be the best investment for your money, experts say.

Since the housing market collapse in November 2011, nearly 500,000 homes were bought and sold in the city, earning a median return of 33%, according to a new report from the real estate listings site StreetEasy. This equates to a 7.5% return rate per year, or a roughly $163,000 total gain on a median-priced home. That is a healthy percentage, since real estate professionals say home-sellers should aim for a 15 to 20% return on their investment.

Meanwhile, sales prices in New York City rose 30% from their crisis low, StreetEasy found, with the median asking price in Manhattan at $1.625 million in July.

But the Big Apple is falling behind the national market, as home values across the country rose 45.1% since mid-2012, noted a recent study from StreetEasy’s sister company, Trulia.

Read more: Forbes

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