Winding down Fannie and Freddie “responsibly”
Tennessee Senator Bob Corker has announced a bill he is introducing in an effort “to get a conversation going” that will “responsibly unwind Fannie and Freddie” and get the government out of the housing finance business to reduce their exposure of government sponsored enterprises (GSEs) to mortgage-backed securities.
The bill is called the “Residential Mortgage Market Privatization and Standardization Act” which will reduce the percentage of mortgage-backed securities the GSEs guarantee and aims for the GSEs to be privatized within ten years, and this act would standardize uniform underwriting and place the required down payment for a mortgage at five percent down rather than the 20 percent other politicians are fighting to require.
The Act would create a database of uniform performance and origination data on mortgages through the Federal Housing Finance Agency (FHFA), which would be industry financed and Corker says would streamline mortgage regulations. It would also sell of the GSE’s ownership of home price indices and technologies to private investors. The bill begins a process of creating rules and technologies for the “to be announced” futures market that will not be backed by the traditional government guarantee.
Corker said, “These are sensible steps that can earn back private capital and ultimately get America’s housing market back to fundamentals and away from undo government involvement.”
Haven’t others tried this already?
The concept of abolishing Fannie and Freddie has been around for years with no one able to successfully push the effort through both houses. In January of 2010, Barney Frank called for Fannie and Freddie to be abolished and replaced but because of his questionable fingerprints on housing, most didn’t take his rally cry seriously.
This spring, House Financial Services Committee passed eight bills to wind down Fannie Mae and Freddie Mac. Committee Chairman Spencer Bachus said, “This effort will focus on legislation to clearly define FHA’s mission and prevent it from simply replacing Fannie Mae and Freddie Mac as a source of taxpayer exposure to the mortgage market.”
This summer, legislation was introduced by Republican Representative Gary Miller of California and Democratic Representative Carolyn McCarthy of New York to merge Fannie and Freddie, creating a single entity so that the government held organization can collectively purchase mortgages and sell them to investors as government backed securities.
Yet Fannie and Freddie remain. In fact, they stole headlines last week when the FHFA approved nearly $13 million in bonuses to Fannie and Freddie execs just days before quarterly reports were released, revealing that Freddie Mac who lost $4.4 billion in the third quarter requested an additional $6 billion, while Fannie Mae lost $5.1 billion and requested an additional $7.8 billion.
What is next?
It remains unseen what path will be chosen by politicians in this process, but it is clear that all sides of all aisles want Fannie and Freddie to be abolished. If Barney Frank and Bob Corker agree that the GSEs days are over, they must be over, but now the dirty work of what happens after they are abolished has to be done and no one quite agrees on what that looks like, hence the multiple efforts listed above. This is going to get ugly.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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