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UPDATE 4-Fannie Mae relaxes loan down-payment requirements
Reuters: [2008-05-16 23:05:00]
(Adds OFHEO response, Freddie Mac policy)
By Lynn Adler
NEW YORK, May 16 (Reuters) - Fannie Mae, the largest U.S. home funding source, is setting a single national standard for down payments on mortgages it buys, including areas where home prices are falling, in an effort to stimulate the housing market.
On loans it purchases, the company will accept down payments as low as 3.0 percent for single-family, primary residences in all U.S. markets starting June 1. That replaces a policy set in December that mandated higher down payments in markets where home prices are dropping, Fannie Mae said on Friday.
The rule change comes as many in the housing industry call for Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, the second-largest federally chartered home funding company, to make more affordable housing available. The two government-sponsored, shareholder-owned companies buy mortgages, freeing up funds for more lending.
Fannie Mae's new down payment policy is a "sound" move that could help unfreeze the U.S. housing market and uncover pent-up demand for mortgages, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said on Friday.
"It's still sound underwriting and makes sense in this type of market," he told reporters after a speech at a Federal Reserve Bank of Chicago conference. OFHEO is the regulator for Fannie Mae and Freddie Mac.
Both companies have tightened standards on loans they purchase, such as mandating higher credit scores, and have raised fees to better reflect risk as defaults and foreclosures escalate.
Fannie Mae "will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, senior vice president of single-family credit policy and risk management, said in a news release.
U.S. home prices have tumbled nearly 16 percent from their June 2006 peak, according to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas. The biggest losses are mainly in areas that had the most sweeping gains in the five-year record housing surge earlier this decade.
Lenders grappling with fast-souring mortgages on their books are reluctant to create new ones despite government interventions and a series of interest rate cuts from the Federal Reserve, said Gregory Miller, chief economist at SunTrust Banks Inc. in Atlanta.
Borrowers with high-cost adjustable mortgages who initially could not afford to refinance into fixed rate loans may benefit most from lower down payments, Miller said.
"Relaxing standards in areas where prices are falling suggests that we're going to some of the more damaged regions of the country -- there are very few markets where prices aren't falling -- and allow some of those households the opportunity to refinance back toward solvency or allow another cohort of potential housing demand," Miller added.
Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages through its automated underwriting system, and ratios of up to 95 percent for other loans. A conforming mortgage meets the requirements for loans that Fannie Mae and Freddie Mac can purchase.
Freddie Mac early this month instituted a 95 percent loan-to-value floor for mortgage it buys, so the down payment can't increase to more than 5 percent of the estimated value, according to spokesman Brad German. It accepts lower down payments on some affordable loan products, he said.
"We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model ... will limit risk layering and assess each loan more precisely," Sullivan added.
The size of conforming loans was temporarily increased in March by their regulator to as high as $729,000 in high-cost areas from $417,000, in an effort to stimulate lending in one of the worst U.S. housing markets since the Great Depression.
Fannie Mae also said it would continue to allow loans with Community Seconds, in one of various assistance programs, for up to 105 percent combined loan-to-value ratio.
With Community Seconds, a borrower has a second-lien mortgage to help cover down payment and closing costs, with funding usually provided by a state or local housing agency, employer or a nonprofit organization.
"We recognize that down-payment assistance programs remain a viable tool for borrowers who can afford a mortgage long-term, but might need a little help getting started," Sullivan said.
On May 6, when Fannie Mae reported first-quarter results, it announced other initiatives, including a plan to provide up to $10 billion to help Housing Finance Authorities (HFA) serve first-time homebuyers "of modest means." In some cases, Fannie Mae said, it will buy HFA mortgages that have greater than 97 percent loan-to-value ratios.
(Additional reporting by Ros Krasny in Chicago; Editing by Frank McGurty) ((lynn.adler@thomsonreuters.com; +1 646 223-6307; Reuters Messaging: lynn.adler.reuters.com@reuters.net)) Keywords: FANNIEMAE/DOWNPAYMENTS
UPDATE 4-Fannie Mae relaxes loan down-payment requirements
Reuters: [2008-05-16 22:59:00]
(Adds OFHEO response, Freddie Mac policy)
By Lynn Adler
NEW YORK, May 16 (Reuters) - Fannie Mae, the largest U.S. home funding source, is setting a single national standard for down payments on mortgages it buys, including areas where home prices are falling, in an effort to stimulate the housing market.
On loans it purchases, the company will accept down payments as low as 3 percent for single-family, primary residences in all U.S. markets starting June 1. That replaces a policy set in December that mandated higher down payments in markets where home prices are dropping, Fannie Mae said on Friday.
The rule change comes as many in the housing industry call for Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, the second-largest federally chartered home funding company, to make more affordable housing available. The two government-sponsored, shareholder-owned companies buy mortgages, freeing up funds for more lending.
Fannie Mae's new down payment policy is a "sound" move that could help unfreeze the U.S. housing market and uncover pent-up demand for mortgages, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said on Friday.
"It's still sound underwriting and makes sense in this type of market," he told reporters after a speech at a Federal Reserve Bank of Chicago conference. OFHEO is the regulator for Fannie Mae and Freddie Mac.
Both companies have tightened standards on loans they purchase, such as mandating higher credit scores, and have raised fees to better reflect risk as defaults and foreclosures escalate.
Fannie Mae "will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, senior vice president of single-family credit policy and risk management, said in a news release.
U.S. home prices have tumbled nearly 16 percent from their June 2006 peak, according to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas. The biggest losses are mainly in areas that had the most sweeping gains in the five-year record housing surge earlier this decade.
Lenders grappling with fast-souring mortgages on their books are reluctant to create new ones despite government interventions and a series of interest rate cuts from the Federal Reserve, said Gregory Miller, chief economist at SunTrust Banks Inc. in Atlanta.
Borrowers with high-cost adjustable mortgages who initially could not afford to refinance into fixed rate loans may benefit most from lower down payments, Miller said.
"Relaxing standards in areas where prices are falling suggests that we're going to some of the more damaged regions of the country -- there are very few markets where prices aren't falling -- and allow some of those households the opportunity to refinance back toward solvency or allow another cohort of potential housing demand," Miller added.
Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages through its automated underwriting system, and ratios of up to 95 percent for other loans. A conforming mortgage meets the requirements for loans that Fannie Mae and Freddie Mac can purchase.
Freddie Mac early this month instituted a 95 percent loan-to-value floor for mortgage it buys, so the down payment can't increase to more than 5 percent of the estimated value, according to spokesman Brad German. It accepts lower down payments on some affordable loan products, he said.
"We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model ... will limit risk layering and assess each loan more precisely," Sullivan added.
The size of conforming loans was temporarily increased in March by their regulator to as high as $729,000 in high-cost areas from $417,000, in an effort to stimulate lending in one of the worst U.S. housing markets since the Great Depression.
Fannie Mae also said it would continue to allow loans with Community Seconds, in one of various assistance programs, for up to 105 percent combined loan-to-value ratio.
With Community Seconds, a borrower has a second-lien mortgage to help cover down payment and closing costs, with funding usually provided by a state or local housing agency, employer or a nonprofit organization.
"We recognize that down-payment assistance programs remain a viable tool for borrowers who can afford a mortgage long-term, but might need a little help getting started," Sullivan said.
On May 6, when Fannie Mae reported first-quarter results, it announced other initiatives, including a plan to provide up to $10 billion to help Housing Finance Authorities (HFA) serve first-time homebuyers "of modest means." In some cases, Fannie Mae said, it will buy HFA mortgages that have greater than 97 percent loan-to-value ratios. (Additional reporting by Ros Krasny in Chicago; Editing by Frank McGurty) ((lynn.adler@thomsonreuters.com; +1 646 223-6307; Reuters Messaging: lynn.adler.reuters.com@reuters.net)) Keywords: FANNIEMAE/DOWNPAYMENTS
U.S. agency 2008 note sales calendar
Reuters: [2008-05-16 14:28:00]
May 16 (Reuters) - The following are the sales schedules for Fannie Mae
benchmark notes and Freddie Mac reference notes in 2008.
Debt issued by the Federal Home Loan Banks is not sold based on a preset
calendar, and offerings will be added as they are announced.
In addition to these offerings, Freddie Mac and Fannie Mae sell bills each
week [N07164318].
*Issue has been priced
AGENCY TYPE OF DEBT AMOUNT ANNOUNCEMENT/PRICING SETTLEMENT
MAY:
*Fannie Mae 3-year notes $4.0 bln May 13/May 15 May 19
Freddie Mac 2-,3-, 5-, 10-yr notes NA May 19/NA NA
JUNE:
Freddie Mac 2-,3-, 5-, 10-yr notes NA June 10/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA June 2/NA NA
JULY:
Fannie Mae 2-,3-, 5-, 10-yr notes NA July 7/NA NA
Freddie Mac 2-,3-, 5-, 10-yr notes NA July 16/NA NA
AUGUST:
Fannie Mae 2-,3-, 5-, 10-yr notes NA Aug 12/NA NA
Freddie Mac 2-,3-, 5-, 10-yr notes NA Aug 18/NA NA
SEPTEMBER:
Freddie Mac 2-,3-, 5-, 10-yr notes NA Sept 2/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA Sept 8/NA NA
OCTOBER:
Freddie Mac 2-,3-, 5-, 10-yr notes NA Oct 8/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA Oct 20/NA NA
NOVEMBER:
Freddie Mac 2-,3-, 5-, 10-yr notes NA Nov 4/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA Nov 17/NA NA
DECEMBER:
Freddie Mac 2-,3-, 5-, 10-yr notes NA Dec 1/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA Dec 8/NA NA
-- Fannie Mae will state the specific maturity and size of the offerings on
announcement dates. Fannie Mae also may opt to skip issuance.
-- The minimum issue size for new Fannie Mae 2-, 3-, 5- 10-year notes is $3
billion. Fannie Mae said benchmark note sales are expected to price within 3
business days of the announcement date and will generally settle 2 business
days after the pricing of the issue.
-- Freddie Mac will state the specific maturity and size of the offerings on
announcement dates.
-- The minimum size for Freddie Mac new 2-yr, 3-yr, 5-yr and 10-year note
offerings is $3 billion. There is no minimum size for a reopening. The minimum
size of new REMIC offerings is $1 billion.
NA = Announcement or settlement dates are unavailable.
((U.S. Financial Markets 646-223-6330))
Keywords: FINANCIAL AGENCIES BONDS
Fannie Mae, Freddie Mac bill sale calendar
Reuters: [2008-05-16 14:28:00]
May 16 (Reuters) - The following is a list of scheduled U.S. agency bill
sales from Fannie Mae and Freddie Mac for 2008. Freddie Mac settlement dates
for its bill sales will be available the day those offerings are announced.
*=Bills have been priced
AGENCY TYPE OF BILLS ANNOUNCEMENT PRICING SETTLEMENT
MAY ISSUES:
Freddie Mac 3-month/6-month May 16 May 19 NA
Fannie Mae 3-month/6-month May 19 May 21 NA
Freddie Mac 3-month/6-month/12-month May 23 May 27 NA
Freddie Mac 1-month May 23 May 28 NA
Fannie Mae 3-month/6-month May 23 May 28 NA
Fannie Mae 1-year NA NA NA
JUNE ISSUES:
Freddie Mac 3-month/6-month May 30 June 2 NA
Fannie Mae 3-month/6-month May 30 June 4 NA
Freddie Mac 3-month/6-month June 6 June 9 NA
Fannie Mae 3-month/6-month June 9 June 11 NA
Freddie Mac 3-month/6-month June 13 June 16 NA
Fannie Mae 3-month/6-month June 16 June 18 NA
Freddie Mac 1-month June 20 June 25 NA
Freddie Mac 1-month June 20 June 25 NA
Fannie Mae 3-month/6-month June 23 June 25 NA
Freddie Mac 3-month/6-month June 27 June 30 NA
Fannie Mae 1-year NA NA NA
JULY ISSUES:
Fannie Mae 3-month/6-month June 30 July 2 NA
Freddie Mac 3-month/6-month July 3 July 7 NA
Fannie Mae 3-month/6-month July 7 July 9 NA
Freddie Mac 3-month/6-month July 11 July 14 NA
Fannie Mae 3-month/6-month July 14 July 16 NA
Freddie Mac 3-month/6-month/12-month July 18 July 21 NA
Fannie Mae 3-month/6-month July 21 July 23 NA
Freddie Mac 3-month/6-month July 25 July 28 NA
Freddie Mac 1-month July 25 July 30 NA
Fannie Mae 3-month/6-month July 28 July 30 NA
Fannie Mae 1-year NA NA NA
AUGUST ISSUES:
Freddie Mac 3-month/6-month Aug 1 Aug 4 NA
Fannie Mae 3-month/6-month Aug 4 Aug 6 NA
Freddie Mac 3-month/6-month Aug 8 Aug 11 NA
Fannie Mae 3-month/6-month Aug 11 Aug 13 NA
Freddie Mac 3-month/6-month/12-month Aug 15 Aug 18 NA
Fannie Mae 3-month/6-month Aug 18 Aug 20 NA
Freddie Mac 3-month/6-month Aug 22 Aug 25 NA
Freddie Mac 1-month Aug 22 Aug 27 NA
Fannie Mae 3-month/6-month Aug 25 Aug 27 NA
Fannie Mae 1-year NA NA NA
SEPTEMBER ISSUES:
Freddie Mac 3-month/6-month Aug 29 Sept 2 NA
Fannie Mae 3-month/6-month Aug 29 Sept 3 NA
Freddie Mac 3-month/6-month Sept 5 Sept 8 NA
Fannie Mae 3-month/6-month Sept 8 Sept 10 NA
Freddie Mac 3-month/6-month/12-month Sept 12 Sept 15 NA
Fannie Mae 3-month/6-month Sept 15 Sept 17 NA
Freddie Mac 3-month/6-month Sept 19 Sept 22 NA
Fannie Mae 3-month/6-month Sept 22 Sept 24 NA
Freddie Mac 1-month Sept 19 Sept 24 NA
Freddie Mac 3-month/6-month Sept 26 Sept 29 NA
Fannie Mae 1-year NA NA NA
OCTOBER ISSUES:
Fannie Mae 3-month/6-month Sept 29 Oct 1 NA
Freddie Mac 3-month/6-month Oct 3 Oct 6 NA
Fannie Mae 3-month/6-month Oct 6 Oct 8 NA
Freddie Mac 3-month/6-month/12-month Oct 10 Oct 14 NA
Fannie Mae 3-month/6-month Oct 10 Oct 15 NA
Freddie Mac 3-month/6-month Oct 17 Oct 20 NA
Fannie Mae 3-month/6-month Oct 20 Oct 22 NA
Freddie Mac 3-month/6-month Oct 24 Oct 27 NA
Freddie Mac 1-month Oct 24 Oct 29 NA
Fannie Mae 3-month/6-month Oct 27 Oct 29 NA
Fannie Mae 1-year NA NA NA
NOVEMBER ISSUES:
Freddie Mac 3-month/6-month Oct 31 Nov 3 NA
Fannie Mae 3-month/6-month Nov 3 Nov 5 NA
Freddie Mac 3-month/6-month/12-month Nov 7 Nov 10 NA
Fannie Mae 3-month/6-month Nov 10 Nov 12 NA
Freddie Mac 3-month/6-month Nov 14 Nov 17 NA
Fannie Mae 3-month/6-month Nov 17 Nov 19 NA
Freddie Mac 3-month/6-month Nov 21 Nov 24 NA
Freddie Mac 1-month Nov 21 Nov 26 NA
Fannie Mae 3-month/6-month Nov 24 Nov 26 NA
Fannie Mae 1-year NA NA NA
DECEMBER ISSUES:
Freddie Mac 3-month/6-month Nov 28 Dec 1 NA
Fannie Mae 3-month/6-month Dec 1 Dec 3 NA
Freddie Mac 3-month/6-month/12-month Dec 5 Dec 8 NA
Fannie Mae 3-month/6-month Dec 8 Dec 10 NA
Freddie Mac 3-month/6-month Dec 12 Dec 15 NA
Fannie Mae 3-month/6-month Dec 15 Dec 17 NA
Freddie Mac 3-month/6-month Dec 19 Dec 22 NA
Fannie Mae 3-month/6-month Dec 22 Dec 24 NA
Freddie Mac 3-month/6-month Dec 26 Dec 29 NA
Freddie Mac 1-month Dec 26 Dec 31 NA
Fannie Mae 3-month/6-month Dec 29 Dec 31 NA
Fannie Mae 1-year NA NA NA
Footnotes:
--The minimum issue size for Fannie Mae benchmark and Freddie Mac reference
bills is $1 billion.
--Freddie Mac will issue 3-month, 6-month and 12-month bills in 2007 and
2008. Announcements will be made on Fridays with pricing on Mondays, unless
there is a holiday in which case pricing will be on Tuesdays.
(Reporting by Caryn Trokie)
((caryn.trokie@reuters.com ; + 1 646-223-6318; Reuters Messaging:
caryn.trokie.reuters.com@reuters.net))
Keywords: FINANCIAL AGENCY BILLS DEBT
UPDATE 7-Senators say have accord on US housing rescue
Reuters: [2008-05-16 03:14:00]
(Recasts, rewrites throughout; adds background)
By Patrick Rucker and Kevin Drawbaugh
WASHINGTON, May 15 (Reuters) - Leaders of the U.S. Senate Banking Committee said on Thursday they have agreed to the underpinnings of a housing rescue plan that will create a federal backstop for failing loans.
"We feel very optimistic we can have a very significant bill, a bipartisan bill, to present to the rest of our colleagues on the floor of the United States Senate," committee Chairman Christopher Dodd told reporters Thursday evening after a full day of negotiations.
The plan would create a $300 billion mortgage insurance fund administered by the Federal Housing Administration and a new regulator for Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, the two largest U.S. sources of mortgage finance.
Under a deal hammered out on Thursday, Fannie Mae and Freddie Mac will partly finance the mortgage insurance program through contributions to a new affordable housing fund, industry sources close to the talks said.
Late Thursday, Dodd said he would reconvene the banking panel on Tuesday to finish its work on the bill.
The Congressional Budget Office in a report estimated the fund would cost $1.7 billion and finance up to 500,000 loans worth $85 billion. The independent agency said it does not expect the fund to insure the $300 billion worth of loans that lawmakers would authorize.
Since last spring, the nation's mortgage market has been shaken by sinking home values that have erased billions of dollars of investor wealth. An estimated 2 million foreclosures are forecast for this year.
Developing a mechanism to fund the program was seen as key to getting the rescue plan out of the Banking Committee and to the Senate floor for final approval, although that could still be a distant prospect.
Aides said Senate leaders are not yet engaged in the housing package debate. Still, the formula did win the support of Sen. Richard Shelby, the banking committee's top Republican, who has said that he does not want taxpayers to foot the bill for the plan.
"We're together on a good concept of the whole thing. We're working on language right now, so be patient," Shelby told reporters Thursday afternoon.
Dodd and Shelby also agreed on language to create a new regulator for Fannie Mae and Freddie Mac, the government-sponsored enterprises that hold federal charters to nurture the housing market, the sources said.
Under the deal reached by Dodd and Shelby, Fannie Mae and Freddie Mac would direct money from a new affordable housing fund to backstop the mortgage insurance fund. The sources said that in the first year, 100 percent of their contributions would go to the new FHA program. That would fall to 75 percent in the second year and 50 percent in the third.
The formula was crafted by Sen. Jack Reed, a Democrat from Rhode Island, to satisfy Shelby, who objected to any taxpayer subsidy for the rescue plan, lobbyists said.
WHITE HOUSE DECLINES COMMENT
The White House has threatened to veto a similar rescue package passed last week by the House of Representatives, partly because of the cost to taxpayers. But the Bush administration has left open the door to discussions.
White House spokesman Scott Stanzel said on Thursday: "We're not commenting on any discussions we may or may not be having. If a bill comes to the president's desk it should meet the principles he has outlined."
The administration wants to ensure Fannie Mae and Freddie Mac face tougher oversight and want to see legislation retool the FHA with a system that sees riskier borrowers pay a higher mortgage insurance premium.
Both the Senate and House packages contain approaches to address those key White House goals. But both packages also propose setting up the FHA mortgage insurance fund, an idea that the administration dislikes. (Additional reporting by Jeremy Pelofsky; editing by Leslie Adler, Richard Chang) ((patrick.rucker@thomsonreuters.com; +1-202-310-5474; Reuters Messaging: patrick.rucker.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: USA HOUSING/CONGRESS
Next: UPDATE 6-Senators reach accord on US housing rescue-sources