Principal Write-downs Too Expensive for Fannie, Freddie

As lawmakers put pressure on mortgage finance companies Fannie Mae and Freddie Mac to make principal write-downs on underwater loans, the regulator for the two firms sent a letter to Washington on Friday making clear how expensive that plan would be. More than 20 percent of all U.S. homes have negative equity at this point, according to mortgage data company CoreLogic, for a combined equity deficit of $750 billion. Borrowers in this situation often choose to default, even when they could keep Read more [...]

Foreclosures Pick Up in October

Lenders are starting to get their foreclosure machines moving again, according to the latest data from foreclosure listing firm RealtyTrac Inc. Total foreclosure filings rose 7 percent last month from September, to 230,678 filings in October. However, that number is still down almost 31 percent from the year before. Initial default notices were up significantly as well, rising 10 percent from the previous month to 77,733 properties. All foreclosure activity, including default notices, auctions, Read more [...]

Housing Finance Director Defends Agency Actions

The Federal Housing Finance Agency has taken a lot of heat lately for not doing enough to get the U.S. housing market back on track. In a taped interview set to air Sunday, the FHFA's acting director, Edward DeMarco, defended the choices his agency has made in recent months. Some of the criticism leveled at DeMarco is that FHFA has been too conservative in what it has allowed mortgage finance companies Fannie Mae and Freddie Mac to do during this credit crunch. Yet, DeMarco feels his agency has Read more [...]

Strategic Mortgage Defaulters are Credit Smart

A key component of the current mortgage market turmoil has been the popularity of "strategic defaulting," where borrowers who are underwater on their loans choose to default, and thereby foreclose, even though they have the ability to keep paying. Mortgage lenders used to predict which borrowers would opt for this strategy simply based on how deep underwater - owing more than the property is worth - they were. Yet a new study sheds light on the type of homeowners who are strategically defaulting. The Read more [...]

Fewer Underwater Mortgages – But Why?

Zillow.com reported today that the number of underwater mortgages in the country is shrinking. According to its quarterly survey, 21 percent of all single-family homeowners during the third quarter of 2009 were underwater, or owed more than their homes were worth, a decrease from 23 percent during the second quarter. Good news, right? Yes, because it means fewer foreclosures as a result of underwater loans. "The decline in the percentage of homeowners with negative equity is a positive sign and Read more [...]