The independent regulator over Fannie Mae and Freddie Mac on Thursday made it clear that the mortgage-financing entities would consider legal action against any state or city if it were to exercise “eminent domain” authority to restructure underwater mortgages.
For about a year, Obama has been pushing to get Congress to create a “HARP 3” that would expand eligibility to mortgages not held by Fannie or Freddie. That’s about 40 percent of home loans.
With average mortgage rates spiking in recent weeks, more consumers expect higher rates for the rest of the year, but they also see home prices staying strong, according to Fannie Mae’s latest housing survey released Monday.
Fannie Mae and Freddie Mac, the taxpayer-supported mortgage-financing companies, completed more than 130,000 foreclosure preventions in the first quarter, bringing the total to 2.8 million since the government’s takeover in 2008.
A bipartisan group of senators Tuesday proposed an overhaul that would effectively eliminate Fannie Mae and Freddie Mac over time, and finally move more mortgage and credit risk into the private sector.
“In some metro areas, affordability is already out of reach for a typical family,” Freddie Mac’s report said. “An increase in mortgage rates, coupled with house price growth, will have a more significant impact on purchase activity in these markets.”
By now, most participants in the housing market are aware that fixed-rate mortgage are coming off their all-time lows, hovering at or near 4 percent. That run-up is leaving adjustable-rate mortgages, or ARMS, as a more popular option for many purchasing or refinancing homes.
The group’s Refinance Index increased 5 percent last week, compared to the previous week. But the level is still 11 percent lower than two weeks prior, and more than a third below the May high.
Under the terms of the agreement announced by U.S. housing officials, Bank of America will pay $22,449 to a woman who was denied a mortgage modification after she had provided full documentation on a disability that kept her from working.
Freddie Mac released its first-quarter 2013 report on refinance activity Thursday, and pretty much declared that the long-running boom is over, with rising interest rates nibbling at or nudging past 4 percent in recent days.