In a press conference this afternoon, President Obama laid out his plan for restructuring the GSEs. His plan sounds very similar to what is being proposed in the Senate, so there were no big surprises. His plan includes a wind down of Fannie and Freddie (no specific timetable provided) to make room for the private sector. His plan includes some form of government backstop, as necessary to encourage a liquid market for mortgage-backed securities (MBS) and the 30 year fixed rate product. The government backstop would insure investor recovery of principal and interest, but would only be paid after substantial private capital has been depleted. He acknowledged that this will take a long time. He offered a couple of things that could be done much sooner, like creating a common Fannie/Freddie platform for issuing new MBS and reducing Fannie’s and Freddie’s mortgage holdings. He emphasized that any restructuring needs to provide adequate opportunity for first time home buyers.
Mortgage Market Update for March 8, 2010 Today’s blog talk radio show highlighted several areas of interest to mortgage professionals. Mortgage rates were on a bit of a roller coaster last week. Falling a little each of the first four days in reaction to weaker than expected economic announcements and then rising by an equal amount Friday on better than expected Employment data. Friday’s important employment data indicated a loss of 36,000 jobs, but larger losses were expected. The Unemployment Rate remained unchanged from January, when a rise in unemployment was expected. There is active discussion in Congress regarding the creation of a Consumer Financial Protection Agency. The proposed legislation is part of a Wall Street Reform bill. The potential exists to separate the CFPA part of this bill from the rest of the bill so that each may be considered independently. The mortgage industry in 2010 is expected to close a few more purchase loans than in 2009 and a many fewer refinance loans. To thrive in the 2010 market one will need to go back to the basics. David Lykken calls them the five P’s, Position, Products, Preparation, Patience, and Persistence. Position yourself with quality Realtors, Builders and [...]