During the next several years, as the housing market crashed and then began to eke its way back, Fannie and Freddie drew $188 billion from the Treasury. They were in turn forced to pay 10 percent stock dividends back. Then in 2012, the Treasury announced that that agreement would be replaced by a quarterly sweep of every dollar of profit that each institution earned in the future.

(Read more: Map: Tracking the recovery)

The move was designed to, “help expedite the wind down of Fannie Mae and Freddie Mac, make sure that every dollar of earnings each firm generates is used to benefit taxpayers, and support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market,” went the 2012 release.

By 2012, with the housing market rebounding and newly originated loans faring better than any in history, Fannie Mae and Freddie Mac began turning annual profits. By 2013, those profits were growing dynamically, and the two are now nearing the amount they originally drew from the Treasury, although the payments do not go to pay back the draw. The Treasury still owns the preferred stock. The money simply goes to the government.

Now, as individual investors in Fannie and Freddie stock cry foul, launching lawsuits against the government and demanding their share, lawmakers are under increased pressure to find a fitting end for the conservatorship and the entities. The question is whether or not to put a government backstop into the market yet again.

“The construct of a government-guaranteed, mortgage-backed security is absolutely going to be needed,” said David Stevens, CEO of the Mortgage Bankers Association. “You can’t have a functioning housing finance system where private capital just leaves it in the next recession. You need to have constant liquidity provided to the U.S. system, and that comes from the guaranteed mortgage-backed security.”

Confidence is key going forward, and investors are unlikely to pour money back into the mortgage market without a guarantee that in another catastrophic crash there won’t be some government backstop. One of the leading bipartisan proposals in Congress, introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., does create an investor and borrower-funded backstop. It will make loans slightly more costly, but the government guarantee on mortgage-backed securities would be there.

“The biggest problem is that Congress wants supercheap mortgages and they want to eliminate taxpayer risk for the housing market, and that’s just a holy grail to get,” said Guggenheim’s Seiberg. “Anything less than 100 percent government backstop is going to raise questions about whether fixed income investors are really going to be there to pick up the slack and to buy those securities.”

Federal regulators are already trying to shrink the portfolios of Fannie Mae and Freddie Mac, even as Congress still debates their future. They have layered on heavy fees to lenders, which have actually made conforming loans (those backed by Fannie and Freddie) more costly than jumbo loans funded by banks. There is also a move to lower the loan limits on conforming loans, which would push banks and investors to take on more of the markets.

(Read more: Jobs report tempers mortgage rates)

Article source: http://www.cnbc.com/id/101018586

During the next several years, as the housing market crashed and then began to eke its way back, Fannie and Freddie drew $188 billion from the Treasury. They were in turn forced to pay 10 percent stock dividends back. Then in 2012, the Treasury announced that that agreement would be replaced by a quarterly sweep of every dollar of profit that each institution earned in the future.

(Read more: Map: Tracking the recovery)

The move was designed to, “help expedite the wind down of Fannie Mae and Freddie Mac, make sure that every dollar of earnings each firm generates is used to benefit taxpayers, and support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market,” went the 2012 release.

By 2012, with the housing market rebounding and newly originated loans faring better than any in history, Fannie Mae and Freddie Mac began turning annual profits. By 2013, those profits were growing dynamically, and the two are now nearing the amount they originally drew from the Treasury, although the payments do not go to pay back the draw. The Treasury still owns the preferred stock. The money simply goes to the government.

Now, as individual investors in Fannie and Freddie stock cry foul, launching lawsuits against the government and demanding their share, lawmakers are under increased pressure to find a fitting end for the conservatorship and the entities. The question is whether or not to put a government backstop into the market yet again.

“The construct of a government-guaranteed, mortgage-backed security is absolutely going to be needed,” said David Stevens, CEO of the Mortgage Bankers Association. “You can’t have a functioning housing finance system where private capital just leaves it in the next recession. You need to have constant liquidity provided to the U.S. system, and that comes from the guaranteed mortgage-backed security.”

Confidence is key going forward, and investors are unlikely to pour money back into the mortgage market without a guarantee that in another catastrophic crash there won’t be some government backstop. One of the leading bipartisan proposals in Congress, introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., does create an investor and borrower-funded backstop. It will make loans slightly more costly, but the government guarantee on mortgage-backed securities would be there.

“The biggest problem is that Congress wants supercheap mortgages and they want to eliminate taxpayer risk for the housing market, and that’s just a holy grail to get,” said Guggenheim’s Seiberg. “Anything less than 100 percent government backstop is going to raise questions about whether fixed income investors are really going to be there to pick up the slack and to buy those securities.”

Federal regulators are already trying to shrink the portfolios of Fannie Mae and Freddie Mac, even as Congress still debates their future. They have layered on heavy fees to lenders, which have actually made conforming loans (those backed by Fannie and Freddie) more costly than jumbo loans funded by banks. There is also a move to lower the loan limits on conforming loans, which would push banks and investors to take on more of the markets.

(Read more: Jobs report tempers mortgage rates)

Article source: http://www.cnbc.com/id/101018586

A: This is a concern that often leads sellers to sit on the sidelines rather than call their Realtor and put that “For Sale” sign in front of their house.

There is a logjam of sorts in our market right now. The number of homes for sale remains far less than needed to adequately meet current buyer demand. Until sellers gather the courage they need to move forward this is likely to be the case for the foreseeable future.

NOW is a great time to sell, because:

1. It has become evident in the past 10 years or so that the real estate market is as volatile as the stock market. Its temperature is related to a number of factors (health of the stock market, employment figures, etc.). As it becomes more challenging to predict future market strength, making decisions about when to sell (or to buy) becomes more about what the real estate market is doing now.

4. If by chance you do not find your new home before you must move, there are good interim housing options, including short-term rentals, available. It is certainly true in my experience, that when a seller takes a leap of faith, with focus and intention, putting their homes on the market, even though they are uncertain about where they will land, the next “right” home for them appears just at the right time.

Article source: http://www.sfgate.com/realestate/article/Sound-Off-What-to-consider-in-a-seller-s-market-4321772.php

“Does the bank rep think people are sophisticated enough to know the difference? They get a notice from a bank … this is complicated stuff. They don’t know if the sheriff will be out in 30 days. In some cases they probably stopped opening the letters from the bank. Some homeowners have fatigue,” Jacob noted.

Other homeowners, however, have just walked away voluntarily. They don’t expect to see any value in the home any time in the foreseeable future, and they’re not interested in negotiating with banks for a mortgage modification. Banks are unable to find them to notify them that the lien has been released, and now cities and municipalities are left holding the bag. Eventually the homes end up in a tax foreclosure, but will likely sit empty for years.

“It’s a challenge for the cities now because if they want to redevelop that property, who do they go after?” Jacob said. (Read More: Housing Recovers, but the Repo Man Is Back.)

Again, this problem is most prevalent in the nation’s hardest hit neighborhoods, where home values are very low and where some properties are uninhabitable.

If a bank sees any real value in a house, they will take it to foreclosure and likely sell it to an investor. What is still unclear is timelines. How long will it take for a bank to make a decision on a potential foreclosure? While some homeowners may refuse to leave until they get an eviction notice, more will walk away if they think foreclosure is inevitable.

A homeowner who leaves the house unwillingly before an eviction notice is “unusual” according to a bank source, but it can and does happen. Whether out of confusion or expectation, the person picks up and moves, never knowing that the possibility exists that the bank will walk away and leave them owning the home free and clear. (Read More: Already Time to Throw Up Caution Signs on Housing?)

The consequences could end up costing the homeowner thousands in taxes, maintenance and utilities and leaving them open to wage garnishment and legal liability. In other words, until the sheriff kicks you out, it’s probably best to stay put.

Article source: http://www.cnbc.com/id/100377676

TWELFTH DISTRICT-SAN FRANCISCO

Economic activity in the Twelfth District continued to expand
modestly during the reporting period of mid-July through the end
of August. Upward price pressures were mixed but appeared to
ease overall, and upward pressures on wages were subdued. Demand
for retail items edged up on balance, as did demand for business
and consumer services. Manufacturing activity in the District
grew a bit further. Demand remained robust for agricultural
producers but fell slightly for providers of energy resources.
Activity in District housing markets stayed sluggish, and demand
for commercial real estate was largely unchanged. District
banking contacts indicated that overall loan demand was stable
or inched down.

Wages and Prices

Upward price pressures were very limited on net during the
reporting period. Further modest price declines were noted for
energy inputs and some raw materials. Stiff competition among
domestic firms, combined with weak final demand, resulted in
largely stable prices for most categories of final goods and
services. The primary reported exceptions were clothing and
medical care, for which recent cost increases were passed
through to final prices.

Upward wage pressures were largely nonexistent, as compensation
gains were held down by high levels of unemployment and limited
demand for new hires. As a result of uncertain product demand,
businesses in most sectors expect to remain highly cautious in
regard to hiring for the foreseeable future, suggesting that
compensation pressures are likely to remain subdued. However,
contacts continued to report significant upward wage pressures
for workers with advanced skills in technology fields.

Retail Trade and Services

Retail sales were mixed but rose a bit overall. For general
merchandise such as apparel and smaller household items,
contacts reported modest improvements in sales, with stronger
performance for traditional department stores than for discount
chains. By contrast, retailers of major appliances and furniture
reported weaker demand resulting from a renewed sense of caution
on the part of consumers. Grocery sales were largely flat. Sales
of new automobiles improved somewhat, despite ongoing shortages
of parts and assembled vehicles for some brands arising from the
natural disaster in Japan earlier this year. The demand for used
vehicles continued to firm, with contacts noting rising sales
and additional upward pressure on prices and trade-in values.

Demand for business and consumer services continued to
strengthen overall. Sales expanded further for providers of
technology services, as consumer demand for software, e-books,
and mobile applications continued to grow. Providers of
professional services such as law and accounting reported that
demand was little changed from the prior period. Similarly,
demand for transportation services was characterized as largely
flat. For energy utilities, demand waned a bit during the
beginning of the reporting period but improved later. Providers
of health-care services reported that demand strengthened
somewhat. Conditions in the District’s travel and tourism
industry improved further, with demand growth reported for the
business and tourism segments alike.

Manufacturing

District manufacturing activity was mixed but appeared to grow
slightly during the reporting period of mid-July through the end
of August. Although manufacturers of semiconductors and other
technology products reported slower growth for new orders and
sales, capacity utilization rates remained high and inventories
were near desired levels given the pace of sales. For makers of
commercial aircraft, significant increases in new orders for
narrow-body aircraft combined with an existing order backlog to
keep production rates near capacity. A metal fabricator noted
that sales were “steady but slow” and raw materials were readily
available. Petroleum refiners reported slightly weaker demand
and capacity utilization rates that were largely stable, causing
product inventories to rise somewhat. Demand held at very low
levels for manufacturers of wood products.

Agriculture and Resource-related Industries

Demand grew further for agricultural products and metals but was
down slightly for natural resources used for energy production.
Orders and sales continued to expand for a wide variety of crop
and livestock products, especially cattle and cotton. Contacts
noted that agricultural input costs have stabilized following
significant increases in the spring. Rising sales prices for
assorted metals spurred further increases in mining activity in
parts of the District. Overall demand for crude oil weakened a
bit, primarily reflecting weaker domestic demand, but extraction
activity for natural gas was largely unchanged.

Real Estate and Construction

Demand for housing and for commercial real estate was little
changed from existing low levels. Although the reports pointed
to scattered signs of improvement in the entry-level and high-
end segments of the District’s housing markets, the pace of home
sales and construction remained depressed. By contrast, demand
for rental space continued to grow, enabling landlords to
increase rents and scale back tenant concessions in some areas.
Demand for commercial real estate remained weak overall, and
vacancy rates for office and industrial space stayed elevated
throughout the District. Conditions were mixed across geographic
markets, with deterioration in leasing activity for some areas
contrasting with ongoing improvements in areas that have
benefited from growth in the technology sector, such as the San
Francisco Bay Area and Seattle.

Financial Institutions

Reports from District banking contacts indicated that loan
demand was largely stable to marginally down compared with the
prior reporting period. Citing heightened levels of uncertainty,
some businesses showed a reduced desire to engage in
expansionary capital spending, reportedly causing demand for
commercial and industrial loans to weaken slightly. Contacts in
most sectors reported downward revisions to their expectations
for growth in their industry for the remainder of the year,
suggesting that capital spending will remain muted in coming
months. On the consumer side, loan demand was largely unchanged.
While lending standards remained relatively restrictive for
business and consumer loans, the reports pointed to ongoing
improvements in overall credit quality and some loosening of
credit standards for selected borrowers.

Article source: http://www.bloomberg.com/news/2011-09-07/u-s-federal-reserve-beige-book-san-francisco-district-text-.html