Profits Down at Fannie Mae & Freddie Mac
Fannie Mae and Freddie Mac reported sharply lower profits but still earned enough for a combined $6.8 billion payment to the U.S. Treasury, as the mortgage-finance companies also cited the potential for a thaw in home-loan access. Both companies said the decline in net earnings doesn’t signal problems with their underlying businesses. Rather, the weaker results stemmed mainly from issues related to slower home-price appreciation, which allowed the companies to decrease their reserves less quickly, and changes in interest rates. Freddie’s large decline in net income was also affected by a $23.9 billion tax benefit recorded in the year-ago quarter. Fannie and Freddie don’t make loans, but buy loans from lenders, wrap them into securities and provide guarantees to make investors whole if the loans default. After the financial crisis, the companies forced lenders to buy back billions of dollars in loans…
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Fixed Mortgage Rates Hovering Near 2014 Lows as of Last Week:
According to Frank Nothaft, vice president and chief economist of Freddie Mac, “Fixed mortgage rates were slightly down on mixed results from October’s employment report. While the unemployment rate declined to 5.8 percent, nonfarm employment rose by 214,000 jobs, which was below consensus expectations. Net revisions for payroll employment in August and September added 31,000 more jobs to the initial readings.”
Freddie Mac Primary Mortgage Market Surveys results released November 13, 2014:
- 30-year fixed-rate mortgage (FRM) averaged 4.01 percent with an average 0.5 point for the week ending November 13, 2014, down from last week when it averaged 4.02 percent. A year ago at this time, the 30-year FRM averaged 4.35 percent.
- 15-year FRM this week averaged 3.20 percent with an average 0.5 point, down from last week when it averaged 3.21 percent. A year ago at this time…
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The Department of Veterans Affairs’ VA home-loan program has gained significant market share compared with competing private and government options. The VA’s home-purchase financing program is now at record levels. New loans to buy houses have more than doubled since 2007. Since 2011, when VA-backed home loans represented about 3 percent of total home-purchase finance activity, they’ve soared to roughly a 7 percent share, according to the Mortgage Bankers Association. For sales of newly built homes, the VA share is larger: 14.5 percent compared with a 16.7 percent share for the other major federal housing finance program, FHA. So VA loans are housing’s hot product, but why? Lots of reasons:
- VA-guaranteed loans come with terms that few other financing sources can match: zero down payment; flexible and generous credit underwriting that emphasizes the individual applicant rather than the algorithm-driven computer programs that dominate conventional lending. Also, VA interest rates are competitive…
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The election is over. The October employment report has been released. But these important events should not obscure the real importance of this week. Today is Veterans Day, the day we give homage to those who have served our country by defending our freedom throughout our history. We only need to look at what is happening in the Middle East to be reminded as to how important those who have served are to each and every one of us. Many don’t realize how extensive the population of veterans is in this country. There are well over 20 million veterans and active military, comprising approximately 10% of the adult population of the United States.
For those in business, this makes veterans a very important demographic. For example, did you know that over 15% of the new home sales in the United States are being financed through the Department of Veterans Affairs…
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Last Week Mortgage Rates Moved Higher for Second Straight Week:
According to Frank Nothaft, vice president and chief economist of Freddie Mac, “Mortgage rates continued to rise this week with the 30-year fixed-rate mortgage eclipsing the 4 percent mark. The rate increases coincide with real GDP beating consensus expectations of 3.0 percent growth by growing at an annualized rate of 3.5 percent in the third quarter. The ISM Manufacturing Index also beat expectations registering 59 in October, up from September’s reading of 56.6.”
Freddie Mac Primary Mortgage Market Surveys results released November 6, 2014:
- 30-year fixed-rate mortgage (FRM) averaged 4.02 percent with an average 0.5 point for the week ending November 6, 2014, up from last week when it averaged 3.98 percent. A year ago at this time, the 30-year FRM averaged 4.16 percent.
- 15-year FRM this week averaged 3.21 percent with an average 0.5 point, up from last week when it…
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