News

FHFA Announces Principal Reduction Modification Program and Further Enhancements to NPL Sales Requirements

The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac will offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes. The new Principal Reduction Modification program is a one-time offering for borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who meet specific eligibility criteria. The modification will be available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016, whose mortgages have an outstanding unpaid principal balance of $250,000 or less, and whose mark-to-market loan-to-value (MTMLTV) ratios exceed 115 percent. Other eligibility criteria apply (see FHFA Fact Sheet for eligibility criteria and key dates).

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Forget flipping houses — these retail investors flip mortgages

By Andrea Riquier | Apr 11, 2016 | MarketWatch

It's 9:30 a.m. on a recent sunny Friday, and 60 people have crammed into an airport hotel conference room in Northern Virginia to hear Kevin Shortle, a veteran real estate professional with a million-watt smile, talk about “architecting a deal.” Some have worked in real estate before, flipping houses or managing rentals. But the deals Shortle, lead national instructor for a company called Note School, is describing are different: He teaches people how to buy home notes, the building blocks of housing finance. While titles and deeds establish property ownership, notes — the financial agreements between lenders and home buyers — set the terms by which a borrower will pay for the home. Financial institutions have long passed them back and forth as they rebalance their portfolios.

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NCST Offers Ideas in Response to FHFA's Duty to Serve Rule

Recently, NCST – joined by the Center for Community Progress, CFED, and the Housing Partnership Network – submitted a letter responding to the request for comment on the proposed Duty to Serve rule. Under the legislation that created the Federal Housing Finance Agency (FHFA) in 2008, Fannie Mae and Freddie Mac are charged with a “duty to serve" three underserved markets: manufactured housing, affordable housing preservation, and rural housing. While FHFA first proposed a rule implementing this law in 2010, that rule was never finalized, and the agency re-proposed the rule this past December.

Our letter focused very specifically on the proposal's request for ideas on how the rule could support state and local programs focused on neighborhood stabilization. We asked that the Duty to Serve rule support state and local neighborhood stabilization efforts in three key ways:

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Fannie, Freddie to Cut Mortgage Balances for Thousands of Homeowners: Fewer Than 50,000 Homeowners Likely Will Be Eligible for the Plan

Thousands of homeowners will be eligible to have their mortgage balances cut under a plan approved by the federal regulator of mortgage-finance companies Fannie Mae and Freddie Mac, according to people familiar with the matter.The plan approved by the Federal Housing Finance Agency marks the first time that Fannie and Freddie will reduce mortgage balances on a large scale for struggling homeowners since the housing crisis erupted. But it doesn't go as far as some housing advocates wanted.

Fewer than 50,000 "underwater" homeowners, who owe more than their homes are worth and are already behind in their mortgage payments, will likely be eligible, people familiar with the matter said.

Fannie and Freddie-which don't make mortgages but rather buy them from lenders and wrap them into guaranteed securities-would also forgive principal only in cases where they determine the companies would lose less money with that option than foreclosure or other foreclosure-prevention methods. In addition, the new program will likely be limited to mortgages whose outstanding principal balance is under a certain dollar amount, people familiar with the matter said. Because of the plan's restrictions, it won't have a significant impact on the national housing market, said Moody's Analytics chief economist Mark Zandi.

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'Zombie Houses' Multiply in Some States

MASTIC BEACH, New York — They call it “The Matrix," a well-thumbed pile of maps locked in a cabinet at Village Hall that pinpoints all the empty “zombie houses" in this 4.2-square-mile seaside community. There's one on nearly every block. “It's like a cancer," Mayor Maura Spery said of the scourge. “It's not getting any better. Each one of these is hurting property values for six or seven houses around it. Who wants to live in a place with so many vacant houses?"

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Housing Groups Blast GSEs' Sale of Bad Loans to Goldman, Hedge Funds

Housing advocates are criticizing Fannie Mae's and Freddie Mac's practice of selling nonperforming loans to the highest bidders, typically well-capitalized investment firms and hedge funds. A coalition of community and housing groups wants the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, to instead give preferential treatment to nonprofits and community development financial institutions. They contend that some private buyers do not have a mission of offering foreclosure prevention and homeowner assistance and are not committed to stabilizing communities.

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FHFA Announces Expansion of Neighborhood Stabilization Initiative

The Federal Housing Finance Agency (FHFA) announced an expansion of the Neighborhood Stabilization Initiative (NSI) to 18 additional metropolitan areas around the country. Effective December 1, local community organizations will be given the opportunity to review and purchase foreclosed properties owned by Fannie Mae or Freddie Mac in these 18 additional metropolitan areas prior to these properties being made publicly available for purchase. Sales prices will vary from market to market.

NSI was jointly developed by FHFA, Fannie Mae and Freddie Mac and involves a partnership with Fannie Mae and Freddie Mac and the National Community Stabilization Trust (NCST). The pilot, launched initially in Detroit, Michigan in May 2014, was extended earlier this year to Cook County, Illinois. Based on the lessons learned from the pilot, Fannie Mae and Freddie Mac will continue their work with NCST to focus on disposition of real estate owned (REO) properties in ways that place a priority on stabilizing neighborhoods.

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Julia Gordon joins National Community Stabilization Trust as Executive Vice President

Gordon will weave NCST into vibrant policy conversations designed to save and revitalize neighborhoods.

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National Community Stabilization Trust Announces Executive Promotions


(Washington, D.C.) The National Community Stabilization Trust (NCST) has announced executive promotions. Annie Carvalho, formerly director of strategic partnerships and development, assumes the role of vice president, strategy and development, and Carlos Alcazar, formerly director of operations, assumes the role of comptroller.

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How the Zombie House Crisis Mutated and What Cities Are Doing About It

Are there more zombies in our city than ever before, or are we just paying more attention to them?

“Zombie properties" is a clever name to describe residential buildings that are neither alive nor dead: They are caught in the limbo of an incomplete foreclosure. The real estate title stayed with the homeowner even after foreclosure proceedings began. The lender walked away — in some cases to avoid having the risk of a low-value property on the books. Homeowners walked away thinking the property was no longer theirs.

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Success Stories

H.I.P. - Housing Initiative Partnership - 2

Suitland, MD
This property was a haven for drug activity with a notorious reputation in the neighborhood. There was little that the active Neighborhood Watch could do but constantly call the police. During the initial property inspection, a police officer even stopped HIP staff to ask why they were at the site. The scope of renovation was a gut rehab. Everything in the house was removed and replaced with the exception of the hardwood floors.