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WSJ Reporting Deal Near to put Fannie and Freddie into Conservatorship September 5, 2008

The Wall Street Journal is reporting tonight that the time is almost up for Fannie and Freddie. That didn’t take long. No wonder the bill was rushed to President Bush to be signed at the end of July.

The plan is expected to involve putting the two companies into the conservatorship of their regulator, the Federal Housing Finance Agency, said several people familiar with the matter. That would mean the government would take the reins of the companies, at least temporarily.

Plans include the government gradually injecting capital into the two companies and a “top level management shakeup.”

Freddie and Fannie own or guarantee more than $5 trillion of mortgages. They have suffered combined losses of about $14 billion over the past four quarters as they make provisions for a wave of defaults. Investors worried that a government bailout would wipe out the value of existing stock, and those fears have sent the shares down about 90% from a year ago. Many U.S. banks as well as foreign governments own stock or debt in the two giants, meaning their financial woes could cause broad problems beyond the housing market.

Emphasis mine.

This breaking story has already been updated. Read more here at the Washington Post and NYTimes.

Fannie Mae and Freddie Mac to be put under control, sources say

U.S. rescue seen at hand for mortgage giants

Update:

Here’s Bloomberg; Paulson plans to bring Fannie, Freddie under government control

Reuters: Fannie Freddie shares fall after report of bailout

I’m sure there will be more stories posted all throughout the weekend.  This Fannie and Freddie takeover is something I could have never imagined when I started my career in mortgage lending 25 years ago.  When they raised the conforming loan limit several months ago and allowed F&F take on Jumbos, there were many who said F&F wouldn’t be able to survive if loan defaults continued to rise.  Firstam Core Logic says defaults will to continue to rise for at least the next 18 months.  We should now begin thinking about the FHA mortgage insurance program and their 3.5% down requirement.  That equity goes away fast during a down market.

I am heading out to the Edmonds Woodway High School Football game. I will post a link to that CoreLogic report and any updates when I return.  Link to CoreLogic PDF posted above. 

Readers, what effect do you believe a F&F conservatorship will have on the local and national real estate market?

And the FED…does nothing. August 5, 2008

The markets anticipated the FOMC to leave the Fed Funds rate alone at 2% and that’s just what they did.   The markets are reacting accordingly by not swinging drastically either way.   The DOW is enjoying triple digit gains while oil has been under $120.   What does this mean to mortgage interest rates?

As you know, the FOMC does not directly control mortgage interest rates as mortgage interest rates are based on bonds–mortgage backed securities (MBS).  Traders will react to what the FOMC does and does not do and THIS will impact mortgage interest rates.

The FOMC press release states:

“Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports”.   I’m wondering how much of the growth in consumer spending is from the economic stimulus checks?

This statement is quickly followed with: “…labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters”.

Bonds react negatively to inflation, I’m anticipating that we will see mortgage rates continue to trend higher.   Here’s a bit from the FOMC regarding the “i-word”:  

“Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.”

You can read today’s FOMC statement here.

PS:  As the Prime Rate is tied to the Fed Funds Rate, your HELOC is unchanged for now.

“It’s just like a normal auction, except… May 30, 2008

…instead of the price going up over time, it goes down.” ~Bothell home owner

Trend?

Fed Funds Rate cut 0.25% to 2.00%. April 30, 2008

The FOMC cut the Funds Rate another 0.25% to 2.00% based on an 8-2 vote.  Remember, this does not mean that the 30 year fixed rate is now 0.25% lower.   This does mean that if you have a HELOC that is attached to Prime (and it’s not fixed), your rate will go down 0.25%.  Prime will be reduced to 5.00%. 

The FOMC also reduced the Discount Rate 0.25% to 2.25%. 

The Fed Statement regarding today’s rate cuts will have a more dramatic impact mortgage rates (mortgage backed securities).

“Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters….

The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices…”

The 0.25% rate cut was highly anticipated and all ready priced into the market.   We’ll see how bonds react once the markets have a chance to absorb the statement and Fed actions today.    This week will remain very volatile with rates…tomorrow is loaded with economic indicators and Friday, we have the big daddy:  The Jobs Report.

With her typical common-sense approach, Rhonda lands… March 20, 2008

…in the NYTs on this article about the impact of the housing crunch on the high-end market:

“The first step for distressed homeowners, said Rhonda Porter, a certified mortgage planning specialist and broker in Seattle, is to pull out their loan documents and see what they say.”

Are Rates Shooting to the Moon? February 20, 2008

Don’t worry…I understand that Helicopter Ben and the US Military have shot down a spy satellite to help blow inflation out of the sky. Mortgage rates should improve tomorrow morning and I will report back on Friday with my weekly rates. I snapped this photo of the lunar eclipse in front of our home a few moments ago. DSC 0156

This week according to 4realz… December 22, 2007

I can tell from the comments that many regular readers of RCG have been checking out the what I’ve been doing on 4realz.net. It’s been fun to try out something a bit different as I do my best to summarize the news and gossip of the real estate technology and RE.net communities.

However, besides blogging on 4realz, I’m also committed to sending out a weekly email that summarizes the news and gossip that I think the typical real estate executive should know. Interestingly, I did something like this at Move and I know from feedback I got that the email was definitely appreciated since most executives don’t have the time to follow all the blogs and news sites that they wish they could. However, I do say “executive” pretty broadly since there are a lot of people who would appreciate a weekly summary of news and gossip from the online real estate community.

I’m extremely hesitant to republish the email on 4realz as a blog post each week (despite requests) because it feels like it would be repeating the same stories that would have already been covered on the blog earlier in the week. I still haven’t figured what I will do each week, but this week I thought I would post the email here on RCG!

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While I expected it to be a slow week thanks to the holiday season, there was more than enough action to keep a blogger busy with all the big names making news week:

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By the way, if you want to subscribe to my weekly email (similar to notes above), it is 100% free and 100% opt-in. To get on the list email me at thisweek@4realz.net with a request (a simple “please include me on your weekly emails” will do). Unsubscribing will always be just as easy.

Tweet tweet November 9, 2007

So far, we have Jeff, Joel, Jessica, Keith and Myself prepared to twitter the NAR 2007. Follow along, or better yet tweet with us, at Jeff’s summary site: NAR Updates.

And I’m voting for using “NAR2007″ (one word) as our tag on Flickr, YouTube, etc. Use it and you’ll make it easy for us to find your stuff! :)

Famous Real Estate Agent Found Dead November 1, 2007

Linda Stein, a New York real estate known as “broker to the stars,” was found dead, apparently bludgeoned to death in her Manhattan apartment.

Linda SteinHer body was found on Tuesday by her daughter but the cause of death was not confirmed until an autopsy Wednesday. Linda lived by herself. The building featured heavy security and there was no sign of forced entry or robbery. Reports say that all people entering the building use the elevator and there is an elevator operator. Officials have not announced any motives or suspects in the case.

Linda was the ex-wife of Seymour Stein, former president of Sire Records, which was the launching pad for the Ramones, Talking Heads and Madonna.

Before real estate Stein was a pivotal figure in the early New York punk scene, co-managing the Ramones with Danny Fields, and was a friend to David Bowie, Talking Heads, The B-52s and Madonna as wife of Sire Records founder Seymour Stein.

Her career continued into the world of expensive real estate, as she brokered property deals for stars like Sting, Billy Joel, Harrison Ford, Rolling Stone editor Jann Wenner, LaToya Jackson, Sylvester Stallone and Andrew Lloyd Webber, amongst others.

For many local Seattle-area agents this brings up painful memories of Windermere agent Michael Emert who was murdered in January 2001 in a Woodinville home listed for sale. Mr. Emert was showing the home or previewing it for a buyer at the time of his murder. Mr. Emert’s body was found by the seller, who is represented by another real estate firm and was a stranger to Mr. Emert. Police believe that Mr. Emert’s late-model Cadillac SUV was taken by the perpetrator and later abandoned in Kirkland. As far as I know this murder was never solved. But it caused a major change in many agents behavior when meeting prospective clients and help inspire SKAR’s (Seattle-King County Association of Realtors) “Safety Week” campaign.

Emergency Short-Term Housing In Southern California October 26, 2007

The interactive marketing team over at Move working pretty hard over the last few days putting together a list of available short-term housing options for people who were displaced by the Southern California fires. Our hope is that we can help people who are returning to find that their homes were either destroyed or partially burned find a temporary place to live while they get back on their feet.

With tremendous support for the Move Rentals team, we were able to reach out to local apartment associations and thousands of Southern California property managers, many of whom have been more than willing to forgo their traditional lease process and open up their vacancies to people on a short-term basis. Also, through the REALTOR.com team, we’ve been able to reach out to local and statewide REALTOR associations who have also provided lots of help in identifying homes and apartments that available for short-term leases.

Normally I don’t talk much about the work that I do at Move, but in this case, I’m going to make an exception because I feel pretty confident we’ve been able to aggregate the largest selection of temporary housing options for the fire victims and I want to get the word out to the RE.net community. Any help you can provide in spreading the word about the list of temporary homes for people displaced by the fire would be most appreciated.

Finally, one of the guys that works with me has done a tremendous job taking adding all the temporary listings we can find onto a Google Map. This has made it extremely easy for just about anyone with a website or blog to spread the word.


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