Testimony from the Senate Banking, Housing, and Urban Affairs’ hearing on how GSE reform will influence the capacity and ongoing viability of small banks:

Skillern is suggesting that the current GSE model, where a government-sponsored entity buys loans and packages them into pass-through securities, should be changed. He is suggesting a model based upon state housing finance agencies. Many of the HFA’s operate without subsidy. In general, a housing finance agency system would be smaller. It would still push more ownership of mortgage-backed securities in to the domain of privately-held companies, but it would still allow for some government intervention to creating opportunity in underserved communities.

The political current in Washington seems predisposed to wind down Fannie Mae and Freddie Mac. The drive is so strong that even a center-left group like the Center for American Progress has abandoned its support for some public-purpose entity. The climate is so hostile that supporting the GSEs, even in a very different and scaled-down orientation, is somewhat of a radical point of view.

The logic provided by the supporters of such a measure is that private investors will step in to buy mortgages on the secondary market. That (more…)

I can agree that we need to address how Fannie and Freddie operate. It isn’t as if there is only one problem, either. The GSEs took on too much leverage. They started buying sub-prime mortgages. They had a finance structure that made no sense at all. It isn’t just a problem for people that want a mortgage, for shareholders, or for people that have been outgunned by GSE lobbyists. It is an issue that should concern anyone that pays taxes. Taxpayers have been forced to recapitalize the GSEs.

But even when all of that is acknowledged, the ongoing value of the GSEs is irrefutable. (more…)

The Federal Housing Finance Agency has just issued a notice of proposed rule-making that will change how the GSEs approach the acquisition of manufactured housing. It is part of a larger response on the treatment of under-served markets, and the proposed rule would effect not just manufactured housing, but also affordable housing preservation and rural housing.

This rule-making is a long time coming, but I am going to contradict the gospel of progressive non-profits acting in this field and say that I think it the very proponents of manufactured housing have conspired to limit the gains that could have come from the FHFA’s interest.

The new rules put the GSEs on the hook to buy more manufactured housing mortgages, and to at least venture into providing capital for parks, too.

If you have followed the story of manufactured housing, you would know that this industry tanked in the early 90s when Greentree and Conseco withdrew from the secondary market for these loans. Good financing dried up. It is hard (more…)

Fannie Mae will soon allow investors with good credit to buy more properties.  Since September, Fannie has not been willing to buy purchases mortgages made to investors who already have at least four single-family properties.  That decision, made at the peak of the credit freeze, was one more nail in the demand for housing.

Beginning March 1st, though, Fannie intends to loosen the rules.  Announcement 9-02 Multiple Mortgages to the Same Borrower explains the rules in full, for use with Desktop Underwriter.  Now, investors can own up to 10 properties and still meet the guidelines for (more…)