HBA Newswatch
March 5, 2008
FED CHIEF URGES FORECLOSURE AID
Ben S. Bernanke has suggested that lenders reduce the amount of homeowners’ loans.
By Jeannine Aversa
Associated Press
WASHINGTON - Federal Reserve Chairman Ben S. Bernanke, battling a dangerous wave of foreclosures nationwide, urged lenders yesterday to offer new relief for distressed homeowners, including lowering the amount of their loans.
"This situation calls for a vigorous response," Bernanke said in a speech to a banking group meeting in Orlando.
Even with some relief efforts under way by industry and government, foreclosures and late payments on home mortgages are likely to rise "for a while longer," Bernanke warned.
Rising foreclosures threaten to worsen the problems in the housing market and for the national economy, which many fear is on the verge of a recession or in one already.
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THE HOUSING NIGHTMARE HITS MAIN STREET
By Luke Mullins, US News and World Report
One domino toppling the next. It's been a convenient metaphor for how troubles in the American subprime mortgage market have cascaded into a global financial mess. Rising interest rates collapsed the housing bubble, which caused a wave of subprime mortgage defaults and foreclosures. That, in turn, froze corporate credit markets as risk-averse investors stopped buying esoteric mortgage-backed securities and led to big losses at bond insurers. Auction-rate securities—an obscure corner of the credit market used by hospitals, museums, schools, and local governments—have been the most recent dominoes to tumble. "We've gotten to the point of almost paralysis in some segments of the market," says David Resler, chief economist at Nomura Securities.
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THE WORST-CASE SCENARIO FOR HOUSING
By Kirk Shinkle, US World & News Report
A year ago, most economists talked in worried tones about the possibility that American home prices could slip after almost doubling during the prior decade. At worst, fretted Wall Street's more bearish forecasters, prices could drop as much as 20 percent from their peak in a more dire version of the last housing downturn during the early 1990s, when new-home sales dipped but existing homes held their value.
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LOWER INTEREST RATES WON'T HELP WITH 'TOO MUCH HOUSE'
Daniel H. Mudd, chief executive of Fannie Mae, knows the feeling when a physician attends a party and a guest wants a diagnosis for a rash or some other unexplained ailment.
In Mudd’s case, people want to know about the housing market. Often they ask him if it’s a good time to refinance their mortgage loan.
Mudd may be the go-to guy at parties because he heads the Federal National Mortgage Association, or Fannie Mae.
Fannie Mae and the Federal Home Loan Mortgage Corp. (Freddie Mac) purchase mortgages from lenders. This in turn allows the lending institutions to provide more home loans.
Naturally people think Mudd, who runs the larger government-sponsored enterprise, would know about the best time to get a mortgage since Fannie Mae is crucial to the mortgage industry.
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