Recently released data from the Federal Reserve Bank of New York’s Center for Microeconomic Data revealed that the first quarter of this year was the mortgage business’ worst quarter in more than four years, but a deeper dive into the data shows that on the refinance side of things, it may have been the worst quarter since the financial crisis, HousingWire.com reported. The Fed report, which looks at mortgage originations as appearances of new mortgage balances on consumer credit reports and includes refinances, showed that the first quarter had the lowest dollar amount of mortgage originations in any quarter since the third quarter of 2014. In fact, according to a new report from the Federal Housing Finance Agency, Fannie and Freddie refinanced fewer mortgages in the first quarter than they have in any quarter since at least 2008. According to the FHFA report, Fannie and Freddie refinanced a total of 234,716 mortgages in the first quarter of this year. And a review of 10 years worth of data from the FHFA shows that that is the fewest number of refinances completed by the government-sponsored enterprises in any quarter since the financial crisis.
Not long after the U.S. Trustee granted its petition to create a committee to protect consumer interests in its bankruptcy proceedings, Ditech filed a motion objecting to such a committee, asking that it be disbanded or, alternatively, that the scope of its involvement be limited, HousingWire.com reported. The consumer committee drama began last month when several advocacy groups filed petitions with the U.S. Trustee asking for the creation of a committee to represent the interests of the mortgage borrowers who have loans with Ditech or its subsidiaries. Among those seeking representation were Chicago-area victims of a reverse mortgage scam whose loans were being serviced by Ditech subsidiary Reverse Mortgage Solutions. The representative of some of those victims, J. Samuel Tenenbaum of Northwestern’s Complex Civil Litigation and Investor Protection Center, said such a committee was necessary to protect the rights of these borrowers, who are mostly elderly, disabled or financially unstable, and therefore vulnerable. In response, the Trustee approved of the creation of a five-member consumer committee on May 2, but the ink was barely dry before Ditech filed its objection, claiming that the Trustee’s move was “arbitrary and capricious” and would have a chilling effect on Ditech’s attempts to sell off portions of its business. If the court will not disband the committee, Ditech asked that the committee’s scope be limited and its fees and expenses capped at $250,000.
Federal Housing Finance Agency Director Mark Calabria said he hopes to have a roadmap for ending the federal conservatorship of Fannie Mae and Freddie Mac by the end of the year, Roll Call reported. Calabria said yesterday that it was his job as FHFA director to develop a plan for recapitalizing and releasing the government-sponsored entities, or GSEs. The two mortgage giants have been under federal control since they accepted bailouts in 2008 in the wake of the housing market collapse. Responding to critics who say that ending the GSEs’ conservatorship requires congressional action, Calabria said that the statute creating FHFA was clear. “Congress did decide,” he said. “My responsibility is to try to set a path out of [conservatorship] where we are faithful to the law, where we carry it out as intended.”
A career con man in California pleaded guilty yesterday in a federal fraud case stemming from a real estate scam that targeted distressed homeowners, many of whom were elderly individuals who were scammed out of their homes, losing significant equity in the properties accumulated over the course of their lifetimes and sometimes over the course of generations of home ownership, according to a press release from the U.S. Attorney's Office for the Central District of California. Michael “Mickey” Henschel of Van Nuys, Calif., pleaded guilty to mail fraud in relation to the scheme that generated more than $17 million in profits and caused homeowners to suffer approximately $10 million in losses when they lost title to their homes and when they were defrauded into giving Henschel and his co-conspirators money as part of the scam. Henschel’s fraudulent conduct also caused losses to mortgage lenders and purchasers of foreclosed properties. With another defendant pleading guilty today, a total of seven conspirators linked to Henschel’s Van Nuys-based businesses have now pleaded guilty in the scheme that used fraudulent deeds to steal properties from homeowners, and also charged homeowners illegal fees to delay foreclosure and eviction actions.
The gatekeepers of the American mortgage market are increasingly backing loans to borrowers who have heavy debt loads, highlighting questions about mortgage risk as policy makers debate ways to change the system, the Wall Street Journal reported. Almost 30 percent of loans that mortgage giants Fannie Mae and Freddie Mac packaged into bonds last year went to home buyers whose total debt payments amounted to more than 43 percent of their incomes, according to an analysis by industry research group Inside Mortgage Finance. The share has nearly doubled since 2015. Data on other government mortgage programs also show an increase. The backing of these loans opens up a debate about the government’s role in the housing market. Some say cheap, federally backed financing has made credit available for millions of borrowers who otherwise might not have had a shot at homeownership. Others say that more-indebted borrowers are riskier, and that their purchases may be accentuating a rise in home prices that in many areas has outstripped median incomes. An obscure half-decade-old rule made these mortgages to buyers with high debt possible. The temporary provision expires at the beginning of 2021, or, should it happen first, when Fannie and Freddie revert to private control, following government sponsorship after the housing crisis.
