%1

The White House will announce a plan by next month to end government control of Fannie Mae and Freddie Mac in a bid to resolve a long debate over the fate of the two companies that dominate the mortgage market, a top regulator said, Politico reported. Joseph Otting, acting director of the Federal Housing Finance Agency, told employees last week that the administration would not wait on Congress, where attempts to overhaul the housing finance system have repeatedly faltered in the years since Fannie and Freddie were rescued during the financial crisis. “In the next two to four weeks you’re going to be able to see some communication that comes out of the White House and Treasury that really sets a direction for what the future of housing will be in the U.S. and what the FHFA’s part of that will be,” Otting said at a Jan. 17 staff meeting.

Across rural America, the government shutdown has eliminated one of the best options for low- to middle-income homebuyers, a zero down payment mortgage from the U.S. Department of Agriculture, Bloomberg News reported. That’s leaving deals and would-be buyers’ lives in limbo. They’re begging sellers for extensions and struggling to decide when to mention their plans to landlords, said Shane Siniard, a loan officer with SWBC Mortgage Corp. in the Atlanta area, where the biggest share of the USDA loans are made, according to an analysis by Zillow. Siniard, one of the most prolific originators of the loans, has one client with a buyer who is unable to sell because he’ll need a payoff statement from the government. 

The Supreme Court yesterday attempted to resolve a legal question that could have broad ramifications on hundreds of thousands of Americans who are foreclosed on without a judicial process each year. A key issue in the matter is who or what can be considered a "debt collector," CNBC.com reported. The case centers on Dennis Obduskey, a Colorado man who defaulted on his $329,940 home loan in the aftermath of the 2007 financial crisis. The question in the case is whether Obduskey is entitled to legal protections for debtors provided by Congress in 1977, or whether the foreclosure is exempt because it is Obduskey's home, and not money, that is at stake. Obduskey obtained his home loan from a company called the Magnus Financial Corporation in 2007, before it was ultimately transferred to Wells Fargo. Like many other Americans, he defaulted on the loan in 2009. The bank then attempted to foreclose on Obduskey for six years, to no avail. Finally, in 2015, Wells Fargo retained a law firm — McCarthy & Holthus — to handle the foreclosure proceedings. But, as of the latest briefs in the case, Obduskey's home has yet to be sold. The question of whether a law firm seeking to foreclose on a property is a debt collector is one that could affect millions of Americans. In 2016, about 200,000 homes were lost to foreclosure in states that permit lenders to foreclose on a property without going to court. Business groups have argued that these so-called non-judicial foreclosures are more efficient and fair to borrowers. Progressives say borrowers are entitled to more protections. The case is Obduskey v. McCarthy & Holthus LLP, U.S., No. 17-1307, 6/28/18. The High Court is expected to issue a ruling by late June.

Mel Watt’s time as the director of the Federal Housing Finance Agency is officially over, HousingWire.com reported. Watt became the first Senate-confirmed director of the FHFA back in 2014, and led the FHFA for five years, but his term as FHFA director ended on Jan. 6, 2019. Going forward, the FHFA will be led by Comptroller of the Currency Joseph Otting, who was picked by President Donald Trump to serve as acting director of the FHFA while Mark Calabria is awaiting Senate confirmation to replace Watt on a permanent basis. In December, Trump nominated Calabria, who serves as Vice President Mike Pence’s chief economist, to replace Watt as FHFA director. But as Calabria is waiting for Senate confirmation, Otting has officially replaced Watt as the leader of the agency overseeing Fannie Mae and Freddie Mac. Otting took over as Comptroller of the Currency in November 2017, bringing a background in banking to the regulatory role. Otting served as the CEO of OneWest Bank from 2010 until 2015, working alongside Department of Treasury Secretary Steven Mnuchin, the bank’s former chairman. Otting was let go by OneWest when the bank merged with the CIT Group in 2015. Prior to joining CIT Bank, Otting worked for U.S. Bank from 2001 and 2010. During that time, Otting served in various roles, including Oregon market president, executive vice president, and east region commercial banking group manager.

Rising home prices are sending first-time home buyers to their parents for help with mortgage down payments, the Wall Street Journal reported. More than 26 percent of mortgage borrowers who used Federal Housing Administration-insured loans got assistance from a relative to make the down payment in the 12 months through September, up from about 22 percent in 2011, according to data released late last year as part of the agency’s annual report. Though the pace of home-price growth has slowed, prices are still consistently rising year over year, and higher mortgage rates are making buying more expensive. What’s more, many who missed the chance to purchase homes at modest prices are waiting for a pullback to jump in. That has created a difficult situation for first-time buyers, many of whom are struggling to stockpile the cash for down payments. Factors including student debt and lackluster wage growth have made it difficult for many to keep up with rising home prices. The homeownership rate among those younger than 35 has fallen 8 percentage points since 2004 to 35 percent in 2017, according to Freddie Mac.