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A National Association of Realtors report showed yesterday that sales of previously owned U.S. homes unexpectedly dropped for a fourth month to the weakest in more than two years, signaling higher prices and tight supplies continue to squeeze demand, Bloomberg News reported. Prospective home buyers are increasingly discouraged by rising borrowing costs and property-price increases that are outpacing wage growth. The share of Americans who say that it’s a good time to buy a home fell in August to 63 percent, the smallest since 2008, the University of Michigan consumer sentiment survey showed on Friday.

Lax and fraudulent lending on single-family homes played a role in inflating and popping the housing bubble a decade ago. The 2010 Dodd-Frank financial overhaul required home borrowers to document their income, and home lenders to verify it, but the rule doesn’t apply to multifamily housing, the Wall Street Journal reported. Lenders in that market review data submitted by borrowers to ensure the properties earn enough to repay loans, but they generally don’t examine every lease to check income. Neither do Fannie Mae and Freddie Mac, the government-sponsored mortgage giants that buy and securitize loans. Credit-rating firms that grade the securities for investors also generally don’t review loans for fraud. Owners of an apartment complex near Pittsburgh, who wanted to take out a mortgage on the buildings, allegedly made vacant units look occupied by turning on radios, placing shoes and mats outside doors and in one instance having a woman tell inspectors her boyfriend was asleep inside. The owners obtained a $45.8 million loan, which was wrapped into mortgage securities and sold to investors. Practices such as these — which were alleged in a federal search-warrant application — have sparked one of the largest mortgage-fraud investigations since the financial crisis. It focuses on whether income from commercial properties was falsified, a move that would enable owners to get larger mortgages and take out cash or expand their businesses faster. Still in its early stages, the investigation has so far yielded a fraud-conspiracy indictment against four real-estate executives in upstate New York. Loans that some or all of them were involved with totaled about $170 million, the indictment alleges.

The Trump administration wants to shift the way it enforces an aspect of fair housing around the U.S., pivoting away from efforts to integrate lower-income housing into wealthier neighborhoods in favor of promoting more housing development overall, the Wall Street Journal reported. The U.S. Department of Housing and Urban Development is set to announce the change today. HUD will begin holding stakeholder hearings on how to change the way it determines whether communities are enforcing the Fair Housing Act, which requires local governments to institute policies that help break down patterns of housing segregation. HUD stakeholders include nonprofit groups, academic researchers and private businesses. The Obama administration took steps to encourage the development of low-income housing in high-income neighborhoods. In an interview, HUD Secretary Ben Carson said he plans instead to focus on restrictive zoning codes. Stringent codes have limited home construction, thus driving up prices and making it more difficult for low-income families to afford homes, Carson said.

The mortgage giants Fannie Mae and Freddie Mac could require as much as $78 billion in bailout money in the event of a serious financial crisis, according to stress test results released on Tuesday by the Federal Housing Finance Agency, National Mortgage News reported. The government-sponsored enterprises would need to draw between $42.1 billion and $77.5 billion from the Treasury Department under the test's "severely adverse" economic scenario, depending on how the enterprises treat their deferred tax assets, the agency said in its report. Under the terms of the senior preferred stock purchase agreements, the GSEs would retain between $176.5 billion and $212 billion under their funding commitment from Treasury. The projected draw is lower than the estimate from last year, when regulators reported that the GSEs could need nearly $100 billion in a new crisis. In 2016, the agency said that they would need just under $126 billion. The Dodd-Frank Act requires federally regulated financial companies with total assets of more than $10 billion to conduct annual stress tests to assess their ability to withstand an economic crisis.

Hundreds of people had their homes foreclosed on after software used by Wells Fargo incorrectly denied them mortgage modifications, CNNMoney.com reported. The embattled bank revealed the issue in a regulatory filing last week and said that it has set aside $8 million to compensate customers affected by the glitch. The same filing also disclosed that Wells Fargo is facing "formal or informal inquiries or investigations" from unnamed government agencies over how the company purchased federal low-income housing tax credits. The document states the probes are linked to "the financing of low income housing developments," but does not offer further details. Wells Fargo said that the computer error affected "certain accounts" that were undergoing the foreclosure process between April 2010 and October 2015, when the issue was corrected. About 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers were ultimately foreclosed upon.

Freddie Mac, the country’s largest backer of apartment loans, is rolling out a new program that will offer lower-cost financing to owners who agree to cap rent increases for the life of their loans, the Wall Street Journal reported. The initiative acts similar to rent control — which has been gaining traction in many parts of the country — by keeping units in private hands and controlling the rate of rent increases. But it comes with less political baggage because it is voluntary. “Maybe there’s a way we can help change incentives,” said David Brickman, an executive vice president at Freddie Mac and head of its multifamily division. “We can provide an economic basis for private, profit-oriented developers to pursue a strategy where they didn’t raise rents by quite as much.” The program, which is set to be announced today and begin immediately, will be available all over the country.