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The U.S. has opened a criminal investigation into whether traders manipulated prices in the $550 billion market for corporate bonds issued by Fannie Mae and Freddie Mac, Bloomberg News reported. The probe shows that investigations by the Obama Justice Department into market manipulation by bank traders are continuing under President Donald Trump. The Obama administration secured billions of dollars in settlements and criminal charges tied to the rigging of currency markets and benchmark interest rates. The latest inquiry is in its early stages and focuses on whether traders at banks coordinated with one another in order to benefit the institutions they work for. Investigators are looking at potential fraud and antitrust violations. The investigators are looking not into the mortgage securities issued by the two companies to finance home purchases but rather at the secondary market for Fannie’s and Freddie’s corporate bonds. Together, the mortgage-finance companies have outstanding corporate debt of about $548 billion, according to the Securities Industry and Financial Markets Association.

Homeownership among Americans in their 20s and 30s is hovering near a three-decade low. Just 35 percent of households headed by someone younger than 35 owned a home in 2017, down from 41 percent in 1982, according to census data, the New York Times reported. At the same time, the nation’s student loan bill has soared to $1.4 trillion, surpassing credit cards to become the largest source of personal debt outside mortgages. A broad set of headwinds is holding millennials back from buying homes. Underwriting standards have become stricter in the last decade, making it more difficult to get a mortgage. Many young people are moving to cities where they can only afford to rent — a problem that has been compounded as home prices have soared while wages have barely outpaced inflation. And recent research suggests that the explosion in tuition costs and student debt is another significant force keeping many millennials out of the home buying market. An analysis published by the Federal Reserve Bank of New York last year suggests that student debt was responsible for up to 35 percent of the decline in homeownership among people between the ages of 28 and 30 from 2007 to 2015.

Fair-housing advocates planned to file a lawsuit today against the U.S. Department of Housing and Urban Development and HUD Secretary Ben Carson for suspending an Obama-era rule requiring communities to examine and address barriers to racial integration, the Washington Post reported. The 2015 rule required more than 1,200 communities receiving billions of federal housing dollars to draft plans to desegregate their communities — or risk losing federal funds. After nearly 50 years of inaction, the rule was seen as a belated effort by HUD to enforce the landmark civil rights legislation of the 1968 Fair Housing Act, which compelled communities to use federal dollars to end segregation in residential neighborhoods. The 2015 rule, developed over a six-year period, required every community receiving HUD funding to assess local segregation patterns, diagnose the barriers to fair housing and develop a plan to correct them. Most communities were supposed to submit their plans to HUD every five years, beginning in 2016. Communities without HUD-approved plans would no longer receive federal housing dollars.

Last year, the two largest sources of American mortgage financing — federally backed Fannie Mae and Freddie Mac — began accepting home-purchase loans that carried no formal property appraisal, according to a commentary in the <em>Washington Post</em>. Instead, the valuations supporting the mortgages were performed by Fannie and Freddie in-house, using proprietary analytics and deep stores of property data. Only highly select loans were eligible for appraisal waivers, primarily those with sizable down payments (20 percent and up) plus previous appraisals on file. Buyers, refinancers and lenders were not permitted to request waivers: Fannie and Freddie were the ones that identified eligible properties and offered waivers at the application stage. Both companies had introduced the no-appraisal concept earlier for refinancings. The expansion to home-purchase loans was a big deal, though, because they’re considered riskier than refinancings, where borrowers’ credit and equity are well established and known to lenders. 

Treasury Secretary Steven Mnuchin said yesterday that he plans for action on the bailed-out government-sponsored enterprises Fannie Mae and Freddie Mac after the midterm elections in November, the Washington Examiner reported. Mnuchin also said that he would pursue bipartisan legislation to take the two mortgage giants out of the government’s custody, where they have lingered since 2008. Mnuchin also said that President Trump would look to replace the government regulator who oversees Fannie and Freddie. That position, the director of the Federal Housing Finance Agency, is held by Mel Watt, an Obama appointee. Watt’s term ends in early 2019. That will be an opportunity to “make sure we have someone in that job that supports the agenda,” Mnuchin said.

U.S. new-home sales surged in March, capping off a strong first quarter in a segment of the housing market characterized by solid buyer demand, the Wall Street Journal reported. Purchases of newly built single-family homes — a relatively narrow slice of all U.S. home sales — increased 4.0 percent from the prior month to a seasonally adjusted annual rate of 694,000 in March, the Commerce Department said yesterday. March’s rise comes on the back of a 3.6 percent increase in February and upward revisions for both January and February sales rates. The solid sales gains show a low unemployment rate and historically low layoff levels are supporting demand for housing, said Mark Vitner, senior economist at Wells Fargo.