The Trump administration is growing wary of taking bold steps toward freeing Fannie Mae and Freddie Mac from federal control before the 2020 election in part because of the political risk of potentially upending the U.S. mortgage market, Bloomberg News reported. While White House and Treasury Department officials are eager to end the companies’ decade long conservatorships, they see the task as arduous, slow-moving and extremely complicated, said the people, who asked not to be named in discussing internal deliberations. Adding to the challenge is that Treasury Secretary Steven Mnuchin is spending much of his time on more pressing priorities, including the trade war with China, debt ceiling negotiations with Congress and imposing sanctions on Iran and other nations. One concern among administration officials is that freeing Fannie and Freddie could impact the housing market, possibly making it harder for borrowers to get loans just as President Donald Trump is seeking another term.
The parent of residential mortgage lender Stearns Lending LLC has filed for bankruptcy after agreeing with majority owner Blackstone Group LP to a debt-restructuring plan that will erase more than $180 million in bond debt from its balance sheet, the Wall Street Journal reported. Stearns Holdings LLC, based in Santa Ana, Calif., filed for chapter 11 protection today in U.S. Bankruptcy Court in New York, listing assets and liabilities each in the range of $1 billion and $10 billion. Blackstone has agreed to pump $60 million in new money into the mortgage lender as part of the balance-sheet restructuring, which also includes commitments of $1.5 billion from warehouse lenders. Blackstone’s private-equity arm purchased a majority stake in Stearns in 2015. Stearns has about $184 million in outstanding bonds that mature next August and sold most of its mortgage-servicing rights last year to pay down a portion of its bond debt.
President Donald Trump signed an executive order yesterday that establishes a White House Council tasked with identifying and removing barriers hindering the development of affordable housing, HousingWire.com reported. In effect, he is “tearing down red tape in order to build more affordable housing,” a White House release said. The council will comprise members of eight federal agencies and be chaired by Department of Housing and Urban Development Secretary Ben Carson. Its creation will “streamline interagency processes and deliver results even faster,” the White House said. This will require the council to meet with state and local leaders to identify issues impeding the development of affordable housing, and to assess the impact of state, federal and local regulations on the cost of such development. Among the specific issues the council will aim to tackle include ways to cut excessive costs in order to spur construction.
Investor purchases of U.S. homes have climbed to an all-time high, a sign that rising home prices have done little to dampen demand for flipping homes or turning them into single-family rentals, the Wall Street Journal reported. Big private-equity firms, real-estate speculators and others that buy properties comprised more than 11 percent of U.S. home purchasers in 2018, according to data released yesterday by CoreLogic Inc. The investor purchases are the highest on record and nearly twice the levels before the 2008 housing crash. The investor interest poses a challenge for millennials and other first-time buyers who are increasingly looking to buy starter homes and are forced to compete with deep-pocketed cash buyers. Big commercial property owners like Blackstone Group LP and Starwood Capital Group began buying thousands of homes out of foreclosure during the housing bust. Many economists credit investors with helping to stabilize the housing market in 2011 and 2012 by buying with cash when prices were low and mortgage credit froze. But analysts expected those purchases to slow, as the market rebounded and properties could no longer be had for fire-sale prices. Instead, demand for properties has intensified. While these purchases dipped slightly when the market started to recover in 2015 and 2016, they have rebounded to surpass the previous peak of six years ago.
Ditech Holding Corp., which filed for bankruptcy in February, said on Tuesday that it reached two separate deals with buyers for its forward and reverse mortgage servicing and originations businesses, the Wall Street Journal reported. Publicly traded real-estate investment trust New Residential Investment Corp. will acquire assets of Ditech’s forward mortgage servicing and originations business Ditech Finance LLC, while Mortgage Assets Management LLC will buy the stock and assets of the company’s reverse mortgage business, Reverse Mortgage Solutions Inc. New Residential’s offer will be designated as a stalking-horse bid, and each of the two agreements are subject to higher and better offers. The deadline for submitting competing bids is July 8 and a confirmation hearing is scheduled for Aug. 7. The Fort Washington, Pa.-based company planned to sell its assets since the start of its chapter 11 proceeding, and the company has also negotiated a deal with lenders to forgive more than $800 million in debt.
