President Obama goes on tour this week to preview his agenda for 2015.
On Thursday, the President plans to discuss housing when he returns to Phoenix. I posted on this blog just a few days ago on the last time the President discussed housing in Phoenix. That visit included President Obama saying:
“So the good news is, right now there’s a bipartisan group of senators working to end Fannie and Freddie as we know them. And I support these kinds of reform efforts.”
In 2013, those comments were ominous as we were not certain what “end…as we know them” meant.
Fast forward nearly a year and a half, and we’ve witnessed FHFA and Treasury work to shrink Fannie Mae and Freddie Mac. In a different, earlier post, I focused on what looks like the goal of FHFA/Treasury as reducing the GSEs to 1/3 of their original size.
Also, FHFA has worked with the leadership of Fan and Fred to implement new policies and procedures in order to avoid being victims of fraudulent bank practices as they saw in the early 2000’s.
However, what still remains ominous is that Congress has tried to pass legislation to end Fannie and Freddie. And with Republications taking over both chambers of Congress we have yet to learn their full agenda on the issue.
Thursday is only four short days from now and we will learn from President Obama of his renewed thoughts on Fan and Fred.
Will President Obama stay the course and again call for Congress to reform the housing industry while incidentally mentioning FnF? Will he be cautious with his words due to the numerous lawsuits?
Or will President Obama claim victory for his Administration by pointing to reborn Enterprises rising from the ashes via a successfully managed Conservatorship? Will he state that he will instruct Secretary Lew to work with Director Watt to responsibly end Conservatorship?
Fortunately, we only have to wait a few days to hear again from President Obama.
Despite what he may or may not say about Fannie Mae and Freddie Mac, he will likely focus on FHA and Making Home Affordable. He may reference the Housing Trust and Capital Magnet Funds…and might give a nod to the new 3% down programs.
The White House recently published Year of Action: A Final Progress Report on the Obama Administration’s Actions to Help Create Opportunity for All Americans. The following passage in the Report references housing, which will likely be the basis of his speech on Thursday.
“Helping Responsible Homeowners: The Administration has continued to focus on ways to help hardworking, responsible families affected by the crisis make their mortgage payments; to provide payment relief to active duty military and their families; and to take responsible action to expand access to mortgage credit for creditworthy borrowers.
- Greater Assistance for Homeowners in the Home Affordability Modification Program (HAMP): In December, the Obama Administration and the Federal Housing Finance Agency (FHFA) announced that they will provide all homeowners that remain current in their HAMP modification after 6 years, an additional incentive payment of $5,000 to be applied to their outstanding principal balance on top of the existing $5,000, for a total of $10,000 paid to borrowers for remaining current on their modification. This will provide an incentive for HAMP borrowers to continue to make their payments through the first five years after the modification and will offer relief to help them stay current on their mortgages. In addition, the HAMP Tier 2 interest rate was reduced by 0.50 percent to provide deeper payment relief. Some borrowers who need to relocate will get a relocation incentive of $10,000 to assist in the transition.
- Payment Relief for Active Duty Military and their Families: In August, the President announced a partnership with 5 large financial institutions to proactively offer interest rate reductions on their mortgage loans to active duty military and their families. Active duty military are entitled to this benefit under the 2003 Service members Civil Relief Act (SCRA) but only if they request it and jump through hoops by providing unnecessary paperwork and documentation—many of them do not. The President launched a coordinated effort across government to cut regulatory red tape, allowing participating lenders to proactively identify and reach out to our active duty service members to enroll them in these important financial protections. The Administration continues to work with additional lenders to join the partnership and to expand the requirements to all consumer lending products, including credit cards, student loans and auto loans.
- Providing Clarity to Encourage Responsible Lending to Creditworthy Borrowers: Since the President called for regulators to establish more certain, brighter-line rules for government guaranteed lending in his 2013 State of the Union Address, the FHFA and the Department of Housing and Urban Development (HUD) have made meaningful progress working with the industry and consumer groups to provide this clarity. In May, HUD announced a blueprint to provide assurance that loans that meet their credit guidelines can be originated without fear of penalty, while the FHFA gave new clarity as to the circumstances under which lenders would be required to repurchase defaulted Fannie Mae and Freddie Mac-guaranteed loans. FHFA made an additional clarifying announcement this fall, inducing some industry participants to facilitate mortgage lending for a broader set of creditworthy borrowers who were previously shut out of the market.”