Executive Perspectives Blog

For America’s underwater homeowners – particularly those who live in areas hit hardest by the housing crisis – the launch of “HARP 2.0” has been welcome news. The program was initially launched in 2009 to help struggling homeowners with mortgages owned by Freddie Mac or Fannie Mae refinance to more sustainable terms. In October 2011, the program was significantly enhanced, providing more homeowners with the opportunity to refinance at today’s historically low mortgage rates – even if they have little or no equity in their home. HARP 2.0 is already delivering strong results and in the first half of 2012, our purchase volume of HARP refinances increased 76 percent compared to the first half of 2011.

One of our top priorities is ensuring that America’s families have access to reliable information about HARP. We recognize that the Internet is one of the easiest and most accessible ways to provide homeowners with important tools, resources, and user-friendly guidance regarding their mortgage, and we continue to focus on FreddieMac.com to meet their needs. Today, FreddieMac.com serves as the starting point for many borrowers interested in HARP and other mortgage relief options.

Changes are afoot in the world of conforming, conventional mortgages. Under the Federal Housing Finance Agency's (FHFA) direction, we're changing our traditional approach to the "representations and warranties" lenders make that the loans they sell us comply with our Seller/Servicer Guide and business terms. Historically, these reps and warranties last for the life of the loan and are an important incentive for delivering quality mortgages to Freddie Mac. That's because rep and warranty violations can lead to a wide range of actions, from one-on-one discussions with lenders about improving their business processes to repurchase requests.

Starting next year, under FHFA’s direction, Freddie Mac will relieve lenders from certain reps and warranties involving the underwriting of borrower credit and the property securing the mortgage, if there are no delinquencies during the first 36 months and other quality performance milestones are met. In the case of Freddie Mac's Relief Refinance Mortgages, which includes Home Affordable Refinance Program (HARP) mortgages, rep and warranty relief can occur after just 12 months of consecutive, on-time mortgage payments. The new policy will apply to all single family mortgages sold to Freddie Mac on or after January 1, 2013. (For details of our new Representation and Warranty Framework, click here.)

Since one-third of Americans rent rather than own their home, Freddie Mac has a vibrant business focused on the multifamily marketplace. Here, we work with a variety of business partners – lenders, borrowers, and securities investors – to finance affordable housing for renters nationwide. How are we doing in terms of creating value for these stakeholders as well as the U.S. taxpayers who capitalize Freddie Mac?

Are America's housing markets warming up? The evidence from our own experience as a national seller of foreclosed (real estate owned, or REO) homes suggests they just might be.

HomeSteps, Freddie Mac's REO sales division, sold more REO than it took in during the second quarter and continued to reduce its national inventory of foreclosed homes. Specifically, as the chart below shows, sales outpaced acquisitions by 6,041 homes and the inventory fell to 53,282 at the end of the second quarter.

Have we hit bottom in house prices or is the so-called “shadow inventory” lurking, ready to send house prices tumbling again? This is a topic we look at in greater detail in our August Economic & Housing Market Outlook.

The news on the economy has been lackluster at best, yet, for a change, the housing news has been encouraging. For example, the Freddie Mac House Price Index logged a 4.8 percent jump from March to June 2012, and a full 1 percent gain over the prior 12 months with 34 states showing higher home values. CoreLogic’s House Price Index was also up June-to-June, and the Federal Housing Finance Agency House Price Index posted an annual gain for the U.S. through May