Executive Perspectives Blog
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
With the full adoption of the Uniform Loan Delivery Dataset (ULDD) today, Freddie Mac reaches a critical milestone of the Uniform Mortgage Data Program (UMDP) – the joint-GSE initiative to improve loan quality through consistent and standardized data. With the ULDD and the Uniform Appraisal Dataset (UAD) now in use, lenders nationwide are using a "common language" for the loans and appraisals they deliver to Freddie Mac and Fannie Mae. This is the culmination of several years of hard work, investment, and planning across the industry that we could not have accomplished without the collaboration and partnership of our customers, vendors, and appraisers.
Standardizing data across the entire loan manufacturing process through the UMDP has far-reaching benefits. At Freddie Mac, we are already seeing improved data quality and enhanced risk management capabilities. The UAD has enabled appraisers to provide consistent descriptions of the subject and comparable properties, resulting in far greater clarity in appraisal reports. This, in turn, gives lenders greater confidence in the appraisal data they receive, regardless of where the property is located or who is doing the appraisal. Ultimately, this will help lenders and investors reduce collateral-related risks because it's now possible to evaluate the appraisals against standards and property trends.
In four major metropolitan areas, the Take RootSM Community Stabilization Initiative provides a powerful means for stabilizing neighborhoods and making a positive difference in the lives of families who call these communities home.
Take Root's two-pronged approach promotes affordable new homebuying opportunities and helps struggling homeowners who are facing foreclosure. Both are needed for local housing markets to emerge successfully from the economic crisis and thrive. Take Root starts with Freddie Mac and local municipalities working to:
Property valuation is a cornerstone of selling real estate. It tells the market what we think a home is worth and what we'll accept as a sales price. A proper valuation process will also determine a home's value in its current "as-is" condition and after repairs and renovations.
Freddie Mac accounts for about five percent of the nation's supply of foreclosed homes and we finished 2011 with a nationwide inventory of just over 60,000 homes in REO, which is still historically high by company standards. Last year we sold about 110,000 homes for an average of 95 percent of market value; two-thirds of them were sold to owner-occupants.
Homeownership has long been considered part of the American Dream, but renting is the right housing option for many U.S. households. A fast-growing number of families are becoming renters, either by choice or necessity. The convergence of the housing crisis, demographic trends, and a return to stricter credit standards for residential mortgages is expected to create a surge in demand for rental housing that will last for years. By the end of this decade, there likely will be more than 10 million additional new renter households in the United States than there were before the recent recession. Freddie Mac is working to keep affordable multifamily rental housing available, for today and tomorrow.
Supporting affordable housing reflects our dedication to our public mission – we do it because it’s who we are. Freddie Mac’s Multifamily business currently finances a significant amount of the multifamily market. Last year, we provided more than $20 billion in liquidity to this multifamily market, financing 1,300 properties comprising 321,000 rental units. Through the first quarter this year, we’ve provided $5.74 billion. More than 90 percent of the properties funded offer rents affordable to lower- and middle-income households (those earning at or below 80% of area median income levels).