Executive Perspectives Blog
Distressed homeowners with mortgages owned by Freddie Mac and Fannie Mae are experiencing a more consistent and efficient interaction with their servicers thanks to new servicing requirements that took effect late last year. This updated framework for mortgage loan servicing is part of the Servicing Alignment Initiative (SAI), an effort directed by our regulator – the Federal Housing Finance Agency – to establish uniform servicing policies and processes for borrowers who may be in danger of losing their homes. The SAI aligns requirements and sets standards for GSE-owned mortgages across key areas of servicing, such as borrower contact, delinquency management, and workout options.
Consistency and standardization are good for the industry, helping to increase efficiency for servicers by streamlining and simplifying processes. Here are three reasons why it's also good for borrowers.
One obvious benefit of a mortgage refinance is that it offers a borrower the opportunity to strengthen their fiscal house. The overwhelming majority of homeowners who refinanced in the closing months of 2011 did exactly that.
First some background. For months, fixed-rate mortgages have hovered at or near 60-year lows. In December, the 30-year fixed-rate mortgage averaged 3.96 percent and the 15-year averaged 3.25 percent. Rates in 2012 have dipped even lower at times.
In a recent survey, three out of four lenders responded that apartments are the best property type for investment opportunities today. Those results from the National Real Estate Investor's annual Borrower Trends survey aren't surprising, but they do highlight the fact that multifamily, and the rental housing market more broadly, is a much-needed bright spot in real estate and the economy.
The multifamily market is becoming more important than ever as more homeowners shift to rental housing either by choice or by need. Policymakers and housing-industry leaders have realized that homeownership isn't – and probably shouldn't be – every American's dream. Renting is the right option for a growing portion of the population, and the need for rental housing is increasing rapidly, as is the demand for capital to support this growth.
Refinancing is Freddie Mac's bread and butter in today's marketplace. Mortgage refinances represented an estimated 78 percent of our single-family purchase volume in 2011 and 80 percent in 2009 and 2010. In the last three years, we refinanced about $930 billion in mortgages – helping nearly 4.3 million American families lower their payments or shorten their mortgage terms.
This translates into real money for borrowers. For example, the borrowers we helped to refinance in 2011 will save an average of $2,700 in interest payments over the next year. That's about $2.7 billion that these homeowners will have to spend, save, or invest because we were there to supply the credit their lenders needed to close their new mortgages.
Mortgage fraud doesn't look like a TV crime scene with yellow tape and flashing lights. It generally doesn't show up on security camera footage or in the sort of dramatic photos that make the front page or go viral on the Internet. That's because mortgage fraudsters, like any predators, rely on camouflage to hide their intentions and lull their victims into a false sense of security.
Freddie Mac's fraud investigation team has over 20 years of field experience uncovering such "camouflage" and helping law enforcement agencies prosecute mortgage fraudsters.
