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August 21, 2021

New Refi Program Aims to Help Lower-income Owners Save

 Fannie Mae will launch RefiNow this week, which could help lower-income homeowners save hundreds of dollars a month on their mortgage payments.

The program, which begins June 5, aims to help about 2 million homeowners lower the interest rates on their mortgages. Eligible homeowners could save an estimated $100 to $250 a month, according to the Federal Housing Finance Agency, Fannie Mae’s regulator.

Among the eligibility requirements, homeowners must earn 80% or less of their area’s median income to apply. Borrowers also must have a Fannie Mae–backed mortgage (use the loan lookup tool to find out). Borrowers must be current on their mortgage and have no missed payments in the last six months. The mortgage also can’t have a loan-to-value ratio above 97%, and borrowers’ FICO credit scores must be at least 620.

“Lower-income borrowers typically refinance at a slower pace than higher-income borrowers, potentially missing an opportunity to save on housing costs,” says Malloy Evans, senior vice president and single-family chief credit risk officer at Fannie Mae. “Fannie Mae’s new RefiNow option will help homeowners refinance by removing some of those barriers, improving affordability, and promoting sustainable homeownership.”

Under the program, participating lenders would be required to reduce eligible borrowers’ interest rate by at least one-half of a percentage point. That could be higher, however. Lenders also must waive the adverse market refinance fee for borrowers whose loan balance is no more than $300,000. Lenders must provide a credit of up to $500 if the borrower is ineligible for an appraisal waiver.

Lenders aren’t required to participate in RefiNow.

Freddie Mac will start its own refinance program later this summer.

August 17, 2021

Slap in the face’: Lobbyists fume at Biden eviction reversal

 President Joe Biden’s move to reinstate a federal eviction moratorium Tuesday after letting it lapse days earlier marked a huge political loss for the National Association of Realtors and its housing industry allies.

President Joe Biden’s stunning decision to revive the eviction ban in response to intense pressure from progressives has left one of Washington’s most influential business coalitions feeling angry and betrayed on the sidelines of power.

Biden’s move to reinstate a federal eviction moratorium Tuesday after letting it lapse days earlier marked a huge political loss for the National Association of Realtors and its housing industry allies, who each year shower candidates in both parties with millions of dollars in contributions and often get their way in big policy fights.

This time, housing lobbyists said they were frozen out of discussions with the White House on the fate of the ban, which cost property owners billions of dollars a month in losses. More than a dozen industry trade groups found themselves outgunned by an improvised resistance campaign led by Rep. Cori Bush (D-Mo.) and other recently elected progressive lawmakers protesting the ban’s expiration on the steps of the Capitol. House Financial Services Chair Maxine Waters (D-Calif.), who has received tens of thousands of dollars in contributions from the Realtors as one of the top lawmakers on housing issues, dismissed their concerns as she also pushed to revive the eviction prohibition.

The industry felt “whiplash,” said National Association of Home Builders CEO Jerry Howard, whose group includes about 3,000 property managers impacted by the original moratorium.

“It certainly is a slap in the face to the housing industry and to the people that shelter America,” Howard said.

The eviction ban fight, which is now working its way through the courts, was the latest evidence of a leftward power shift among Democrats that has caused some industry groups to struggle with how to defend their members’ interests in Washington. In the case of evictions, lobbyists even had Biden’s word that the ban was done, only to have the president abruptly backtrack.

White House: Biden believes in legality of revised eviction ban

Diane Yentel, a top affordable housing advocate who led efforts to convince Biden to revive the ban, said realtors, home builders and apartment associations wasted millions of dollars and goodwill “in a public fight to allow landlords to evict struggling tenants during a historic and deadly global pandemic.”

“These trade associations painted their members in the worst possible light, all while failing over the last year to achieve their goal of overturning the moratoriums,” said Yentel, president and CEO of the National Low Income Housing Coalition.

The National Association of Realtors — the most powerful housing industry group — is more than 100 years old and occupies a headquarters just blocks from the Capitol. It has some of the deepest pockets in Washington, shelling out nearly $700 million to influence policy since 1998, according to data compiled by OpenSecrets. The spending puts it behind only the U.S. Chamber of Commerce.

With real estate interests in every district, the Realtors group is accustomed to not being so easily dismissed. It successfully pressured lawmakers to preserve a tax deferral benefit known as like-kind exchanges in the 2017 tax reform law, and jammed up an attempt to overhaul National Flood Insurance Program rates for homeowners the same year. Carried interest is still in the tax code despite multiple attempts to kill it, in large part because it’s important to real estate investment partnerships.

The association took the lead on fighting the eviction moratorium after the Centers for Disease Control and Prevention first imposed it in September. About 28 percent of the group’s 1.4 million members rent out property, meaning they would be prevented from kicking out tenants who fell behind on rent under the ban. The CDC argued the moratorium was needed to avert public health risks from people crowding into homeless shelters or doubling up with friends and family during the pandemic.

The moratorium posed a financial hardship for landlords who still had to pay their own bills, including mortgages, property taxes and utilities.

“They're not getting any income, but they're still providing heat, electricity, air conditioning, water," Howard said.

Local chapters of the association sued to block the ban late last year. The industry also successfully lobbied for federal rental assistance that would help make landlords whole and keep renters in their homes, though only a fraction of the $46.5 billion has reached its intended recipients thanks to state and local bottlenecks.

The industry’s fight appeared to bear fruit in late June. After the Biden administration extended the moratorium for what it said was the final time — until July 31 — a Supreme Court ruling triggered by Realtor lawsuits bolstered the legal case against the ban. The high court kept the prohibition in place in a 5-4 decision but conservative Justice Brett Kavanaugh said he was only backing the ruling because of the upcoming expiration date. Kavanaugh warned that he believed the CDC had exceeded its legal authority by imposing the moratorium.

The Supreme Court ruling prompted the Biden administration on July 29 to announce that it would let the moratorium expire three days later and that it was up to Congress to renew it.

The last-minute announcement set off a scramble by House Speaker Nancy Pelosi and other Democratic leaders to pass legislation before representatives left for their August recess.

The push triggered fierce pushback by the housing industry, with 14 groups representing property owners, developers and lenders urging lawmakers to “end the unsustainable nationwide federal restrictions on property operations” and instead focus on accelerating the distribution of rental aid.

The lobbying appeared to pay off, after more than a dozen House Democrats privately resisted legislation extending the ban and stopped it from getting a vote. But the episode also revealed a growing rift between housing lobbyists and top Democrats.

“Now I know that there's a strong lobbying effort, and the Realtors have come, and they have put a strong letter out last night, and some people are simply saying, 'Oh my God, I don't want to cross the Realtors,’” Waters said July 30 as she tried to rally support for the ban.

Why states struggle to get rent relief to tenants

Waters urged her colleagues not to be cowed by interests she knew well. “They're in my committee, I work with them,” she said, referring to her committee's jurisdiction over housing policy.

The Realtors' PAC contributed nearly $2 million to House Democratic candidates in the 2020 election cycle, including $10,000 apiece to Waters and Pelosi.

After the Hill deadlock, the White House stood its ground for a few days. But Biden relented after facing intense pressure from fellow Democrats to reverse course, with progressives led by Bush attracting national attention as they camped out for several days on the Capitol steps to protest the lapse of the ban.

The CDC on Tuesday announced what the administration called a targeted eviction ban, which would apply only to areas with high levels of Covid-19 transmission — currently about 80 percent of counties.

The process left landlords feeling like “pawns” who had been sacrificed to keep the Democratic caucus together, National Apartment Association President and CEO Bob Pinnegar said.

Cindy Chetti, senior vice president at the National Multifamily Housing Council, said the odds were stacked against the industry as outrage over the ban’s expiration snowballed.

“We did lobby a lot, we did step into gear,” Chetti said. “I’m not sure there’s anything else we could have done. ... I feel comfortable that we did everything we could.”

The Alabama and Georgia chapters of the Realtors association sued Wednesday to block the ban. The same groups led the legal challenge against the prior moratorium, prompting the Supreme Court to cast doubt on the CDC’s authority.

A spokesperson for the Realtors pointed to last week’s quashed House vote when asked whether the group saw the new eviction ban as a lobbying loss.

“When House leaders launched an effort to extend the moratorium legislatively last week, our members reached out to Congress and made their voices heard,” Realtors spokesperson Patrick Newton said. “The votes in Congress never materialized, which is why the issue is back in the courts.”

Some housing lobbyists said they were angry about being beaten by progressive upstarts and affordable housing organizers on one of the most critical fights for their members in years. The ban's reimposition threatened to spur big financial losses for landlords, including mom-and-pop property owners who lobbyists pointed out were in nearly every district.

“Those people, for the last year and a half, have kept their tenants housed with their own money,” said Howard, with the home builders association. “And they're being cast as villains in this.”

White House replaces regulator overseeing U.S. mortgage giants following Supreme Court ruling

 The White House replaced the regulator who oversees mortgage giants Fannie Mae and Freddie Mac, following a Supreme Court ruling that paved the path for President Biden to put his own regulator at the top of the Federal Housing Finance Agency.

The Biden administration moved Mark Calabria, a Trump appointee and libertarian economist, out of the job. On Wednesday night, the White House appointed Sandra L. Thompson as the agency’s acting director. Thompson previously served as deputy director of the Division of Housing Mission and Goals, overseeing FHFA’s housing and regulatory policy, fair lending and other regulatory matters.

Before joining FHFA, Thompson worked at the Federal Deposit Insurance Corp. During her time there, she oversaw the agency’s enforcement program for risk management and consumer protection during the Great Recession.

In replacing Calabria, the administration signaled it would install someone more aligned with the administration’s housing policies.

“There is a widespread lack of affordable housing and access to credit, especially in communities of color,” Thompson said in a statement. “It is FHFA’s duty through our regulated entities to ensure that all Americans have equal access to safe, decent, and affordable housing.”

Calabria took office in 2019 and sought to end government control over Fannie Mae and Freddie Mac, which guarantee roughly half of the $11 trillion U.S. mortgage market.

Calabria said in a statement that he respected the Supreme Court’s decision.

“Much work remains,” he wrote. “When the housing markets experience a significant downturn, Fannie Mae and Freddie Mac will fail at their current capital levels. I wish my successor all the best in fixing the remaining flaws of the housing finance system in order to preserve homeownership opportunities for all Americans.”

In a split decision Wednesday, the Supreme Court ruled that the leadership structure of the Federal Housing Finance Agency was unconstitutional because of a provision preventing the president’s ability to remove its director, except “for cause.” The president nominates the director of the FHFA, who is confirmed by the Senate for a five-year term.

The majority of the justices wrote that the housing regulator should be treated the same way the Supreme Court recently treated the Consumer Financial Protection Bureau. Federal law had restricted the president’s ability to remove the CFPB chief, but the Supreme Court last year struck that down, saying such restrictions violate the separation of powers in the Constitution.

“But as we explained last Term, the Constitution prohibits even ‘modest restrictions’ on the President’s power to remove the head of an agency with a single top officer,” wrote Justice Samuel A. Alito Jr.

As home prices soar in unlikely places, the most vulnerable residents pay the price

The FHFA was created in 2008 amid worries that Fannie Mae and Freddie Mac were not sufficiently regulated given the dangerous housing bubble. The companies nearly collapsed shortly after the agency was created, and they were put under a government conservatorship that still exists.

The Supreme Court ruling comes as the housing market has emerged as one of the most unequal features of the economic recovery during the pandemic. Wealthier Americans are scooping up increasingly expensive homes and engaging in bidding wars that push home values even higher. Meanwhile, many renters, including those who lost jobs, are struggling to get by and fearing a June 30 deadline, when the current eviction moratorium from the Centers for Disease Control and Prevention is scheduled to expire. The Biden administration, though, is expected to extend the moratorium for another 30 days.

Policymakers at the Federal Reserve say they are not concerned that the state of the housing market poses financial stability risks. But they are keeping a close eye on the situation, with some economists wary of a bubble that could form the longer prices continue to soar.

Fannie Mae and Freddie Mac are two of the largest financial institutions in the United States, effectively backstopping the mortgage industry. They purchase mortgages on the secondary market, ensuring there is enough liquidity for banks and other lenders to extend loans. They remain controversial, though, and have remained under government control since 2008. It’s unclear when that arrangement will end.

Government support for the housing market has remained popular with many banks and housing groups because they believe it provides easier access to mortgages, but policymakers have not successfully hashed out what the long-term vision for these entities should be. Taxpayers had to bail out both companies after the financial crisis when many of the mortgage products that they held lost value.

The authority Biden cited came from a Supreme Court decision Wednesday that largely went against Fannie Mae and Freddie Mac investors who were challenging more than $100 billion in profits gathered by the government. The money was compensation for the taxpayer bailout Fannie and Freddie received after the 2007 housing market crash.

The justices rejected claims that the FHFA exceeded its authority under the Recovery Act. “In the Recovery Act, Congress sharply circumscribed judicial review of any action that the FHFA takes as a conservator or receiver,” Alito wrote for the court.

But the majority agreed with the investors that the law had unconstitutionally shielded the head of the FHFA by saying he could not be fired by the president except for cause. That decision follows a similar one from last term regarding the head of the Consumer Financial Protection Bureau.

The court’s liberals, nominated by Democratic presidents, said the majority went too far.

Justice Elena Kagan said she was compelled to agree on the president’s removal powers because of the court’s opinion last term in Seila Law v. Consumer Financial Protection Bureau. “But the majority’s opinion rests on faulty theoretical premises and goes further than it needs to.”

The justices sent the case back to a lower court, where investors will have a chance to show they were harmed by the president’s lack of control over the FHFA directors.

Freddie Mac launches new home renovation mortgage, here's how to get one

Freddie Mac on Thursday introduced its new mortgage product, the CHOICEReno eXPress mortgage, which will allow homebuyers and homeowners to pay for home renovations by funding the project through their mortgage purchase or refinance. 

Freddie Mac said this will save homebuyers and homeowners time and money, and give them the funds they need for home renovations at low cost with no extra fees and interest rates that mirror mortgage interest rates, which are currently at historic lows. The loan is closed with their traditional mortgage and combined into one monthly payment. 

"CHOICEReno eXPress expands upon the Freddie Mac CHOICERenovation mortgages, which were designed to help address the nation’s aging housing supply, support the need for affordable housing, and offer renovation, repair, improvement or refinance options to support the increasing demand for cost-effective financing solutions," said Danny Gardner, senior vice president of client and community engagement for Freddie Mac’s single-family business. "CHOICEReno eXPress will help homebuyers and homeowners reduce their out-of-pocket costs by offering more affordable loan terms than using credit cards or unsecured financing when making small-scale renovations."

If you're interested in adding the home improvement loan to your mortgage purchase or refinance, visit an online marketplace like Credible to find a lender with lower rates. By comparing mortgage rates from multiple lenders, borrowers can save hundreds of dollars on their monthly payments and leave more room in their renovations budget.  

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