FHFA Sends Two New Reports to Congress

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Mike Kennedy, Oct 30, 2009.

Thread Status:
Not open for further replies.
  1. Mike Kennedy

    Mike Kennedy Elite Member

    27
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    WASHINGTON, DC – Acting FHFA Director Edward J. DeMarco today sent two reports to Congress pursuant to requirements of the Housing and Economic Recovery Act, passed in July 2008. The reports discuss a number of topics, including mortgage risk, Fannie Mae’s and Freddie Mac’s housing goal performance, and key developments in the housing market.

    FHFA analyzed the loan-level data submitted with the Enterprises’ AHARs for 2008 to
    determine their performance on the 2008 housing goals and subgoals.
    The results are as follows:

    Fannie Mae / Freddie Mac
    Low- and Moderate Income Goal: 53.7 percent 51.5 percent
    Underserved Areas Goal: 39.4 percent 37.7 percent
    Special Affordable Goal: 26.4 percent 23.1 percent
    LM Home Purchase Subgoal: 38.8 percent 39.3 percent
    UA Home Purchase Subgoal: 30.4 percent 30.2 percent
    SA Home Purchase Subgoal: 13.6 percent 15.1 percent
    SA Multifamily Subgoals: $13.31 billion $7.49 billion

    Fannie Mae exceeded the underserved area goal by 0.4 percent but failed to meet the low- and
    moderate-income and special affordable housing goals. Freddie Mac failed to meet all three
    overall housing goals. Both Enterprises’ performance fell short of the three home purchase
    subgoals, but their performance exceeded their special affordable multifamily subgoals. FHFA
    notified the Enterprises of their official goal performance in letters dated June 11, 2009.8


    C. 2009 Housing Goals
    The Safety and Soundness Act, as amended, includes a transitional provision for the 2009 affordable housing goals. Specifically, section 1331(c) provides that the 2008 housing goals shall remain in effect for 2009 and directs FHFA to review the goal levels for 2009 to determine
    their feasibility given current market conditions, and after seeking public comment, make appropriate adjustments consistent with the market conditions.​

    After evaluating market conditions and seeking public comment, and in light of continued deterioration in market conditions and an unexpectedly high volume of refinance mortgages obtained by higher-income borrowers, FHFA determined that all of the goal and home purchase subgoal levels and the housing goal and subgoal levels should be reduced for 2009.

    On May 1, 2009, FHFA published a proposed rule revising the overall 2009 housing goals and the 2009 home purchase subgoals.​
    10 Following review of the comments on the proposed rule and an updated analysis of mortgage market conditions, on August 10, 2009, FHFA published a final
    rule establishing the 2009 housing goal levels as follows:

     ​
    Lowered the existing low- and moderate-income goal from 56 percent to 43 percent

     ​
    Lowered the existing underserved areas goal from 39 percent to 32 percent

     ​
    Lowered the existing special affordable goal from 27 percent to 18 percent

     ​
    Lowered the existing low- and moderate-income home purchase subgoal from 47 percent to 40 percent

     ​
    Lowered the existing underserved areas home purchase subgoal from 34 percent to 30 percent

     ​
    Lowered the existing special affordable home purchase subgoal from 18 percent to 14 percent

    However, because of the severe curtailment of secondary market financing for multifamily properties from other sources, FHFA modestly increased the existing special affordable multifamily subgoals for the Enterprises—for Fannie Mae, from $5.49 billion to $6.56 billion, and for Freddie Mac, from $3.92 billion to $4.60 billion. The 2009 special affordable multifamily subgoals are well below the Enterprises’ actual performance on these subgoals in
    recent years. However, due to conditions in the multifamily market, the subgoals will be challenging for the Enterprises to meet.


    http://www.fhfa.gov/webfiles/15152/ReportsPR103009.pdf
     
  2. CANative

    CANative Elite Member

    30
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Ha! No wonder it's so freaking hard to do a multi-family now days. I won't accept these types of assignments no matter how much money they offer. JVI want's to pay a whopping $400 for 4 unit properties. zzzzzzzzzzzzz
     
  3. Tom Watson

    Tom Watson New Member

    0
    Oct 11, 2009
    Professional Status:
    Appraiser Trainee
    State:
    Oregon
    FHFA sends 2 reports to Congress on Mtg Market

    This thing is choice. 345 pages of b***hit complete with cowbells. A lot of it is about appraisals and the benefits of AVM's. Some of you math wizzes might want to check out this Austin Kelly report 42-69. Looks like some misinformation to me. The first 69 pages are about the FHFA's stance on appraisals and how great AVM's are. Unreal.

    Some quotes:
    Appraisal by an individual trained in local markets could be augmented, if not completely replaced, by a modern version of “computerized mass appraisal,” relying upon simple statistical measures (e.g., hedonic models of house values) and a large sample of house sales, and firms specializing in that phase of the process grew and thrived during the past decade.

    A theoretical paper by Shiller and Weiss (1999) illustrated the application of statistical or “Automated Valuation” models (AVMs) to mortgage underwriting and to the limitation of mortgage portfolio losses due to default. The key insight of the Shiller-Weiss analysis was the explicit linkage between lender profitability and the loan-to-value (LTV) ratios of loans, permitting the probability distribution for an appraisal to be summarized by the profitability of the underlying loan. Those ideas were quickly incorporated into the practical world of mortgage underwriting (see, for example, Elizabeth Mays’ Handbook of Credit Security, 2001), and a variety of competing proprietary real estate valuation systems flourished.

    Decreased appraisal quality (that is, over-appraisal of a property relative to a hedonicbased estimate) was significantly related to default, while under-appraisal had little effect. The authors also found that errors resulting from estimating collateral values by interpolation using a price index for the state (the Office of Federal Housing Enterprise Oversight [OFHEO] index6 for Alaska) were quite large. The authors provided some sensible prescriptions for lenders, suggesting that the latter may want to compare appraisal information with statistically-based measures in a routine way.

    To some extent, the fact that a buyer is willing to pay $X for a house sets $X as the market value, rendering an appraisal somewhat superfluous.



    :new_2gunsfiring_v1: :new_2gunsfiring_v1: :new_2gunsfiring_v1: :new_2gunsfiring_v1:


    Tip: Control F for search and input apprais to search the document


    FHFA housing goals : http://www.fhfa.gov/webfiles/15150/10-30-09 Annual Housing Report.pdf
     
    Last edited: Oct 30, 2009
  4. Tom Watson

    Tom Watson New Member

    0
    Oct 11, 2009
    Professional Status:
    Appraiser Trainee
    State:
    Oregon
    I hope this doesn't get buried, I would really like others opinions on this

    EDIT: Mike!! You beat me to it lol
     
  5. LI-Appr

    LI-Appr Senior Member

    0
    Nov 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    God Bless First Amer and Core Logic. Take both of them add a little water anf Presto. You got a Value!!
     
Thread Status:
Not open for further replies.

Share This Page