THE BASIS POINT

Fannie & Freddie Own 191,000 Homes & Chart Of Bank-Owned Homes.

 

Fannie & Freddie Own More Than 191k Homes
Fannie and Freddie have already taken back nearly as many homes in the first half of 2010 as they did during all of 2009! F&F owned more than 191,000 homes at the end of June, double the year-earlier total, according to the WSJ. That number will grow because they are taking back homes faster than they sell them, and in turn have warned lenders who are taking too long to reclaim homes once they have determined that the home is vacant or once they have exhausted foreclosure alternatives that they need to do more to dispose of these assets. Once they take homes back, Fannie and Freddie must not only cover the utility bills, attorney’s fees, and property taxes, but they are also relying on thousands of real-estate agents and contractors to rehabilitate homes, mow lawns and clean pools. Fannie took a $13 billion charge during the second quarter just on carrying costs for its properties. The costs of managing those homes are adding up, but as you’d expect F&F, along with REO departments of large investors, reluctant to slash prices and dump lots of homes at big discounts. According to the article, Fannie is testing an effort in Chicago where it will rent vacant foreclosures rather than list them for sale.

Also, here’s a chart breaking down which institutions own homes they’ve taken over. The Private Label MBS section is notable. No wonder there are still so few jumbo mortgage options.

Jobless Claims, And More On Post-Fed Rate Declines
Based on mortgage bond performance since the Fed meeting, it is almost as if the global markets act like the FOMC implemented a new round of quantitative easing, rather than suggesting that they would implement a new round if needed. The price of gold continues to make headlines – not a great sign for our economy (although the price of it is near historical averages for an ounce buying barrels of oil). The 2-yr hit a new low yield recently, near .4%, but foreign demand for Treasuries continues to be robust. Heck, the 6-month T-bill is down to .19%. MBS’s, and in turn rate sheet prices, by the end of yesterday had worsened about .125 and $2.3 billion in MBS’s traded. This morning we’ve already had Jobless Claims, up 12k to 465k last week. Continuing Claims also rose. These numbers, indicating further weakness, served to push stocks down this morning, and to lower rates. The 10-yr is back down to 2.48%, and mortgages are better .125-.250, depending on where the investor priced yesterday.

 

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