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What We're Reading: November 8

Throughout the week, the BPC Housing Commission will highlight news articles that address critical developments in housing policy. Any views expressed in the content posted on this forum do not necessarily represent the views of the Commission, its co-chairs or the Bipartisan Policy Center.

Finding more flaws in HUD’s accounting of HOME program

By Debbie Cenziper

The Washington Post

“Launched two decades ago, the HOME program provides federal money to local housing agencies, which subsidize developers willing to build or renovate homes for the poor. Over the years, HOME funding has been used to produce thousands of successful rental units and homes for purchase by low-income buyers. Advocates say the money is crucial to cash-strapped cities struggling to provide affordable housing. “But The Post, using publicly available data, found in May that nearly 700 current projects showed signs of being delayed, either because they were launched more than five years ago, had stopped drawing federal money or faced other obstacles identified by local housing agencies.” Read more here.

[Housing Commission Blog]

To Fix Housing, See the Data

By Joe Nocera

The New York Times

“Housing activists love principal reduction because they tend to see it as a just solution to an unjust situation — it’s a way of making the banks pay a real price for their sins during the subprime madness while allowing people to keep their homes. Conservatives, on the other hand, hate principal reduction. They believe that borrowers who made poor decisions by taking out mortgages they could never afford have to take responsibility for those decisions. If that means foreclosure, so be it.” Read more here.

Should Fannie, Freddie Write Down ‘Underwater’ Mortgages?

By Nick Timiraos

The Wall Street Journal

“Why won’t Fannie and Freddie write down loan balances? There are three broad reasons. First, the firms guarantee $5 trillion in mortgages, of which around 20% are underwater. But the vast majority of those underwater mortgages—around 87% for Freddie Mac—are current. The companies are reluctant to write down loan balances because of a concern that will create a moral hazard that induces other borrowers to default.” Read more here.

Freddie Mac: 82% Of Refinancings Avoided Higher Debt In 3Q

Dow Jones Newswires

“The majority of U.S. homeowners who refinanced their mortgages either maintained or reduced their mortgage debt in the third quarter, according to a recent report from Freddie Mac (FMCC). The latest data are another sign that many borrowers are still using their incomes to pay down debts after the economic downturn took a toll on many overleveraged consumers. Low interest rates are also making the net savings from refinancing more attractive. According to the report, 44% of first-lien homeowners maintained the same loan amount, while 37% reduced their principal balance by paying-in additional money at closing. This compared with 51% of homeowners who maintained their same loan amount and 26% who reduced their principal balance in the second quarter.” Read more here.

Home Values Flat for the Quarter But Down on Yearly and Monthly Basis

By Stan Humphries

Zillow Real Estate Research

“Despite recent economic turmoil around the European debt crisis, dragging levels of domestic consumer confidence, and high unemployment and negative equity, home values have remained essentially flat over the last quarter. According to the Q3 Zillow Real Estate Market Reports, released today, home values fell only 0.2 percent from the second to the third quarter of 2011. On a monthly basis, home values fell 0.09 percent between August and September, a higher rate than the 0.08 percent decline between July and August (Figure 1). This is in line with our previous forecast, which anticipated continued declines as we progress towards the bottom.” Read more here.

Elijah Cummings, the Homeowner Crusader

By Joseph Williams

POLITICO

“Every few months, Cummings oversees “foreclosure prevention” seminars in his district, one-on-one meetings between frustrated homeowners and often elusive lenders. He has grilled administration officials like Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan. And he’s helped push Edward DeMarco, acting director of the Federal Housing Finance Administration, overseer of mortgage giants Fannie Mae and Freddie Mac, to use his power to keep more roofs over people’s heads.” Read more here.

2011-11-08 00:00:00

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