A new paper issued by a robust group of government and economic leaders in the real estate economy have outlined a proposal to merge Fannie Mae and Freddie Mac into a new government-owned corporation. Currently both organizations are government-regulated, but privately owned. According to the paper the goal of the proposal is to overhaul the mortgage lending process to accomplish the following: “This would facilitate a deep, broad and competitive primary and secondary mortgage market; limit the taxpayer’s risk to where it is absolutely necessary; ensure broad access to the system for borrowers in all communities; and ensure a level playing field for lenders of all sizes.” The new government-owned corporation to be name the National Mortgage Reinsurance Corporation would continue to provide the same services of providing federal guarantee on mortgage-based securities as well as issuing affordable loans to consumers. According to the paper: “The NMRC would purchase conforming single-family and multifamily mortgage loans from originating lenders or aggregators, and issue securities backed by these loans through a single issuing platform that the NMRC.” The paper suggests that the new entity would be able to encourage more investment by charging lower fees than the current system when investors are more willing to take on risk, but higher fees when investors are more cautious, the Journal reported. The NMRC would differ greatly from its predecessor organizations. “The NMRC would differ from Fannie and Freddie, however, in several important respects. It would be required to transfer all non- catastrophic credit risk on the securities that it issues to a broad range of private entities. Its mortgage-backed securities would be backed by the full faith and credit of the U.S. government, for which it would charge an explicit guarantee fee, or g-fee, sufficient to cover any risk that the government takes. And while the NMRC would maintain a modest portfolio with which to manage distressed loans and aggregate single- and multifamily loans for securitization, it cannot use that portfolio for investment purpose.” As some of you may know, I am on the Board of Directors of the National Small Business Association. From my recent experiences working with this group and lobbying on the Hill, I would highly doubt that a change as fundamental as this will be accomplished with our current administration and Congress. I would love to get your opinion about the inherent risks and rewards of this proposed solution.
Dale Ross, head of RPR published a very interesting article today that I thought would share with you about the company’s efforts to have a positive impact on the mortgage industry. One of the key goals of RPR is to help improve the accuracy of the valuations of properties by providing more comprehensive, accurate and up to date information. Here it is: Today, RPR is available to the majority of NAR’s REALTOR® members. In 2011, RPR began to place greater focus on the communications and relationships needed to engage the entities responsible for mortgage liquidity. With the support of NAR’s Washington D.C. based Legislative Staff, RPR has been participating in numerous meetings with various governmental agencies and financial institutions. The purpose is to provide them with advanced analytics and valuation tools created by RPR to reinforce confidence in property valuations. This has the potential to bring stability to the market and thereby provide more capitol to the housing industry. Response to our plan has been overwhelmingly positive. To highlight the level of interest and dialogue between the federal government and the NAR regarding RPR’s potential value, I would like to share some recent testimony by one of our NAR members. On June 28, 2012, Frank Gregoire a REALTOR® from Naples Florida, and 2011 Chair of NAR’s Appraisal Committee provided testimony before the United States House of Representatives Committee on Financial Services Subcommittee on Insurance, Housing and Community Opportunity. This hearing was specifically on Appraisal Oversight regarding The Regulatory Impact on Consumers and Businesses Regarding RPR and the Realtor Valuation Model® (RVM®), Frank testified: “The unique value of RPR’s AVM is that it incorporates real-time market information from more than 400 Multiple Listing Services (MLS) nationwide, comprising approximately two-thirds of NAR’s membership. Much of this MLS data contains more than 10 years history on most properties. RPR’s AVM, known as the Realtors Valuation Model (RVM), is more accurate than most other AVMs when tested on both the national and local levels. Incorporation of MLS data combined with accuracy allows the RVM to offer the strongest value proposition in today’s market.” He also stated: “Through RPR, REALTORS® have access to comprehensive tools to improve comparable property selection to determine the tradeoff between days on market and price. This also allows for improved disposition of distressed properties based on local trends and connections to REALTORS® equipped to sell these unique properties. RPR is an investment in […]