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"Individuals used to own two-thirds of apartment properties with five to 24 units. But from 2001 to 2015, that share fell to two-fifths, and researchers from Harvard University's Joint Center for Housing Studies found that as large, Wall Street-backed investors purchased the buildings, they raised rents more quickly.
"Given that units in these structures are generally older and have relatively low rents, institutional investors may consider them prime candidates for purchase and upgrading. These changes in ownership have thus helped to keep rents on the climb," researchers wrote.
Wall Street investors owned virtually none of America's single-family homes a decade ago but now own about 2 percent of them, according to the Federal Reserve.
Redfin senior economist Sheharyar Bokhari said small landlords who are struggling to keep up should at least be able to find buyers for their properties. In the second quarter alone, investors - rather than traditional home buyers - dropped a record $48.5 billion to acquire 67,943 homes, the highest quarterly figure on record, according to a recent Redfin report. Investors bought 1 in 6 homes sold in the second quarter, up from a typical 1 in 10."
Source: article in todays WP
https://www.fanniemae.com/research-and-insights/perspectives/helping-renters-unlock-door-homeownership
Perspectives Blog
Helping Renters Unlock the Door to Homeownership
August 11, 2021
Hugh Frater
Chief Executive Officer?
Owning a home has long been one of the most effective ways to build wealth. But for many lower-income renters – especially for Black families and other people of color – the leap from renting to owning can seem nearly impossible. For many, one of the biggest obstacles to qualifying for a mortgage is insufficient credit history.
Today, Fannie Mae is taking an important step forward to change that.
We are making a groundbreaking update to our automated mortgage underwriting system, Desktop Underwriter®, to allow lenders to consider a history of recurring rent payments in assessing eligibility. It seems obvious that if someone is paying rent consistently it’s likely they could and would pay their mortgage consistently, too. Yet we believe this will be the first time any large-scale automated mortgage underwriting system will leverage electronic bank statement data to consider positive rent payment history.
This is one important step in correcting housing inequities and encouraging the housing system to develop new ways to serve all of society safely and fairly. While credit history is a key element in evaluating a borrower’s ability to make a mortgage payment, building credit in the United States is not an equitable endeavor. Most ways to establish credit involve student loans, credit cards, or parental co-signers. But, people of color are statistically less likely to use these forms of credit to manage their financial lives.
As a result, people of color are disproportionately represented among the 20% of the U.S. population having little to no established credit history. Our National Housing Survey® found that Black consumers identify insufficient credit score or credit history as their single biggest obstacle to getting a mortgage – and do so at a much higher rate than white consumers (29% to 18%).
“For many households, rent is the single largest monthly expense. There is absolutely no reason timely payment of monthly housing expenses shouldn’t be included in underwriting calculations. With this update, Fannie Mae is taking another step toward understanding how rental payments can more broadly be included in a credit assessment, providing an additional opportunity for renters to achieve the dream of sustainable homeownership.” – FHFA Acting Director Sandra L. Thompson
We decided to tackle this challenge through the lens of innovation. Starting September 18, Fannie Mae will enable lenders, with the borrower’s permission, to use bank account data to identify 12 months of consistent rent payments. This technology innovation is a “win-win” for renters looking to own a home. That is, there is no way it can hurt their credit score, and it will only be used to help eligible homebuyers qualify for mortgage credit. Any records of missed or inconsistent rent payments identified in the bank account data (and not already reflected on the applicant’s credit report) won’t negatively affect their ability to qualify.
What could this change mean? In a recent sample of applicants who had not owned a home in the past three years and did not receive a favorable recommendation through Desktop Underwriter, 17% could have received an Approve/Eligible recommendation if their rental payment history had been considered. We will do all we can to help lenders and consumers take advantage of this positive change to DU.
Today, the rate of Black homeownership is roughly 30 percentage points lower than for white households, which translates to almost 4.7 million fewer homeowners. This gap has stood firm since the early 1900s, and it stems in part from historically racist government policies that disadvantaged Black Americans and stymied their ability to build wealth and economic stability. It has been estimated that if homeownership rates were the same for all races, the wealth gap between Black and white families would be reduced by 31 percent.
Fannie Mae is committed to doing all that we can to address these inequities. This change demonstrates the potential of using technology and data to remove systemic barriers to mortgage finance. It is one step toward creating a better, fairer housing market for everyone.
Hugh R. Frater
CEO, Fannie Mae
The government has been a bad actor here, just a shame we haven't had the chance yet to have a trial on the merits where the full sunshine will show just how badly these government actors behaved...
“We think there’s going to be continued institutional capital flowing into this sector,” Allan Swaringen, chief executive officer of JLL Income Property Trust, said in an interview. “Getting ahead of capital is always an attractive thing.”
https://finance.yahoo.com/news/jll-sponsored-fund-buys-stake-140000431.html
"The changes to Fannie Mae's underwriting system, which are scheduled to go into effect Sept. 18, will allow it to automatically identify rent payments from applicants' bank-account information.
Twelve months of consistent rent payments could help applicants qualify for mortgages, but a history of missed or inconsistent payments wouldn't penalize an applicant, Fannie Mae said."
https://www.wsj.com/amp/articles/fannie-mae-aims-to-make-home-loans-more-accessible-11628686801
Let's see, in the last 51 days, common has dropped about 50%, at what point will the shorts greed turn to fear and they will want to buy and cover? We won't get any numbers on changes in institutional holdings until sometime in the 4th Q for positions trimmed or liquidated in the 3Q...
"That directive reflected
longstanding Trump Administration policy and echoed Secretary Mnuchin’s
comments in one of the first interviews he gave after being nominated to head the
Treasury Department in 2016: “We’ve got to get Fannie and Freddie out of
government ownership. It makes no sense that these are owned by the government
and have been controlled by the government for as long as they have.” Mnuchin: Get
Fannie Mae, Freddie Mac out of government ownership, FOX BUSINESS NEWS, at
00:06 to 00:16 (Nov. 30, 2016), https://bit.ly/3iKDZUc."
Telling it like it is...
But will the federal courts continue on their, THE KING CAN DO NO WRONG projectory?
"After the Supreme Court’s ruling in
Collins, the proper remedy for Plaintiffs’ removal claims is to order Defendants to
do what would have been done but for the unconstitutional removal restriction."
https://www.housingwire.com/articles/on-time-rent-now-counts-in-fannie-mae-underwriting/
"Thompson has already made clear in her short tenure as head of the FHFA that expanding credit to low-income and minority communities is paramount. The Biden administration has also made clear it is committed to improving racial equity and taking steps to reduce the racial homeownership gap.
Less clear, however, are the specific policies that will accomplish those lofty goals.
Legislation to provide down payment assistance, which housing advocates say would help borrowers of color who do not have the benefit of generational wealth, is fighting its way through Congress. In July, a task force, co-chaired by former United Nations Ambassador Susan Rice and Housing and Urban Development Sec. Marcia Fudge, started to take a hard look at potential racial bias in the appraisal process.
Those efforts will take time to bear fruit. But in the immediate term, the impact of considering rental payment history in making credit decisions could be profound. In a study of recent unfavorable recommendations from its desktop underwriting system, Fannie Mae found that 17% of those would have been approved, had their rental history been considered."
https://www.housingwire.com/articles/mortgage-applications-up-2-8-as-jobs-numbers-rise/
https://www.housingwire.com/articles/down-payment-assistance-part-of-3-5t-infrastructure-plan/
As the federal government tightens and lengthens the 13 year "conservatorship", the exodus of executive talent will continue in earnest and the gses will be HUD II and HUD III. I think the current administration would welcome that outcome, don't you?
Strong demand still for Housing, not so much for sp of the gses:
https://www.cnbc.com/2021/08/11/rental-bidding-wars-heat-up-as-economy-improves-in-tight-housing-market.html
https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1
It's practically lawless behavior by the Executive branch, BUT BEING LAWLESS WITH THE GSES SEEMS TO BE THE MODUS OPERANDI OF THE EXECUTIVE BRANCH OF THE US GOVERNMENT FOR THE LAST 13 YEARS!
That's exactly what a sharp conservator would do right now, but da gubmint conservator ain't sharp and it's not really a conservator!
Liquidation Preference sounds like it would only apply to Liquidation but if the courts don't stop the Executive and/or Legislative branches they seem like they will shake down the twins for every last dime.
The latest haul will be from the Legislative branch with an estimated $21B from extending the 10bp TPCA for ANOTHER 10 YEARS to pay for "infrastructure"...
I would like to think that the US would protect property rights but the Eviction moratorium, the waiving of the patent protection of the inventors of the Cov19 vaccine, and of course the SCOTUS saying that the federal government can Nationalize the gses under HERA are all examples of the erosion of property rights.
In Collins, the SCOTUS said that HERA created a new type of conservator that could act in ways that benefit the FHFA or the public it serves. They also ruled that the original structure of the FHFA was unconstitutional and allowed the POTUS to fire the FHFA Director and the Collins Plaintiffs may have claims under the unconstitionally insulated FHFA Director issue.
The Takings Case is another issue not litigated fully yet.
On the Eviction moratorium, Britt Kavanaugh said HE thought it was unlawful BUT the other Justices didn't say anything about the legality of the ban.
The new eviction moratorium will likely buy some time to distribute the $45B allocated by Congress. But the eviction moratorium seems facially like another example of government overreach.
More institutional money buying single family homes...
https://www.cnbc.com/2021/08/09/how-to-invest-in-single-family-rentals-without-buying-a-house.html
The 5th Amendment in the Bill of Rights in the US Constitution? That's the theory at least, let's see if the Federal Courts can figure it out...
Here's another company whose business was just Nationalized (usually it's Banana Republics or Dictatorship Countries NOT the USA, but WE ARE LIVING IT!) from todays WSJ: "Canada's Centerra Gold Inc. invested more than $3 billion over nearly three decades to turn a remote gold prospect in Kyrgyzstan into a prosperous gold mine. Then in May, the mine was taken over by authorities in the former Soviet republic.
Officials from Kyrgyzstan's secret police arrived at homes of local mine managers to obtain computer passwords, confidential documents and keys to the mine and the head office of Centerra's wholly owned subsidiary Kumtor Gold Co., people familiar with the matter and court documents said.
Mining and legal experts say the expropriation of one of Central Asia's largest gold mines -- which had accounted for about a tenth of Kyrgyzstan's economic output -- is one of the most brazen moves in recent years by a country to assert control over valuable natural resources.
Centerra is far from the only mining company that has tangled with governments in recent years. Gold or copper mines in Tanzania, Papua New Guinea, Mongolia, Indonesia, Greece and South America have been stalled or threatened as local governments pushed for more taxes, royalties or larger stakes.
Mining giant Barrick Gold Corp., for example, settled a standoff with Tanzania in 2019 by paying the African country $300 million and sharing ownership at three local gold mines. Tanzania's president at the time said he was waging "economic war" against miners who weren't paying sufficient royalties and taxes.
Many of the moves have been driven by a rise in commodity prices and, in the case of the Kyrgyzstan mine, rising social and economic strains caused in part by the coronavirus pandemic.
Robert Cohen, vice president and portfolio manager at Canada-based 1832 Asset Management LP, said he is avoiding stocks in Latin American countries such as Peru and Chile for the first time in decades, because governments are demanding higher taxes and royalties from miners.
Mr. Cohen had steered clear of Centerra's stock before the seizure because "a stomach of steel" was needed given past tactics used by Kyrgyzstan against the miner, he said. A former Centerra executive was detained in Bulgaria for about three months several years ago after the Kyrgyzstan government issued an Interpol notice alleging he was involved in corrupt activities. The executive was released when Kyrgyzstan failed to produce documentation to support its extradition request, Centerra's lawyer told a New York judge in July.
Four months before the Kumtor mine was seized, Sadyr Japarov, a nationalist politician and advocate of its nationalization, was elected president. His government said it took control of the mine after alleging Kumtor failed to follow local environmental laws to protect mountainous terrain near the property.
Scott Perry, Centerra's chief executive officer, disputed that laws were breached. He said the mine expropriation was instead motivated by rising gold prices. "Clearly this is all about economics. You have a high gold-price environment, and they want a better economic deal. The playbook here is a premeditated seizure," he said.
Salavat Ashirbekov, director of the Center for Court Representation of the Kyrgyz Republic, said Centerra's accusations "were stated in the absence of evidence, are far-fetched and do not correspond to reality."
The expropriation of Centerra's mining subsidiary is one of a number of recent unorthodox moves in Kyrgyzstan. These include an alleged attempt to divert a payment owed by a London trading company, a unit of StoneX Group Inc., to Kumtor Gold. In another instance, a court in Kyrgyzstan issued an order forbidding U.S. and Canadian lawyers from representing the mine in North American court proceedings.
Mark Bristow, CEO of Barrick, said after years of operating mines in Africa and elsewhere, he favors giving nations a fairer stake in local resource production so the interests of governments and foreign operators are more closely aligned in mining operations that can continue for decades.
This year Barrick agreed to give Papua New Guinea and local entities a 51% equity stake in a gold mine that was shut last year when the country refused to renew its mining license in a push for more benefits. The country's prime minister, James Marape, described the deal in April as a historic step that would set a precedent for future projects.
When countries take such extreme steps as Kyrgyzstan, Mr. Bristow said, the local economy suffers in the long run because foreigners are less willing to invest or share technology and expertise.
"It is disturbing to witness this kind of behavior," Mr. Bristow said. "This clearly isn't about sharing, this is about taking the whole thing.""
I'm sure that large institutional holders who are trimming or liquidating their positions aren't doing it quickly but incrementally. It just seems to me that daily trading volume has been elevated for some time now.
Let's see, at $1/share I think Freddie has 620M shares outstanding multiplied by 5 (if you include the warrants) equals 3.1B outstanding shares. If normalized earnings are $10B to $12B/year, that would equal $3 to $4/share in EPS.
Pretty sure some institutions are saying, bye bye on this investment, how low will she go? Hazardous a guess?
https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1
"Palmer’s companies allege that the moratorium — first put in place by Mayor Eric Garcetti as an emergency order, then approved as an ordinance by the City Council — violated the “takings clause” established in the 5th Amendment, which says private property shall not be taken for public use without “just compensation.”"
https://www.latimes.com/california/story/2021-08-09/apartment-building-owner-geoffrey-palmer-sues-los-angeles-saying-anti-eviction-law-caused-astronomical-losses?_amp=true
“The city orchestrated a regulatory regime designed to provide a compulsory and de facto rent forgiveness to be foisted on landlords throughout the city,” the lawsuit states.
A Garcetti spokesman did not immediately have a comment on the case.
Palmer has tangled with the city in court before. More than a decade ago, he persuaded a Superior Court judge to overturn the city’s “inclusionary housing” rules, which required that developers near downtown offer a specified percentage of affordable housing as part of their residential projects."
I think this one is 5% par...https://finance.yahoo.com/quote/FNMFO?p=FNMFO
I think the par is $100k BUT it is extremely thinly traded...
"34.4 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loans secured by those properties was no more than 50 percent of their estimated market value."
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q2-2021-u-s-home-equity-and-underwater-report/
https://www.attomdata.com/news/market-trends/figuresfriday/top-10-u-s-zip-codes-with-highest-shares-of-equity-rich-properties/
Interesting. They may just wait for the courts to resolve all the major litigation issues as I don't think a buyer(s) would bring in new money without knowing exactly what they are buying. IN THE MEANTIME THE GSES BUILD CAPITAL ON THEIR BALANCE SHEET with the caveat that the LP may or may not be reduced or eliminated...
I think in retrospect, the federal government should have distributed the $45B in rental assistance not the state and local housing authorities who have to develop brand new programs from scratch.
"We also significantly upgraded our quarterly house price forecast, as measured by the FHFA Purchase-Only Index. We now project FHFA’s index to increase by 14.8 percent in 2021 on a Q4/Q4 basis, up from our prior forecast of 8.0 percent. We expect house price growth in 2022 to decelerate but still register a gain of 5.4 percent. We slightly downgraded our forecast for second and third quarter total home sales, driven by a weaker short-term outlook for the sale of new homes largely due to continued supply constraints affecting homebuilders. This was partially offset by a modest upward revision to second quarter existing home sales based on incoming data. We now expect 2021 total home sales to increase by 3.8 percent from 2020, compared to 4.2 percent in our June forecast. For new construction, we forecast 2021 housing starts to be 17.7 percent higher than in 2020, up from a 17.2 percent gain previously, driven by an upgrade to multifamily starts. Due to a stronger house price outlook and a modestly lower interest rate forecast, our 2021 mortgage originations forecast was upgraded to $4.2 trillion, up from $4.1 trillion. Both purchase and refinance originations contributed to the upgrade. Our forecast of 2022 originations ticked up to $3.2 trillion from a prior $3.1 trillion."
https://www.fanniemae.com/research-and-insights/forecast/economy-transition-inflationary-concerns-mount
"We demand the government move now to cancel the rents and mortgages. We need to build a nationwide movement for housing justice -- Join us!"
https://www.canceltherents.org/
“My fear is that if we continue to extend these policies, they will eventually erode the confidence of investors and insurers, and imperil the integrity of the mortgage and real estate markets." https://t.co/umKyGubBaX
— Tim Rood (@tim_rood_) August 6, 2021
I was particularly troubled when the SCOTUS bought into the "King can do no wrong" theory of federal governmental powers and in essence denied the trial court the ability to determine whether or not the "Death spiral narrative" was valid. Disturbingly, the public record and publically available discovery information was ignored by the SCOTUS in their "analysis" of the nws.
I mean I understand the great deference given by federal courts to governmental actors but here a 13 year conservatorship that has resulted in the pilfering and nationalization of the private property of shareholders just has some surreal qualities about it.
I think the 5th Amendment Takings Clause cases have some legs and it will be interesting to see how all this plays out but it is going to take some time for the courts to work through alot of these issues and so long as the federal Judges continue to buy into whatever the government is saying it could be a very long time....
Let's let the dust settle from all the litigation prior to jumping to that conclusion... As Americans the US CONSTITUTION IS THE ULTIMATE LAW OF THE LAND AND PROTECTORATE OF OUR INDIVIDUAL LIBERTIES AND RIGHTS!
But could the federal courts do a run around on the US CONSTITUTION? Possibly, perhaps I should start brushing up on my studies of Marxism...
"Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win." Karl Marx
You see, I don't think PWC admitted to fraud, as I recall their was a major conflict of interest as the big 6 accounting firms had BOTH a business consulting contract AND were the certified Auditors! One the one hand these business consulting firms showed firms how to cook their books and the other hand as Auditors would give it their blessings...
Scary stuff! Many Americans have made the ultimate sacrifice to stop the spread of Communism and Facisism and here our own US GOVERNMENT HAS EFFECTIVELY NATIONALIZED OUR PERSONAL PROPERTY!