The Treasury Department is planning more changes for the way homes are financed. The changes will be designed to ensure that public tax dollars are no longer used to subsidize private profits within the public/private mortgage giants Fannie Mae and Freddie Mac. Standards used to assess capital and underwriting standards will be re-evaluated to avoid excessive risks. Consumer protections will be strengthened.
Fannie and Freddie buy residential mortgages from private banks. This frees up bank capital so it can be lent out again. Since the federal government too over the institutions in 2008 they have received $150-billion of public aid. They have recently requested another$3.3-billion between them.
Many questions remain about what changes will be made. Still strongly debated is whether public or private control does a better job of pricing mortgage default risk. Also on the table is whether the present mish-mash of combined public/private control at Fannie and Freddie is viable at all.
Mortgage loan applications and interest rates both fell again last week. Applications to refinance fell 10.8% from a week earlier and applications to purchase a home fell 0.4%. 30-year fixed-rate mortgage interest declined to 4.47%. 15-year fixed-rate mortgage interest went down to 3.96%.
Trulia.com reported sellers still lowering asking prices in August. 26% of listed homes reduced the price by an average of 10%. That is almost $34,000 per home and adds up to $29-billion of value nationally.
Specifically to the Tampa Bay area, foreclosures increased again in August. Pasco county’s foreclosures rose 60% over the previous year. Hillsborough county saw a 30% increase. Pinellas county foreclosures rose by 10%. Florida as a whole saw the number of new foreclosures decrease by 9%. Nationally, Florida is second only to Nevada in total number of foreclosures with nearly 57,000 new filings. Florida accounted for 17% of all foreclosures nation-wide. These statistics mean that one of every 155 Florida homes received a foreclosure notice in August.
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