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23 Jul 09 Fed Chief Talks Mortgage Rates and More

Today on Capitol Hill, Fed Chairman Ben Bernanke continued his testimony before Congress and is taking a lot of heart from many of the Senators are questioning some of his past action and future plans.  The Fed chief reiterated his stance that mortgage rates would remain low for the near future in an effort to stimulate the struggling housing sectors across the nation.

Many Senators, both Democrats and Republicans alike are questioning his prior handling of the subprime mortgage debacle, the financial crisis and his failure to act in a timely manner to avert this crisis, his balking at independent audits of his actions and his apparent belief that the Feds should have even more power than they have now.  Congress and the Obama Administration are not subject to home foreclosures, charge offs or bankruptcies.

When Wall Street gets nervous, mortgage interest rates tend to benefit and that is the case today. As investors sell off stocks and buy bonds, mortgage rates do well. There is very little change from the close of business, as regards mortgage rates today, but no news is good news. We saw rates drop substantially yesterday, close to the lows we saw earlier this year. 

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03 Feb 09 Fed Agrees to Buy $500 Billion in Bad Credit Mortgage Securities

The Federal Reserve agreed to buy $500 billion in bad credit mortgage securities guaranteed by Fannie Mae and Freddie Mac that will ensure loan modification opportunities for millions of distressed homeowners.

The Obama administration is developing proposals to help rescue the banking system that could cost taxpayers hundreds of billions of dollars beyond the $700 billion bailout Congress already has approved. Details are still being worked out. But the administration is looking to spend hundreds of billions more to address the foreclosure crisis, help banks get out from under weighty bad assets and expand liquidity programs. Looming above these is a proposal to set up a federal bank — dubbed a “bad bank” — that would buy troubled assets clogging financial institutions’ balance sheets. This would free the institutions to lend money and would entice wary investors back into the market, proponents say.

But the government will have to commit far more money than policymakers were discussing even a few weeks ago. “I think we’re talking hundreds of billions of dollars,” said Brian Gardner, an analyst with the research firm Keefe, Bruyette & Woods. “I don’t think there’s anyone who doubts the administration will be going back to the Hill for more than the $350 billion” recently released from this fall’s $700 billion bailout package.  The International Monetary Fund wrote in a report Wednesday that home loan losses from banks in the U.S. and Europe already have topped $1 trillion and could reach $2.2 trillion. At that rate, the banks will require “at least half a trillion dollars” to remain solvent, the report says.

Federal Deposit Insurance Corp. Chairman Sheila Bair has mentioned the “bad bank” proposal in a series of interviews as one option the government should consider. By purchasing bad assets that banks can’t sell now, the government would set prices for them. This could cost the banks dearly in write-downs. But it also could give investors clarity about the relative strength of the financial institutions. That, in turn, could encourage those on the sidelines to begin investing again. “Buyers are going to say, ‘Wait a minute, these are valuable assets; we just don’t know how to price them,’” said Travis Larson, a spokesman for the Securities Industry and Financial Markets Association. “Now, many of these toxic assets aren’t toxic anymore, because in fact, the market value has gone up as buyers re-enter the market.” Homeowners need loan modifications and banks need insurance money to re-write mortgage loans for distressed borrowers who are delinquent on their loans.

Bank stocks surged Wednesday on investor expectations about the proposed plan to purchase assets. Wells Fargo & Co. soared 31 %, Citigroup Inc. 19 % and Bank of America 13 %. “It’s pretty great news for pretty much all banks, especially the big ones,” said David Stepherson, portfolio manager at Hardesty Capital Management. Administration officials said they expect Treasury Secretary Timothy Geithner to unveil his plans for a new financial industry rescue next week.

House Financial Services Committee Chairman Barney Frank, D-Mass., is interested in Geithner’s plans for spending the second $350 billion of the existing bailout, his spokesman said.”Because we released this money as a result of congressional action, we would like very much to know what it’s going to be used for, and what the priorities of this administration will be,” said Frank spokesman Steven Adamske. Frank has called for spending tens of billions of the money to address the foreclosure crisis.

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15 Dec 08 Obama Announces Shaun Donovan to be HUD Secretary

President-elect Barack Obama has named a former commercial mortgage executive as his choice to head the U.S. Department of Housing and Urban Development. This will be the second term at HUD for the nominee.

 

In a weekly radio address Saturday, Obama announced his nomination of Shaun Donovan as HUD secretary, according to a transcript of his prepared statement. Donovan currently serves as commissioner of New York City’s Department of Housing Preservation and Development.  The HUD nomination is a more important nomination than most years, because the HUD secretary is sure to play a key role in cleaning of the mortgage industry in hopes of ending the foreclosure crisis.  Get the latest mortgage news online.

httpv://www.youtube.com/watch?v=11gmqODMX44

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