Fannie And Freddie

WASHINGTON - Pressure is mounting on a key federal regulator to allow Fannie Mae and Freddie Mac to reduce loan principal amounts for struggling homeowners, after disclosures that a plan to do that was scuttled even though it was aimed at saving taxpayer money and helping to heal the housing market. Fannie Mae officials in 2009 supported principal reductions in some cases and crafted a pilot program that would have cost only $1.7 million to implement but could have provided more than $410 million worth of benefits to homeowners, according to internal company documents cited by two House Democrats.

WASHINGTON - Taxpayer-owned Fannie Mae and Freddie Mac are back in the black, but it's unlikely to keep the nation's housing finance giants from being dismantled. Boosted by the recovery in the housing market, Fannie Mae on Tuesday reported a record annual profit of $17.2 billion for last year, a sharp turnaround from a $16.9-billion loss in 2011. In February, Freddie Mac reported net income of $11 billion, compared with a loss of $5.3 billion the previous year. Their first annual profits in six years also have helped the companies reduce the balance of the combined $187.5 billion they received in a government rescue in 2008 when they hovered near bankruptcy amid the crash in the subprime housing market.

Lenders would have to originate mortgages with at least a 20% down payment if they want to repackage the loan to sell to other investors without keeping some of the risk on their books, according to a proposal that U.S. bank regulators endorsed Tuesday. The Federal Deposit Insurance Corp. board and the Federal Reserve agreed to seek public comment on the proposal, which is intended to restore lending discipline and define the safest form of mortgages that can be completely resold to other investors.

Almost three years after a series of government bailouts began, what many feared would be a deep black hole for taxpayer money isn't looking nearly so dark. The brighter picture is highlighted by the outlook for the bailouts' centerpiece ? the $700-billion Troubled Asset Relief Program. "It's turning out to cost one heck of a lot less than what we all thought at the beginning," said Ted Kaufman, a former U.S. senator from Delaware who heads the congressionally appointed panel overseeing TARP.

With sweeping financial reform legislation enacted, the White House and Congress now must focus on fixing the mess created by the failed housing finance giants Fannie Mae and Freddie Mac. It's a complex challenge with high stakes for taxpayers and the struggling real estate market. On Tuesday, key administration officials conferred with about 200 industry executives, affordable housing advocates and other experts about the role the government should play in the nation's housing finance system.

In the latest government effort to recoup mortgage meltdown losses, the federal regulator for Fannie Mae and Freddie Mac sued 17 banks over mortgage bonds that were sold to the giant home-finance companies during the housing boom and proved to be toxic. The lawsuits, filed late Friday in New York federal and state courts and Connecticut federal court, for the most part accused the banks of negligence in misrepresenting the risks embedded in securities backed by subprime mortgages and other risky loans.

  The Obama administration is moving to dramatically downsize the government's role in the mortgage business, saying taxpayers can no longer afford the cost and the risk of subsidizing home loans on a grand scale. The administration's plan calls for gradually shutting down Fannie Mae and Freddie Mac, which now control nearly half of the $11-trillion mortgage market. The two companies have cost taxpayers $150 billion since they were seized by federal regulators in 2008. Real estate industry groups attacked the proposal, saying it would make it tougher for average Americans to get home loans and thereby weaken the housing market.

WASHINGTON - A little-known career bureaucrat temporarily filling a key government job has emerged as the person with the most impact on the nation's battered housing market - and is rapidly making enemies. As the regulator over Fannie Mae and Freddie Mac, which own or back 60% of the nation's mortgages, Edward J. DeMarco is considered by a growing number of people to be the single biggest obstacle to the housing market recovery for opposing the use of a major foreclosure prevention measure.

Bank of America Corp. is feeling billions of dollars in fresh pain from its 2008 acquisition of home-loan specialist Countrywide Financial. Implicitly acknowledging that it overpaid significantly when it bought the Calabasas lender for $4.2 billion in stock, Bank of America said Monday that it was slicing $2 billion off the value of that investment on its books. The Charlotte, N.C., bank also disclosed that it agreed to pay Fannie Mae and Freddie Mac a total of $2.8 billion to settle claims of misrepresentations on billions of dollars in loans that went sour after Fannie and Freddie bought them from Countrywide, which was once the No. 1 home lender.

Will the move to dismantle Fannie Mae and Freddie Mac mean the end of the 30-year fixed-rate mortgage as we have come to know it? Many housing proponents say that it will. Without the government's backing, they contend that the 30-year mortgage will become a relic of a bygone era when mortgage money was cheap and easy to come by. But others say America's most popular home loan will still be available — if you can afford it. Before digging deeper into the debate, a short primer: Although the long-term fixed-rate mortgage was born with the Federal Housing Administration — the government agency established in 1934 to help stabilize the then-shaky housing market — it was taken to its greatest heights by Fannie and Freddie, the two government-chartered institutions that were created years later to keep the money flowing for home loans.