As the Federal Government scrambles to prop up Freddie Mac and Fannie Mae, investors have called it quits on the two companies. With their stock priceshovering around one dollar, The Hill is reporting that they are planning on de-listing from the New York Stock Exchange.

If these were true public companies, the phrase “Putting a fork in them” would apply, but as they government has committed to bailing them out Fannie and Freddie will continue to stumble around like drunken sailors.

It is a sad day for many investors though.

Fannie Mae and Freddie Mac, the bailed-out mortgage giants, are expected to remove their shares from the New York Stock Exchange (NYSE), a government regulator said Wednesday.

The two companies would need to take steps to shore up their share prices to meet stock exchange rules. The Federal Housing Finance Agency (FHFA) directed the companies to delist their shares.

“The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies,” said FHFA acting Director Edward DeMarco. via The Hill

by Tom Royce therealestatebloggers.com

NEW YORK (AP) — Home prices rose for the fifth month in a row in October, but the recovery is shaky with only 11 of the 20 metro areas tracked showing gains.

The Standard & Poor’s/Case-Shiller home price index released Tuesday edged up 0.4 percent to a seasonally adjusted reading of 145.36 in October from September. Without adjusting for seasonal factors the index was flat.

The index was off 7.3 percent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters. Many economists, however, are predicting a double dip in prices this winter as foreclosures increase and government support wanes.

“I’d be very surprised if we don’t go below the lows we hit this year,” Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning Washington think tank. “We still have a very glutted housing market.”

The index is now up 3.4 percent from its bottom in May, but still almost 30 percent below its peak in April 2006.

There are also wide variations from around the country. Prices have climbed for at least six months in a row in Denver, Washington, Minneapolis and San Francisco, for example.

“We saw an unusually low amount of inventory on the market,” which helped prices firm, said Frank Castaldini, an agent with Coldwell Banker in San Francisco.

Properties at the lower end — between $500,000 and $600,000 — also received multiple bids, partly due to a federal tax credit for first-time homebuyers, he said.

But in Chicago and Tampa, Fla., prices fell slightly from September. And there’s no sign of a bottom in Las Vegas, where prices have tumbled by more than 56 percent from their peak in April 2006.

“People hear prices are getting better, but they’re not here,” said Penny O’Brien, a real estate agent with Re/Max Experience in Las Vegas. “Unemployment has got people scared of purchasing.”

The tax credit didn’t make a big dent in the Las Vegas market either, O’Brien said, because many first-time buyers were elbowed out by all-cash investors.

Home prices play a key role in the economy. Homeowners feel wealthier when property values rise and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the banks than their houses are worth.

The positive trend in home prices and a better employment outlook helped raise the Consumer Confidence Index to 52.9 in December, up from a revised 50.6 the month before, the Conference Board reported Tuesday. While far below a 90 reading that would signify a solid economy, consumers’ outlook on jobs over the next six months reached its highest level in two years.

The federal government has stepped in with far reaching programs to create jobs and make homeownership more affordable.

Home price gains since the summer reflect the rush of homebuyers trying to close their deals before the original expiration date of a federal tax credit. The Nov. 30 deadline was extended last month to April 30.

Besides a credit of up to $8,000 for first-time buyers, Congress expanded the program to include homeowners who have lived in their current properties for at least five years. They can now claim a tax credit of up to $6,500 if they relocate.

The Federal Reserve is also buying up $1.25 trillion in mortgage-backed securities to help keep interest rates at historical lows.

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AP Real Estate Writer Alan Zibel in Washington contributed to this report.

J.W. ELPHINSTONE
Chicago Tribune

NEW YORK (CNNMoney.com) — Mortgage giants Fannie Mae and Freddie Mac have directed their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan time to work.

The Streamlined Modification Program, set to launch Dec. 15, enables delinquent borrowers to get a modified mortgage that lowers payments to no more than 38% of their gross incomes.

“By delaying these foreclosure sales, the nation’s servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new [program],” said Freddie Mac CEO David M. Moffett in a statement.

Freddie has told its servicers to immediately contact the 6,000 borrowers who already have auction sales or evictions scheduled for between the specified dates to tell them the sales are postponed. Fannie estimated that 10,000 of its borrowers will be affected. Borrowers facing eviction between Nov. 20 and Nov. 26 were not expected to get relief.

The foreclosure suspension affects only a small percentage of homeowners facing foreclosure over the next two months. Although Fannie and Freddie mortgages account for more than half of all mortgages, they have relatively few of the most risky subprime loans at the center of the foreclosure crisis.

“The vast majority of what’s going into foreclosure are not Fannie Freddie loans,” said Freddie Mac spokesman Brad German.

The Fannie, Freddie plan was unveiled on Nov. 11. Eligibility is determined by several factors: Homeowners must be 90 days or more late in their mortgage payments, owe at least 90% of their home’s current value, live in the home on which the mortgage was taken and have not filed for bankruptcy.

The mortgage rate could be lowered to as little as 3% for five years. After that, it would increase by 1 percentage point a year until it hits either the market rate or the original interest rate, whichever is lower.

Unlike previous federal efforts, participation by servicers is not voluntary.

Several major servicers — including Bank of America, JPMorgan Chase and Citigroup — have recently announced expansions of their foreclosure prevention efforts, which could aid nearly a million more borrowers.

Associated Press

WASHINGTON – The White House said Monday that the giant federal takeover of troubled mortgage giants Fannie Mae and Freddie Mac might have been prevented if Congress had acted on its recommendations for changing the system.

“It is exactly the kind of event we warned about and tried to prevent over the years,” White House press secretary Dana Perino said. “Remember that we have highlighted the systemic risk posed by Fannie Mae and Freddie Mac because of the very large role they play in housing markets and because of their business practices.”

She said that the White House has asked Congress “for years” to establish a strong independent regulator to oversee the institutions.

Perino also highlighted that the takeover will allow time for Congress and the next administration to determine the appropriate future role for the companies. She said their primary mission should be to increase the availibility and affordability of home mortgages.

“Whatever eventual longtime solution is decided for Fannie Mae and Freddie Mac,” Perino said, “it is crucial that there are reforms so they do not pose similar risks to our economy or the financial system again.”

President Bush said he is pleased with the action and believes “it will stabilize the markets.”

“I wouldn’t call it a bailout,” he said in an interview conducted Sunday with Fox News Channel’s Fox & Friends show, and set to air Tuesday. “I’d call it a stabilization.”

Perino said the nation’s “economy will not return to strong job growth until the housing correction is behind us.”

Perino was pressed repeatedly about how Bush — a fiscal conservative — could champion such a historic government takeover and intervention in markets.

“This is not action that we wanted to take. It’s action that we needed to take,” she replied.

Analysts were split on how much the takeover could eventually cost taxpayers although they all agreed the upfront costs will be substantial, possibly hitting $100 billion as the Treasury is called upon to bolster the capital cushions at both institutions. Perino said the administration is moving “to make sure that the taxpayers would be paid back first.”

“The goal is to prevent additional risk to the taxpayers,” she said.

July 30 (Bloomberg) — President George W. Bush signed into law legislation that helps 400,000 homeowners facing foreclosure and extends a lifeline to Fannie Mae and Freddie Mac.

Bush signed the measure at the White House shortly after 7 a.m., spokesman Tony Fratto said. Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Steve Preston and Federal Housing Administration Director Brian Montgomery were among those present.

“We look forward to putting in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac,” Fratto said.

The law is aimed at stemming foreclosures and halting a free-fall in housing prices by providing federal insurance for refinanced 30-year mortgages for homeowners struggling to make their monthly payments.

The measure also is designed to restore confidence in Fannie Mae and Freddie Mac by tightening regulations and authorizing the Treasury secretary to inject capital into the two biggest U.S. providers of mortgage money.

The measure passed the Senate July 26 and the House three days earlier.

The recession in the housing market, the worst since the Depression, along with higher fuel prices and a shrinking job market, is weighing on consumers and the economy.

The White House Office of Management and Budget this week cut its February forecast for economic growth this year to 1.6 percent from 2.7 percent. The OMB said it expected the economy to expand 2.2 percent next year, compared with its earlier forecast of 3 percent growth.

Lead Lobbyist

The foreclosure-prevention measure, unveiled in March, was bolstered after Paulson sought and received temporary authority, through Dec. 31, 2009, to lend money or to buy the stock of Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac. The goal is to avert a collapse of the companies that buy or finance almost half of the $12 trillion of U.S. mortgages.

The Treasury chief, who was the lead lobbyist for the White House, persuaded Bush to back off a threatened veto over a section of the legislation that provides $3.9 billion in grants to states to buy and repair foreclosed properties. Bush said he regarded it as a bailout of lenders. Democrats said it would stabilize neighborhoods.

New Regulator

The law creates a new, independent regulator called the Federal Housing Finance Agency. It would ensure that Fannie Mae and Freddie Mac adhere to minimum capital requirements, limit the size of portfolios and oversee executive pay for the two government-sponsored enterprises.

Under the law, the FHA can now insure higher loan limits, up to $625,500 from $417,000 in high-cost areas. The law also raises the nation’s debt limit to $10.6 trillion from $9.816 trillion to accommodate the Paulson plan.

A new FHA program, a unit of the U.S. Department of Housing and Urban Development, would insure up to $300 billion in refinanced 30-year fixed loans for about 400,000 borrowers struggling with their monthly payments after loan holders agree to cut their mortgage balance.

HUD Secretary Preston expressed misgivings when asked in a Bloomberg TV interview if he was confident that money for the program would be spent effectively with no loss to the taxpayer.

“No, I’m not,” Preston said. “Roughly a third of the people who get this assistance will end up in foreclosure,” he said, citing Congress’ own estimates, “and many more, we believe, will be chronic delinquencies.”

The measure would offer $15 billion in tax breaks, including provisions offering the equivalent of interest-free loans worth up to $7,500 for first-time homebuyers. States would be able to offer an additional $11 billion in mortgage revenue bonds to refinance subprime loans.