Reforming Fannie and Freddie:
While legislation to reform the housing financing system passed the Senate Banking Committee, there is virtually no chance the bill will receive further consideration this year. The measure would eliminate Fannie and Freddie and establish a new public/private housing financing system. Democrats argue the bill does not do enough on affordable housing issues, while Republicans argue the measure still places too great a risk on taxpayers. Shareholders of Fannie and Freddie stock perhaps played the biggest role in killing the bill, spending millions to keep Fannie and Freddie alive as they engage in a court battle against the Treasury Department for Fannie and Freddie profits.
Mortgage Forgiveness Debt Relief Act Extension:
Passed in 2007, the Mortgage Forgiveness Debt Relief Act assisted sellers utilizing short sales by eliminating a requirement to pay taxes on the amount banks write-off when accepting a short sale. The expiration of the Act has curbed the utilization of short sale transactions. Recently, the Senate Finance Committee passed S. 2260 (Expiring Provisions Improvement Reform and Efficiency Act known as “EXPIRE”) that among other things would extend the Mortgage Forgiveness Debt Relief Act through 2015. The House will likely push for a permanent extension. Getting the measure through the Senate is the primary obstacle as the bill contains other measures considered more controversial.
Housing Discrimination Issues:
Ohio: A Chillcothe landlord has filed a complaint with the Department of Housing and Urban Development and the Ohio Civil Rights Commission opposing the city’s methamphetamine lab law. The ordinance requires owners to pay for all clean-up and recovery efforts. The landlord argues that local landlords were not consulted prior to passage of the bill and that it discriminates against lower income areas.
Louisiana: Louisiana lawmakers are considering a bill governing the eviction of victims of domestic violence. Proponents of the measure want to prevent domestic violence victims from paying for the actions of their abusers, while opponents argue the bill tramples over the rights of landlords to evict tenants. The bill has passed committee and is headed to the Louisiana House floor for consideration.
Massachusetts: Landlords will likely face greater scrutiny in Massachusetts after the publication of a report by the Metropolitan Area Planning Council alleging rampant private landlord discrimination against protected classes. Non-profit housing rights groups will likely step up investigations and sting operations in the wake of the report as the state considers new policies governing landlords.
May Housing Forecast (Freddie Mac):
May 2014 U.S. Economic and Housing Market Outlook
Freddie Mac released its U.S. Economic and Housing Market Outlook for May, showing that regular supply and demand forces continue to produce unexpected results as the housing recovery readies to shift into a higher gear during the spring home buying season.
Outlook Highlights
- Projecting new home construction to increase by 18 percent, and house price appreciation moderating to an annual growth of 5 percent in 2014.
- Maintaining new and existing home sales at 5.5 million for 2014, the same as for 2013, as the inventory of homes available for sale remains low in many markets.
- Single-family originations are expected to drop about 35 percent in 2014 relative to 2013, based on the large decline in refinance volume. Refinance is expected to represent about 40 percent of this year’s originations, down from about 60 percent in 2013.
- While net household formation continues to increase, the overall level remains lower than what would be expected; stronger job and income growth are necessary to support additional household formation.
- Expect the 30-year fixed-rate mortgage to gradually rise higher, ending the year around 4.6 percent. We expect fixed rates to rise gradually during the second half of the year in part as a result of the Federal Reserve’s “tapering” of net MBS acquisitions.
Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.
“The housing recovery is struggling to shift into a higher gear, and obviously there are various imbalances holding this back from happening, but at the heart of the matter it comes down to jobs. Housing needs stronger, and just as important, sustained levels of job creation to get the housing engine firing on all cylinders. April’s jobs numbers were encouraging, and nothing will solve the supply and demand factors faster than keeping employment growth going. Until we see this happening, we’re revising our forecast lower in several areas on an annualized basis. While we still see an improving trajectory for the housing market, we’re pushing it out a few months from our earlier forecast because we expect GDP growth to pick up in the final three quarters of the year from what was clearly a dismal first quarter reading.”
