GSEs plan to launch chattel-loan pilot programs
Fannie Mae and Freddie Mac plan to bankroll some $200 million in chattel-loan financing for manufactured-home purchases over two years. Chattel loans are backed by
the home itself, and not the titled land. The government-sponsored enterprises (GSEs)
will begin three-year pilot programs in 2018 and make the loan purchases in 2019 and
2020, subject to approval by their federal regulator. The GSEs laid out the pilot efforts
in their final “Duty To Serve” plans.
Home prices increase steadily in 2017
Home prices continued on a strong upward trajectory heading into the final months
of 2017, Black Knight data shows. Year over year as of this past October, home prices
had risen by 6. 48 percent nationally, according to the company’s report. Eleven of the
20 largest states hit new price peaks in October 2017, as did 12 of the 40 largest metros
tracked by Black Knight. Among the states, New York had the highest home-price
appreciation this past October, with a 0.98 percent increase over September’s mark.
A quarter of all homes are selling for above the listed price
Some 24 percent of U.S. homes sold above the listed price in 2017, Zillow reported.
Sellers netted an additional $7,000 on average over the initial listed price, a typical
increase of 3.1 percent, the company said. In some high-flying cities, however,
that percentage was much higher. More than half of the homes sold in San Francisco,
Salt Lake City, Seattle, and San Jose, California, for example, yielded, on average, at
least $20,000 more than the original price listed.
Treasury allows GSEs to build small capital buffers
The U.S. Treasury Department agreed this past December to allow Fannie Mae and
Freddie Mac to retain small capital buffers, reversing a plan to wind down the GSEs’
reserves to zero in 2018. Treasury, along with the GSE regulator, the Federal Housing
Finance Agency, struck a deal to allow each enterprise to maintain a buffer of $3 billion,
which will form the new baseline in calculating their dividend payments to taxpayers
each quarter. The move makes it less likely that the GSEs will need to take draws on a
massive Treasury line of credit because of quarterly earnings volatility.
Mortgage credit risk bumps up
Mortgage credit risk was increasing toward the end of 2017, with the market shifting
away from refinancing while credit standards continued to loosen, CoreLogic reported.
CoreLogic’s housing credit index increased 18 points year over year in the past
third quarter to a level of 111.1. Over the past year, home purchases have grabbed
a greater share of the overall mortgage market. Purchase loans tend to be riskier
than refinances. n
By Victor Whitman
The preliminary estimate for the total
number of U.S. housing starts in 2017,
an increase of 2.4 percent over the
Source: U.S. Census Bureau
The average loan size for a new-home
purchase this past December, up 0.5 percent
from the prior month
Source: Mortgage Bankers Association
The estimated value of all U.S. homes as
of this past December, up by $2 trillion
in one year