Fannie Mae

Are you stuck with high mortgage interest, but think you can't refinance because you owe more than the house is worth? You may still be able to qualify for a Fannie Mae Refi Plus loan.

You can get a refi for up to 125 percent of your home's value. That means if the current market value is $200,000, you can get a mortgage up to $250,000. So even if your house is underwater, if you're stuck with a loan above 6 percent, you should still talk with your lender about a Fannie Mae Refi Plus loan. You may also want to use this program to lock in a low fixed rate, if you still have an adjustable rate mortgage.

The loan must currently be owned by Fannie Mae. You can find out if your loan is eligible by using the Fannie Mae lookup tool. If you find out your loan is owned by Fannie Mae, your next step is to call your loan servicer. You can find out if your servicer is in the Fannie Mae network and a contact number for him using Fannie Mae's search tool.

The refinance process for Fannie Mae has been streamlined and you may not even need to get an appraisal or credit check, as long as you have been paying your mortgage on time.

While everyone discusses the likelihood that Fannie and Freddie were duped into buying subprime mortgages that didn't meet their investing criteria, we may finally get a definitive answer when banks answer the 64 subpoenas issued this week by the Federal Housing Finance Agency. The agency didn't release the names of the banks subpoenaed, but The Wall Street Journal did speculate on the likely recipients.

Fannie and Freddie gobbled up these securities in huge numbers starting in 2005. These securities held triple-A ratings when sold. Now the FHFA wants to take a closer look at what types of loans were actually placed in these securities and whether or not they truly deserved those high ratings.

"By obtaining these documents we can assess whether contractual violations or other breaches have taken place leading to losses for the Enterprises and the taxpayers," FHFA acting director Edward J. DeMarco said in statement when he announced the subpoenas.

While he didn't say what the FHFA would do if they find breaches, the lawsuit filed by the Federal Home Loan Bank of San Francisco certainly shows what can be done.

You probably won't be surprised to learn that the key reasons people just walk away from their homes involve job loss and a significant drop in home value. What might surprise you is how long people hold onto their homes before they decide to walk away.

The Federal Reserve found in a recent study that most strategic defaulters don't walk away from their home until the equity in their home is negative 62 percent of the home's value.

If you choose to walk away from your mortgage rather than work something out with your servicer, Fannie Mae will block you from getting another mortgage for seven years from the date of the final foreclosure on the house. That's according to new rules that go into effect immediately.

But, if you do work with your servicer to come to some agreement -- whether a loan modification, deed-in-lieu of foreclosure, pre-foreclosure sale or short sale -- your wait time to buy a new house will be much shorter. In fact to encourage people to work with their lenders rather than just walking away, Fannie Mae is shortening the time you'll be eligible for another Fannie Mae mortgage.

"Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting," Terence Edwards, Fannie Mae's executive vice president for credit portfolio management, said in making the announcement.

"On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer, will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."

Do you or your parents have a reverse mortgage for which they don't pay the property taxes or insurance? While in the past, the FHA and Fannie Mae would patiently wait until the property owner died or moved to pay off any liens, that practice is about to end.

Many seniors don't realize that they can lose their home to foreclosure if they have a reverse mortgage, since no payments are due. They just assume any past-due taxes or insurance will be paid when they die.

While that is how it's worked in the past -- even though it wasn't really supposed to work that way -- the practice is ending.

Has your income been hit hard by the oil spill? Frustrated by the slow response of BP and its CEO, Tony Hayward (pictured left)? If you have a Fannie Mae mortgage, you may be eligible for as much as a six-month suspension on your mortgage payments, according to a new emergency program announced by the government-sponsored corporation.

How much help you can get will depend on how hard your finances have been hit by the Gulf oil spill. You also may be eligible if your property has sustained severe damage.

Are you one of the millions who didn't make the cut for the federal loan modification program, because you weren't in bad enough trouble? If your loan is held by Fannie Mae or Freddie Mac, you may be in luck.

Worried that home prices will continue to decline, Fannie and Freddie are offering a hand to borrowers looking to shrink their mortgage payments. American Banker reports that Fannie Mae and Freddie Mac have begun offering loan modifications to borrowers who tried but couldn't qualify for the Home Affordable Modification Program because their housing costs are less than 31 percent of their income.

Why would the Feds do that?

It's National Home Ownership Month, prompting lots of talk about the value of owning a home. The rhetoric isn't all bubbly.

Sheila Bair, the outspoken head of the Federal Deposit Insurance Corporation, recently questioned the government's role in promoting homeownership. The speech wasn't widely covered, but The New York Times' Joe Nocera drew attention to it in a column headlined "Wake-Up Time for a Dream."

"Sustainable home ownership is a worthy national goal," Bair told the Housing Association of Nonprofit Developers. "But it should not be pursued to excess when there are other, equally worthy solutions that help meet the needs of people for whom home ownership may not be the right answer."

Nocera calls her comments "a bit of honest heresy."

Next time you're inclined to complain about the bankers' bailout, remember that homebuyers are now on government life support as much as anyone.

This week, Federal Housing Administration chief David Stevens announced that his agency is now the largest source of home-purchase mortgages in the nation. According to the firm Potomac Partners, FHA insured $52.5 billion in purchase loans in the first three months of 2010. The government-controlled Fannie Mae and Freddie Mac purchased just $46 billion.

This is the first time in memory that FHA is the dominant player in the mortgage business, a role it hasn't really had since era of "Father Knows Best" in the 1950s.

What does FHA's new dominance mean for home buyers?

Is $19 billion a lot of money -- or a small price to pay for keeping mortgages available to you at a reasonable price during the ongoing financial crisis and into the future? Ask yourself that as you take in the heated reaction to this news: The government overseer of Fannie Mae and Freddie Mac wants the U.S. Treasury to use that pile of treasure to keep them from collapse.

The latest take comes from Gretchen Morgenson at The New York Times, who asks a provocative question: Why aren't Fannie Mae and Freddie Mac part of the financial reform package going through Congress right now? That's the same question Senate Republicans have been asking. Last week, Sens. Richard Shelby, John McCain and Judd Gregg introduced an amendment to the reform bill that would eliminate Fannie and Freddie over the next few years.

Morgenson brings to her case the liberal economist Dean Baker, who suggests that Freddie Mac is somehow overvaluing new mortgages in order to prop up the mortgage markets. It would seem that we have a consensus across the political spectrum: Fannie Mae and Freddie Mac are a menace to the American taxpayer, vampirically sucking our hard-earned wealth.

Pretty awful, right? Not if you compare it to the garbage loans that Fannie and Freddie's virtually unregulated private competitors were dealing in.

If your lender forecloses on your mortgage but lets you stay in your house as a tenant, is your real-estate saga more likely to have a happy ending? A new law making its way through the House of Representatives may give you the chance to find out.

The riddle for most cities plagued by foreclosure involves solving two problems at once: helping banks recover unpaid mortgage bills while helping people stay in their homes.

If the banks write off bad loans, they have no money to lend to other borrowers; if the banks foreclose and evict on every owner who can't make a payment, cities empty out. What to do? Raul Grijalva (D-AZ), an ally of House Speaker Nancy Pelosi, has proposed a solution for defaulting owners of "moderate-value homes."

Grijalva's "Right to Rent Act of 2010," introduced on Tax Day, would basically keep the homeowner from having to look for a new house. It works as follows.

Good news for those working their way back to home ownership. In an effort to aid in the recovery of the housing market, Fannie Mae has changed its loan rules for homeowners that went through a short sale or gave their deed back to the bank before foreclosure. The U.S. housing market has so far weathered six million foreclosures in the past three years, with another three million expected this year.

The government-sponsored public company has relaxed its loan guidelines that prevented applicants in these situations from obtaining a mortgage for extended periods of time. After meeting certain requirements, the wait for a new loan will be cut to two years from its current four-year wait.

For some former owners, this is the chance they've been waiting for.

No longer able to afford your mortgage payment? Thinking about walking away from your underwater house? Really, what you'd like is an affordable way to stay in your current residence until you find a better solution.

Then Fannie Mae's Deed-for-Lease program might be right for you.

The program was first announced in November 2009. Some have been denied access to the program because they have a second lien on their property. But with the new Home Affordable Foreclosure Alternative (HAFA) program, you may now be eligible.

HAFA offers incentives to servicers and second-lien holders to make a deed-in-lieu of foreclosure possible. If you have a Fannie Mae loan, and if you've been denied access in the past, it doesn't hurt to ask again.

Today Barney Frank's House Financial Services Committee will hear ideas from across the political spectrum about what the next-generation Fannie Mae and Freddie Mac should – and should not -- be able to do.

Congress had better pay attention to ex-Fannie CEO Daniel Mudd, who with colleague Robert Levin went before the Financial Crisis Inquiry Commission late last week to give his account of why Fannie Mae ended up as good as wiped out, and in the hands of the U.S. government.

Fannie's losses are expected to cost U.S. taxpayers more than $300 billion.

"In hindsight, less credit exposure to new homeowners, non-traditional products and regions of the country in economic downturn might have reduced losses," Mudd told the bipartisan panel. In other words, mandates from Congress and the U.S. Department of Housing and Urban Development to make credit available to low- and moderate-income borrowers ended up costing Fannie Mae dearly. That's the same conclusion Alan Greenspan came to in testimony to the commission earlier last week.

Who's to blame for the collapse of the U.S. housing market? That question is at the root of the hearings being held by the Financial Crisis inquiry Commission, a bipartisan commission of former political officials. Republicans want to blame Fannie and Freddie for their risky loan practices, or federal officials for their lofty housing goals. The favored target of Democrats is Wall Street and predatory lenders.

The reality of the situation is that all three forces are to blame. The cast of characters and motivations reads like "The Bonfire of the Vanities": execs at Fannie Mae and Freddie Mac were worried about corporate profits; the government wanted to expand home ownership to low income families; and Wall Street and lenders were just looking to make an easy buck. All got what they wanted -- creating the perfect storm that ultimately led to the collapse of the U.S. housing marketplace.

So, it's doubtful the commission will be able to pinpoint a single culprit or the root cause of the problem. But that's not to say that the hearings aren't fleshing out some interesting plot lines.