March 17, 2010Remarks Prepared for Delivery by Candy Lasher, Vice President, Fannie Mae
It’s a treat to be back in Atlantic City. Congratulations to the NJ MBA for hosting this great event and for all the educational opportunities you offer. Fannie Mae is pleased to join you. We value our many relationships in this room and appreciate the opportunity to work with each of the MBA organizations represented here.
Today I’d like to talk about the challenges facing the housing and mortgage markets. I’ll focus on:
Where we are – the market environment
Let me summarize what Fannie Mae’s economists are telling us about the market environment today and going forward. We know the challenges:
You know all this. You are living it. But let me note the upsides in today’s market:
So how do we at Fannie Mae look at the near-term future? I would describe our outlook as cautious because we have a ways to go to reach where we would like to be.
Over the long term, we see reason for optimism in our market. A growing nation will mean growing demand for homes.
Let’s be clear: We won’t be planting a flag on the mountaintop of recovery until we see a turnaround in the current foreclosure crisis. We are bracing for more foreclosures, driven mostly by unemployment and underemployment.
Let me take a moment to explain what Fannie Mae is doing to help families stay in their homes and help neighborhoods avoid the destabilizing impact of foreclosures.
Fannie Mae has assembled a sizable operation based in Dallas – our National Servicing Organization – to help servicers work out loans. That office also maintains and markets our foreclosed properties, which we work to put back into service as rapidly as possible. Last year, we sold more than 120,000 foreclosed properties.
Fannie Mae also administers the Administration’s year-old Home Affordable Modification Program. Servicers have started more than one million trial modifications through February and permanently modified loans for nearly 170,000 borrowers.
It’s also important to note that we continue to do modifications on our loans that are not eligible for HAMP. Fannie Mae completed more than 75,000 non-HAMP modifications in 2009.
The Administration’s parallel effort is the Home Affordable Refinance Program or HARP. More than 190,000 Fannie Mae and Freddie Mac borrowers had their loans refinanced under HARP last year. Overall, the two GSEs refinanced more than 4 million loans in 2009.
Treasury has made and continues to make adjustments to both HAMP and HARP, including extending HARP through June 30, 2011, to address borrower circumstances and servicer needs.
What We’ve Learned
Given that none of us has ever seen a market crisis like the one we are experiencing today, what have we learned to guide our way forward? Here are some important points:
Strengthening the Market
As the housing crisis subsides and we look to a brighter future, how can we support sustainable homeownership and a stronger, more resilient housing market down the road?
Like most of the mortgage finance industry, Fannie Mae has returned to more traditional lending standards. All of us have shared in the consequences when too many borrowers got into loans they could not afford over the long run. By strengthening lending standards, we help protect borrowers, lenders, and the housing finance system.
Sustainability in all market cycles is also important for Fannie Mae’s business model. Our plan is to work with lenders to ensure that loans sold to us meet our credit, eligibility and pricing guidelines. To do this, Fannie Mae will implement policies and processes and offer tools and resources for lenders that will:
We’re calling this our Loan Quality Initiative, and it will help us build a safer, more sustainable business model that is transparent to our lender partners, mitigates lender risk, supports stability in all market cycles, and helps us to fight mortgage fraud.
The government has given Fannie Mae an important job to do and the support to do it. In 2009, we provided the liquidity for 600,000 people to purchase homes and 2.5 million homeowners get into better loans. We have kept liquidity flowing to multifamily lenders to finance and upgrade affordable rental housing. We are offering liquidity to small and mid-sized lenders in new ways so they can keep on making loans.
Although there are signs that the housing market is beginning to recover, we have a long way to go before this housing crisis is behind us. Until then, millions of borrowers are looking to your businesses for help.
Let us know what Fannie Mae can do to assist you. Our customer account teams are ready to support your business. Our teams from New Jersey, Delaware, Pennsylvania and New York will be here throughout the conference and in our Customer Service Center to hear your concerns, questions and ideas. I look forward to meeting you as well.