Acting Director of the Federal Housing Finance Agency, Edward DeMarco, testified last week before the Senate committee on Banking, Housing, and Urban Affairs. His testimony reiterated the prevailing news in real estate, that a recovery is in fact underway. The subject of the testimony and the questions that lawmakers face, is how the federal government plans to move forward in terms of loan modifications, credit to borrowers, and consumer protections. The following statement was made by DeMarco on these merits, “While is it ultimately up to lawmakers to provide an answer, in my opinion the main purpose in addressing housing finance reform should be to promote the efficient provision of credit to finance mortgagees for single family and multifamily housing. An efficient market system for providing mortgage credit to people who want to buyer a house should have certain core characteristics: it should provide consumer choice, it should provide consumer protections, it should allow for innovations by market participants, and it should facilitate transparency.”
Last year, government sponsored enterprises helped an estimated 2.2 million families who were struggling to repay loans. In the luxury market, this number is important because when there are less foreclosures and short sales, the market is more stable and home prices increase. DeMarco pointed to a number of elements in his testimony from records from Freddie Mac, Fannie Mae, and the National Association of Realtors. According to the National Association of Realtors, the current supply in the US is at 4.7 months which is decreased from last year when it was 6.4 months, this constriction in homes has led to an increase in home prices by 6.5%. FHFA stated that Freddie Mac and Fannie Mae combined granted 1.3 loan modifications, 665,000 repayment plans, and 150,000 forebearance plans. A recovery is definitely underway, and we will report the federal response as it emerges.