Trump Treasury Nominee Plans to Privatize Fannie Mae and Freddie Mac
Call it an early Christmas present for Fannie Mae and Freddie Mac shareholders. President-elect Donald Trump’s nominee to head the Treasury Department, Steven Mnuchin, in his first interview since his announced appointment said the two housing finance agencies should not be under government control and added that the Trump administration would make it a priority and get it done reasonably quickly.
Fannie Mae shares jumped $1.25 per share to $4.33 and Freddie Mac's share price soared $1.24 to $4.26 per share.
Fannie Mae and Freddie Mac provided about $90 billion in multifamily financing combined last year, and are on that pace again this year.
Speaking on Fox News, Mnuchin said, "We've got to get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have. In many cases, they displace private lending in the mortgage markets," said Mnuchin.
"It's right up there in the top 10 list of things we're going to get done,” he added. "Let me make clear we will make sure when they are restructured they are absolutely safe and don't get taken over again. But we have to get them out of government control."
Plans for how such a separation will happen have not been formulated, but the news that the mortgage finance giants would be returned to private shareholders sent their stocks soaring.
Shareholders also appeared to be heartened that Mnuchin's comments on Fox News appeared to favor returning Fannie and Freddie back to private ownership rather than being wound down and eliminated entirely, as some Republican congressional leaders have proposed.
Rep. Jeb Hensarling, for example, the Texas Republican who chairs the House Financial Services Committee, earlier this month restated support for his housing finance reform plan, under which Fannie Mae and Freddie Mac would be phased out over five years.
The U.S. government took Fannie Mae and Freddie Mac over during the global financial crisis, providing capital support through U.S. Treasury preferred stock purchases of their mortgage-back securities, but did not acquire the balance of privately held shares of the companies. Under their current bailout agreements, Fannie and Freddie are required to send nearly all of their profits to the U.S. Treasury, while winding down their capital to zero dollars by 2018.
Some groups have opposed that plan, saying Fannie and Freddie should be allowed to keep more of their profits in order to build a capital buffer in order to help maintain their viability in providing credit to potential homebuyers.
Congress has debated what to do with the two GSEs almost since agreeing to bail them out. As government-sponsored enterprises, the two agencies play a critically important role in real estate finance by establishing a vibrant secondary market, buying mortgages from lenders, packaging them into securities and providing guarantees to investors in case of default.
The question over what to do with Freddie and Fannie has been tied up in Congress as part of a larger debate over housing policy reforms following the Great Recession. Despite repeated calls over the past eight years for Congress to pass legislation to reform the housing-finance system, legislators have failed to agree on a comprehensive proposal.
Congress is currently considering several smaller pieces of legislation that would address the GSE status enjoyed by Fannie Mae and Freddie Mac, possibly including winding them down entirely, addressing portfolio limits and guarantee fees, among other issues.
More clarity on the fate of Fannie and Freddie could be forthcoming during Mnuchin's expected congressional confirmation hearings.*
FHA Increases Loan Limits Going into 2017
The Federal Housing Administration announced plans on Thursday to increase loan limits in 2017, announcing a significant jump in counties set to increase compared to last year.
Due to home price increases, the FHA said that most areas in the country will see a slight increase in loan limits in 2017.
These loan limits are effective for case numbers assigned on or after Jan. 1, 2017, and will remain in effect through the end of the year.
The FHA recalculates its national loan limit on a yearly basis. The limits are based on a percentage calculation of the nation conforming loan limit.
Here are the upcoming changes. In high-cost areas, the FHA national loan limit “ceiling” will increase to $636,150 from $625,500. FHA will also increase its “floor” to $275,665 from $271,050.
Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150.
The FHA noted that this amount is 150% of the national conforming limit of $424,100.
The maximum loan limits for forward mortgages increased in 2,948 counties, which is attributed to changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits.
There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties.
This is compared to last year, which increased the loan limits in 188 counties due to changes in housing prices.
As an added note, FHA’s minimum national loan limit “floor” is set at 65% of the national conforming loan limit of $424,100. The FHA said the floor applies to those areas where 115% of the median home price is less than 65% of the national conforming loan limit.
For any area that doesn’t fit this and the loan limit exceeds the “floor,” it’s considered a high cost area. The maximum FHA loan limit “ceiling” for high-cost areas is 150% of the national conforming limit.
Check here for a complete list of FHA loan limits.
The news follows Federal Housing Finance Agency’s recent announcement that it plans to increase the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2017.*
Facebook Gives $20 Million for Affordable Housing
Facebook Inc. is extending a sizable olive branch to neighbors rankled by its plans to expand its campus and bring 6,500 new employees to the area, a move some locals fear will exacerbate a growing housing shortage.
The tech giant announced Friday it will spend about $20 million in Menlo Park and East Palo Alto, Calif., two cities that surround its campus, to create a fund to build new housing, support job-training programs and provide legal assistance to tenants in danger of eviction.
Some $18.5 million will go to a fund to build new housing, primarily targeted at low- and moderate-income families, with consultation from community groups.
Government officials and community groups in San Francisco and Silicon Valley have tried to engage tech behemoths in their backyards for help in solving the housing crunch. Costs have skyrocketed due to tight zoning restrictions that make it difficult to build and an influx of highly paid workers who are pushing out long-term residents with their ability and willingness to pay more to rent or buy.
Facebook’s decision to begin funneling tens of millions of dollars to create housing in local communities underscores the growing pressure on these companies to help tackle housing affordability, an issue that also is beginning to make it difficult to recruit employees. Companies such as Google parent Alphabet Inc. and Apple Inc. are facing similar pressures.
While about 500,000 new jobs have been created since 2010, Silicon Valley built just 26% of the new homes it needed for lower-income households between 2007 and 2014, a shortfall of nearly 22,000 homes, according to local government statistics.
“We saw that we were growing and that we were putting pressure on the market. We wanted to make sure that there were opportunities for people to stay,” said Elliot Schrage, vice president for public policy and communications at Facebook.
Facebook is planning to add 1.1 million square feet to its current office complex. In the coming years as part of another planned campus expansion, the company said it was planning to design 1,500 housing units, of which 15% would be set aside for low- and middle-income residents.
“Those numbers didn’t add up for us,” said Tameeka Bennett, executive director of Youth United for Community Action, a local nonprofit group.
The coalition of community groups that are participating in the fund have agreed not to sue Facebook over its campus expansion, company officials said, lifting a significant threat to the company’s plans although groups not involved with the agreement could still sue.
“We had our attorneys ready and ramped. We were still filing all of our paperwork to be able to sue them should things take a turn for the worse,” Ms. Bennett said.
Ultimately, she said the group was convinced of Facebook’s sincere commitment to easing the problem. The company met with her group and others several times a week often for a couple of hours at a time.
“What we really wanted out of this was a partnership. Checkbook diplomacy hasn’t worked for a long time,” she said.
Solving an affordable-housing crisis doesn’t lend itself to the kind of disruption that many technology companies favor. Mr. Schrage said Facebook is hoping to attract investment from other companies and philanthropic organizations to bolster its efforts and to address the 22,000-unit shortfall.
“I don’t feel like we have a choice,” he said. “All of these companies love being in Silicon Valley. All of them have experienced extraordinary growth in Silicon Valley. All recognize that it is becoming increasingly difficult to persuade talented people to move to the region.”**
10 Hottest Housing Markets for 2017
As the country heads into a new year with a new president, the housing market in 2017 is predicted to vary widely from one state to the next. People looking to move into senior living may find it easier to sell their homes in the “hot markets” next year.
If seniors are looking to sell their homes, certain metro areas are predicted to do better than others in terms of price and sales increases. Millennials will play as large of a part in the housing market of 2017 as baby boomers. The Midwest continues to be a popular area among millennials looking to purchase homes, according to the 2017 Housing and Residential Real Estate Forecast by Realtor.com.
Though before the presidential election the first-time buyers market was looking up, mortgage rates have now dropped and there may be more challenges for those seeking to qualify for a mortgage.
“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016. However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate predication for next year,” Jonathan Smoke, chief economist for realtor.com said in the report. “With more than 95% of first-time home buyers dependent on financing their home purchase, and a majority of first-time homebuyers reporting one or more financial challenges, the uptick we’ve already seen may price some first-timers out of the market.”
The cities leading the way in the Midwest are Madison, Wisconsin; Columbus, Ohio; Omaha, Nebraska; Des Moines, Iowa and Minneapolis. Affordability continues to be strong in these areas.
“This year, average millennial market share in these markets is 42%, far higher than the U.S. average of 38%,” the report said.
Another factor seniors consider when selling is their home price growth year over year. Of the top 100 largest metro areas in the country, those on the western side of the U.S. are expected to see an average price increase of 5.8% and a sales increase of 4.7% this year, which is much higher than the country as a whole, according to the report.
On a national level, the top 10 housing markets in 2017 with the highest price and sales increase include:
1. Phoenix-Mesa-Scottsdale, Arizona
2. Los Angeles-Long Beach-Anaheim, California
3. Boston-Cambridge, Massachusetts and Newton, New Hampshire
4. Sacramento-Roseville-Arden-Arcade, California
5. Riverside-San Bernardino-Ontario, California
6. Jacksonville, Florida
7. Orlando-Kissimmee-Sanford, Florida
8. Raleigh, North Carolina
9. Tucson, Arizona
10. Portland-Vancouver, Washington and Hillsboro, Oregon
As a group, the top 10 markets exceed last year’s anticipated national growth of 3.9%, but only Los Angeles and Tucson are individually showing higher growth than last year. The group also has affordable rent prices, low unemployment and large populations of millennials and baby boomers.
Other cities in the top 100 expected to see higher increases in home sales and prices include Seattle-Tacoma-Bellevue, Washington with a predicted home price increase of 7.4% and an increase in sales by 3.4%, and Salt Lake City, Utah with a price increase of 6.7% and sales increase of 4.7%.***
- Cash Gill plans to attend the Missouri Real Estate Appraisers Commission’s Quarterly Commission Meeting December 6th – 7th in Jefferson City, MO.
- Gill Group attended AHF Live’s Annual Affordable Housing Developers Summit November 15th – 17th in Chicago, IL.
- Cash Gill spoke on a panel on Thursday, November 17th: “Preservation of Older LIHTC Deals”
- Gill Group attended NAHRO’s National Conference and Exhibition October 14th – 16th in New Orleans, LA.
- Gill Group attended Mississippi Home Corporation’s QAP Meeting October 5th in Jackson, MS.
- Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Commission Meeting September 13th – 14th in Jefferson City, MO.
- Gill Group attended THDA’s Annual QAP Meeting August 9th in Austin, TX.
- Gill Group attended AHAIN’s Buyer/Seller Conference August 1st – 2nd in French Lick, IN.
- Cash Gill spoke on two panels: “Appraisals and CNAs” and “Pulling it All Together”
- Gill Group attended NH&RA’s Summer Institute July 20th in Martha’s Vineyard, MA.
- Gill Group attended NCSHA’s Housing Credit Connect Conference June 13th – 16th in Seattle, WA.
- Cash Gill spoke on a panel entitled “Rural and Native American Development Strategies” with Bryan Hooper (Deputy Administrator of Multifamily Housing at Rural Development), Joline Kline (Executive Director of the North Dakota Housing Finance Agency), Don Beaty (The Summit Group), and Elizabeth Glynn (CEO of Travois).
- Gill Group attended CARH’s Mid-Year Meeting and Conference June 12th – 13th in Washington, DC.
- Gill Group attended NH&RA’s Spring Developer’s Conference May 16th – 18th in Marina del Ray, CA.
- Gill Group attended PHADA Annual Conference and Exhibition May 22nd – 24th in Las Vegas, NV.
- Gill Group attended Texas NAHRO’s 40th Annual Conference and Tradeshow April 19th – 21st in Houston, TX.
- Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Commission Meeting March 22nd in Jefferson City, MO.
- Gill Group attended Bank of Advance’s Annual Meeting March 17th – 20th in Norfork, AR.
- Gill Group attended the Maco Companies’ Annual Meeting March 10th – 13th in Biloxi, MS.
- Gill Group attended the Council for Affordable Rural Housing’s Quarterly Board Meeting March 4th – 5th in Washington, DC.
- Gill Group attended the National Housing and Rehabilitation Association’s Annual Meeting February 24th – 27th in West Palm Beach, Florida.
- Gill Group attended the Council for Affordable Rural Housing’s Midyear Meeting January 25th – 27th in San Antonio, Texas.
- In 2015, Gill Group attended over 50 meetings and conferences from California to New York, and just about everyone in between.
GROWTH (2015 - Highlights):
- Gill Group added two offices in Michigan and one in Wisconsin, further expanding our staff of architects and engineers.
- Gill Group and Greystone formed a Joint Venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions. Gill Group and Greystone are utilizing each of our areas of expertise in a collaborative effort, with a mission to partner with PHAs across the nation in preserving and expanding the affordable housing inventory under the HUD RAD program. Our team fully understands the intricacies of the real estate and affordable housing industries, and our services are provided by professionals who are fully immersed in LIHTC executions, construction management, project accounting, regulatory compliance, real estate transactions, and opportunity development. We sit on national and state boards and have in-depth knowledge of industry trends and best practices. As a developer team, we operate as three individual entities, each with a unique set of previous transaction experiences that add value to the project at hand. As a collaborative unit, we draw upon those experiences to bring to the table creativity, fresh ideas and unsurpassable development advisory services.
- Gill Group’s subsidiary, National Title & Escrow, added two new offices in Missouri and Arkansas, further expanding our ability to service our nationwide base of customers.
- Gill Group attended 40+ meetings and conferences throughout the United States in 2014.
GROWTH (2014 - Highlights):
- Gill Group began the process of working with owners of affordable housing to develop a web-based program that will work hand-in-hand with our services. It will give the users of our appraisals, market studies, capital needs assessments and many other services easy access and real time usage.
- Gill Group added 2 offices with appraisers, market analysts, engineers and architects.
- Within the offices are 11 architects, one MAI appraiser, one general certified appraiser, four market analysts and 12 additional support staff.
- Gill Group attended 22 conferences and meetings throughout the United States in 2013
GROWTH (2013 - Highlights):
- Gill Group expanded our cutting-edge market analysis software and added our own in-house developed needs assessment software for CNAs, PNAs, PCNAs, PCAs, RPCAs, and every other acronym for this type of service.
- Gill Group added 4 offices with appraisers, market analysts, engineers and architects.
- Within the offices are three architects, one MAI appraiser, two general certified appraisers, five market analysts and 10 additional support staff.
- Gill Group expanded the footprint of its subsidiary, National Title & Escrow, to cover the entire United States with a local presence.
- Gill Group attended 20 conferences and meetings throughout the United States in 2012
GROWTH (2012 - Highlights):
- Gill Group developed cutting-edge market analysis software that will allow us to do preliminary analysis that is subject-specific in any market in the United States within minutes.
- Gill Group added 11 offices with appraisers, market analysts, engineers and architects.
- The offices now employ an additional 34 people.
- Gill Group expanded coverage of its subsidiary, National Title & Escrow, to cover the entire United States.
- Gill Group expanded coverage of its subsidiary, Gill Insurance Group, to cover the entire United States.
Gill Group has published the following:
- New York Real Estate Journal - How can low-income housing facilities translate into high profits?
- New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
- Tax Credit Advisor - Boston MSA Market Snapshot
- Tax Credit Advisor - Seattle MSA Market Snapshot
- Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
- Affordable Housing Finance – Urban and Rural Market Studies.
- Tax Credit Advisor – LIHTC Appraisals 101
Cash Gill, MAI has had the opportunity to speak on the following topics:
- (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
- (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
- (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
- (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
- (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
- (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
- (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
- (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
- (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
- (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
- (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
- (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
- (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
- (Chicago, IL) AHF Live – Strategies for Rural Deals.
- (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
- (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
- (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
- (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
- (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
*as seen on costar.com
- (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
- (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
- (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
- (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
- (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
- (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
- (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
- (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
- (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
- (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
- (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
- (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities (2014)
- (St. Pete Beach, FL) CARH – Preservation Challenges and Opportunities
- (Nashville, TN) TAHRA – Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for LIHTC and RAD Transactions
- (Los Angeles, CA) NCSHA – Successful Development in Challenging Markets
- (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities
- (Seattle, WA) NCSHA – Rural and Native American Development Strategies
- (French Lick, IN) AHAIN – Appraisals and CNAs
- (French Lick, IN) AHAIN – Pulling it All Together
- (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
**as seen on wsj.com
***as seen on seniorhousingnews.com
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