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HOW HARD IS IT TO BUY FANNIE MAE FORECLOSURES MAC
“While we continue to study this issue carefully, at this time neither Fannie Mae nor Freddie Mac offer principal reduction in the form of a discounted payoff for a new refinance or as a component of a modification,” Watt wrote in a letter e-mailed to Kuhns. But, he emphasized, a principal reduction is off the table. Watt even weighed in, and urged the couple to keep working with Fannie.
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In June, Fannie offered to modify their mortgage and shave the amount they had paid in rent off the loan. So the Coronels, who have yet to be evicted, pushed back. “How does that help the local economy or the neighborhood?” “What often ends up happening is big Wall Street-backed investors come in, buy the property and turn it into a rental,” he said. It refused to sell the home to the Coronels for the same price it would ask of anyone else, including Wall Street firms, he added. (They owe this much in part because they refinanced into what they now recognize were abusive lending terms, they said.) But the home is worth about $260,000, said Peter Kuhns, an organizer at the Alliance of Californians for Community Empowerment, a grass-roots group funded with dues from members, including the Coronels.įannie’s offer made no sense, Kuhns said. They were pre-qualified for a loan that they could afford given Jaime’s pension and the Social Security checks they receive, Juana said.įannie agreed to sell it to them - for $452,000, the amount they owe on their loan. That’s when the Coronels approached the company about buying it back. Three years later, when Fannie wanted to sell the house, it moved to evict the couple. Jaime had retired by then, and the couple tapped his union pension to pay the rent, which was $430 less than their $2,180 monthly mortgage payment, they said. With price gains expected to moderate, many deeply underwater borrowers will likely stay there for some time.Īgainst that backdrop, the Coronels felt trapped in a financial vise.Īfter losing their home in 2010, Fannie agreed to let them rent the property. A high concentration of them are in poor and minority communities, underscoring the lingering effects of the housing crash and the uneven nature of the recovery, studies show. While home prices have climbed during the past two years, about 16 million borrowers remain underwater or close to it - and Fannie and Freddie own a portion of those loans. “You’ve got to understand that I was a member of Congress representing my constituents, many of whom were underwater, and advocating for relief for them,” Watt said. Watt, a Democrat, downplayed his previous support for such debt relief when pressed about it during his Senate confirmation hearing. But he’s been silent on the issue since taking the FHFA post in January, except to say he’s studying it. Toward the tail end of his two decades as a North Carolina congressman, Watt pushed for targeted principal reduction for underwater homeowners. Now that Melvin Watt is in charge, all eyes are on him. The regulator, which oversees the two government-backed mortgage giants, fears that principal reductions will entice homeowners to intentionally default on mortgages in a bid to get cheaper loans. The Federal Housing Finance Agency won’t allow Fannie Mae and Freddie Mac to take part in these kinds of deals.
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These borrowers owe more on their mortgages than their homes are worth, making it tough to refinance or sell if they run into financial trouble. Millions of “underwater” borrowers like the Coronels were left without equity in their homes after the housing market tanked and home values plunged. “We asked, ‘Why don’t you sell it to us?’ ” Juana said.īut an independent regulator that holds enormous sway over the mortgage market essentially put the kibosh on those kinds of arrangements, triggering a public confrontation with the Obama administration and even a lawsuit. The mortgage finance firm was eager to offload the modest ranch house in a working class suburb just east of Los Angeles. After 20 years in their house, Jaime and Juana Coronel lost it to foreclosure when Jaime’s landscaping work dried up in the recession and the couple fell behind on payments.Īs the eviction process dragged on, the Coronels regained their financial footing and wanted to buy the house back from its new owner, Fannie Mae.