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According to Bloomberg today, US homeowners in the foreclosure process were an average of 507 days late on payments in 2010 compared to last years record of 406 days late in 2009 (a 25% increase).

According to Realty Trac a record 2.87 million properties received a notice of default last year, despite a 30 month low in December caused by the robo-signing scandal, and that number is expected to climb this year.

A record 1 million homes were foreclosed upon and nearly 7 million mortgages are at least 30 days in arrears, but FNM expects home prices to rise in 2011.

Foreclosures have weighed down U.S. housing prices as the nation’s unemployment rate is stuck at more than 9 percent. Home values may rise 0.6 percent for the year, the first annual jump since 2006, according to Fannie Mae, the largest U.S. mortgage buyer.

Last Friday the US Treasury department leaked a portion of its upcoming white paper regarding the future of mortgage giants FNM & FRM. Essentially calling for the reduction in size of its share of the market from the current 95% to under 50%.

Rep. Scott Garrett (R-N.J.) wants the finances of the troubled mortgage giants Fannie Mae and Freddie Mac, including their billions of dollars in losses, put on the federal government's books.

Rep. Garrett is the Chairman of the House Financial Services Committee which oversees FNM & FRM. They will be meeting later this week to start discussion on how to wind down the two mortgage giants. Already the US taxpayers have given them nearly $180 Billion in direct of indirect bailouts. 10:1 what comes of this will lead to even more tax-payer funded dollars winding up on Wall Street.

One of the proposals on the table is to reduce the loan limit amounts from the current $729,750 (in high priced areas) to $625,000. If you recall the limit before the market crash was $417,000.

Of course Rep. Garrett is privatize gov't proponent.

Winding down the portfolios of Fannie and Fannie more quickly would reduce the government's exposure to interest rate fluctuations, Garret said, and could help the government turn a profit. He said there are "significant unrealized gains" in the two portfolios.

Fannie is introducing a new program this year called risk based fees. The GSE's are the market and Fannie & Freddie are now going to ask you to cough up more money, in some cases thousands of dollars based on your credit score. For example:


 Say you want to buy a house with a $300,000 first mortgage, and that you have excellent FICO scores - above 800 - and a down payment of just under 25 percent.

   Based on your credit score and loan-to-value (LTV) ratio, Fannie plans to charge you an extra 0.25 percentage point of the loan amount - $750 - just to do the deal. The same loan would have cost you zero in risk-based fees in 2010.

   If that’s not bad enough, consider someone trying to borrow $300,000 with a 679 FICO score and a down payment of just under 20 percent.

   Fannie will hit that consumer up for a 2.75 percent risk-based fee - an extra $8,250 solely attributable to the person’s FICO score and LTV. That’s $1,500 more than what you would have paid in 2010.

What does this mean?

Mortgage borrowing rates are likely to go up. Which means higher down payments at the existing price levels.
Adding to price pressures would be the amount of homes being dumped by the gov't GSE's. Of course not to be left on the bench the large Wall Street investment houses that still hold private label mortgage debt would step out in front of the government agencies and dump their portfolio of toxic waste in an attempt to garner the most money they could before the tidal wave.

Originally posted to joeshwingding on Mon Feb 07, 2011 at 01:59 PM PST.

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