Fannie Mae posted a net loss of about $19.8 million during the third quarter or about $3.47 per share from $29.4 million losses or $13 per share for the same period a year ago. Already, it has filed a request with the U.S. Securities and Exchange Commission for additional funding to allow it to reduce its net worth deficit. The agency hopes to receive the additional funding the 31st of December.

According to Fannie Mae, its third quarter loss was a result of credit-related expenses amounting to almost $22 billion. Also, the agency said that majority of its funds were used for the implementation of the Making Home Affordable Program of the Obama Administration.

Under the Obama program, banks and lenders are encouraged to modify or refinance loans to reduce the number of foreclosure properties across the U.S. However, the program requires that Fannie May and Federal Home Loan Mortgage Corp. or Freddie Mac, another government-sponsored enterprise, should get the mortgage loans from securities which led to losses.

During the implementation of the program, delinquencies for loans 3 months or more past due or facing foreclosure have increased. And the unabated increase in the unemployment rate has prevented many struggling homeowners from finding alternatives to save their homes from foreclosures.

Because of its net quarter losses, Fannie Mae has filed for a request for more federal funding to allow it to reduce its net worth deficit. So far, the agency has received about $44.9 million as federal government assistance. The money was under a purchase agreement for senior preferred stocks.

Additionally, Fannie Mae plans to sell about $2.6 billion worth of unused tax credits. Fannie Mae’s net revenue of Fannie Mae from July to September rose by $5.9 billion from about $5.6 billion during the second quarter.

The Federal Housing Finance Agency took control of Fannie Mae in September 2007 which affected shares of the mortgage insurer. Its shares dropped by almost 7.1 percent. Fannie Mae explains that it expects net worth deficits in the coming months and so it needs to get additional funding.

And with the number of serious delinquencies rising to unprecedented heights, foreclosure properties across the U.S. will continue to pull down the economy and housing market.

Last month, Freddie Mac’s mortgage investment portfolio increased by an annualized rate of 7.3 percent while delinquencies on the loans it insured accelerated. On a year-to-year basis, the Freddie Mac portfolio grew in size by 3.4 percent to $784.2 billion from $736.9 billion in September 2008.

For the second quarter of this year, Freddie Mac reported a profit, indicating that for the meantime, it has no need for additional federal funding.

In September, Freddie Mac loan delinquencies rose to 3.33 percent from 3.13 percent the previous month and 1.22 percentage points in September 2008. The high percentage growth in loan delinquencies has prompted several industry experts to expect more Freddie Mac foreclosures before the end of this year.

Also last month, the delinquency rate for multifamily home loans rose slightly to 0.11 percent compared with 0.10 percent the previous month. The delinquency rate was at a low of 0.01 percent in September of last year.

Meanwhile, the purchase volume for refinance loans dropped by $21.4 billion last month from $35.6 billion in August. But refinancing activity was in an accelerated pace last year, with $52 billion posted in March as the biggest volume since 2003.

The total amount of mortgage-related investment agreements entered by Freddie Mac last month hit $4.6 billion, a drop of $12.1 billion from August. In an annualized level, the total mortgage portfolio rose by 0.8 percent to $2.243 trillion in September.

In a separate note, Freddie Mac has announced that it will permit some of its borrowers to turn their foreclosed houses into rentals. The company explained that the initiative is designed to prevent vacant and foreclosed properties from deteriorating.

Furthermore, the company also announced that renters will be allowed to stay in their houses despite their landlords going into some foreclosure proceedings. So far, Freddie Mac foreclosures totaled 8,500, with many of these properties unoccupied.

Industry experts voiced out support for Freddie Mac’s initiative, saying that keeping foreclosure homes occupied ensures that they will be in good condition always and will help boost property prices and values and expedite the recovery of the housing market.

Most of these defaults are expected to go into foreclosure because of recent data showing that the percentage of delinquent homeowners able to restore their home loan accounts to current status is dropping sharply.

The redefault rates for modified home loans have also increased significantly over the past months, with around 50 percent of borrowers with modified mortgages redefaulting within six months after signing into the Home Affordable Modification Program.
While helping the federal government carry out its HAMP initiative, Fannie Mae also provides guarantees to qualified home loans provided by private mortgage lenders, packages home loans into securities to be sold to investors and invests in mortgage-backed securities.

Whenever mortgages owned by Fannie are foreclosed, Fannie Mae sells them so it can use the proceeds for its operations and help communities minimize the adverse effects of foreclosures.

You can take a look at Fannie Mae foreclosures by visiting ForeclosureDeals.com, which is an exclusive online database for Fannie Mae homes. There are single-family houses, condo units and townhomes located in various neighborhoods.

When buying Fannie Mae homes, you should always hire a professional home inspector to examine the house you are buying. Fannie
Mae sells every foreclosure property as is and does not repair defects after the settlement. It also does not issue guarantees on its homes. It only discloses hazards on homes if there were previous hazard disclosures submitted to Fannie Mae.

Remember also that Fannie Mae requires you to be prequalified for a home loan before your real estate agent can submit a purchase offer. This requirement assures Fannie Mae that the person it is negotiating with is able to pursue and complete the home purchase.

For those looking for Fannie Mae financing, there are two programs available: the HomePath Renovation Mortgage Financing and the HomePath Mortgage Financing. Both of these programs require low down payments.

To buy a Fannie Mae foreclosure, you should negotiate with listing agents certified by Fannie Mae. You cannot directly buy from Fannie Mae. This is to ensure that the home purchase process is done professionally and all financial documents are accomplished efficiently according to regulations for Fannie Mae foreclosures and state laws on residential real estate sales.

The U.S. Department of Housing and Urban Development (HUD) hosted a party in Seattle during the Recovery Act in Action Week. Some of the party highlights included HUD Secretary Shaun Donovan’s broadcast message, networking, webinars and technical assistance for recovery programs.

Currently, the HUD is providing a total of $3.47 billion in competitive grants for Native American and public housing, green retrofitting for federally-assisted houses and neighborhood stabilization projects.

Last February, the HUD allocated about $10.1 billion Recovery Act funds, with $168.6 million received by Washington.

HUD’s Office of Field Policy and Management deputy director Dave Ziaya said that Seattle could apply for the competitive grants which are set up not just for neighborhood stabilization and bank REO properties prevention programs.

HUD deputy regional director Martha Dits said that there are many agencies in Seattle that could seek funding, adding that there is a lot of interest and enthusiasm on the recovery funds.

Brookings Institute’s Metropolitan Policy Program Vice President Bruce Katz noted that the recovery grants are motivating counties and cities to work together and with private partners. He added that parties involved have recognized the links between energy, housing and transit.

Meanwhile, the government-controlled mortgage company Federal Home Loan Mortgage Corp. or Freddie Mac has announced that it would ease loan refinancing rules to help more homeowners avoid bank REO properties.

Freddie Mac will allow borrowers of loans guaranteed by the agency or who are current on their mortgages to refinance their troubled loans through any affiliated lenders. Currently, troubled loans are only refinanced through lenders who gave out the mortgages.

The program is part of the Home Affordable Refinance plan, under the Making Home Affordable program of the Obama Administration.

The refinancing program allows renewed financing at low interest rates for as many as 5 million borrowers who have good mortgage payment histories on loans guaranteed by Freddie Mac or its sister company, the Federal National Mortgage Association.

Last April, filings of foreclosures were made on 52.8 percent homeowners daily, an increase from the 24.5 percent for the same period last year. In Snohomish and King counties, 0.7 percent of properties were in danger of becoming bank REO properties and 2.3 percent mortgages were delinquent for at least 90 days.

The mortgage firm also announced that it has asked the federal government to provide $19 billion to help fund its continued operations. In the first months of 2009, Fannie Mae also asked the U.S. Treasury to provide $15.2 billion to help cover its losses in 2008.

It also reported that the Treasury has been authorized by President Obama to provide Fannie Mae with $200 billion.

Fannie Mae attributed its losses to the large numbers of forclosure homes that it had guaranteed. The inventories of foreclosed homes were also made worse by increasing number of defaults and delinquencies. In 2009, the number of forclosure homes has been rising largely due to rising unemployment rates. The falling prices of foreclosed properties worsened the housing market and led to further rises in inventories of forclosure homes.

Fannie Mae’s first quarter loss was lower than its loss in the last quarter of 2008, which totaled $25.2 billion and which occurred after the government took over the firm.

The first quarter loss was more than ten times the net loss in last year’s first quarter. Fannie Mae reported that it lost $4.09 per share in the first quarter.

Fannie Mae said that because of the large numbers of forclosure homes, it expected to need more financial help from the Treasury. It announced that the weak conditions in the financial and housing markets have made it unable to recover some of its losses.

On Friday, Fannie Mae was not able to be influenced by the stock rally. Its stock price of less than $1 fell more steeply by about 7 percent in the early morning trading.

The company also reported that despite its efforts in implementing foreclosure moratoriums, large numbers of foreclosed homes still arose. In the first quarter this year, it purchased 25,374 forclosure homes, which is an increase from the 20,998 it acquired in last year’s fourth quarter.

David Ursani, a Wall Street analyst, said that the federal government has been using Fannie Mae as one of its tools in controlling loses in the mortgage sector. He said that Fannie Mae has incurred much loss due to the wave of forclosure homes that it guaranteed.

Freddie Mac economists reported that 50 percent of homeowners who refinanced their mortgage loans with Freddie Mac in the first quarter had reduced their yearly mortgage rate by 20 percent or more and that only 42 percent of refinancing borrowers obtained loans on their home equity, the lowest level in almost 6 years.

However, the economists also reported that the glut of foreclosed homes has pushed down the median house appreciation, which is used as basis for loan refinancing, to just 3 percent, the smallest growth in 6 years.

Frank Nothaft, chief economist and senior vice president of Freddie Mac, said homeowners who refinanced were able to lower their monthly payments by around $160 on a loan of $200,000 after the application of reduced mortgage rates.

Nothaft said the reductions in monthly payments can be translated into approximately $2.5 billion in cash savings that the homeowners can use next year. He added that if the current pace of refinancing keeps up, homeowners can accumulate up to $10 billion in savings in the first year of loan refinancing. Aside from the savings, the homeowners were able to achieve their more important goal of saving their houses from becoming foreclosed homes.

According to Freddie economists, their study on savings from mortgage rates is important during these times when the nationwide unemployment rate is soaring, the sources of family income are dwindling and the number of foreclosed homes continues to rise in many areas. They said the increase in savings from mortgage rates contributed to the rise in consumer spending in the first quarter.

In addition, the Mortgage Bankers Association said that applications for mortgage refinancing increased after the U.S. Federal Open Market Committee told the public about its plan to purchase mortgage-backed securities and Treasury securities. The bankers cited the committee’s announcement as a factor in the decline of mortgage rates that also pushed the increase in sales of existing homes, including foreclosed homes, in many areas of the country.

Even so, the positive effects of the sharp rise in the MBA mortgage refinance index could be hindered by the slow rise in home values, which is largely caused by the glut of foreclosed homes nationwide.

Officials have found him dead in his Fairfax residence on this Wednesday morning and suspect it to be a suicide case with no foul play. However, investigations are still on in this case before reaching any final conclusions.

According to official sources, David Kellermann was employed with Freddie Mac and associated with this company for almost 16 years. He served the company diligently while holding important positions within the company as Vice President of the company.

Kellermann managed all the financial responsibilities of the company including financial planning, annual budgeting while looking after all the financial regulations and managing issues related to tax compliance.

It is believed that Kellermann used to report to the former CEO David Moffett and held several prestigious positions in the company as Senior Vice President, Corporate Controller and also as accounting officer. Kellermann, 41, was named the CFO of the company in last September when the federal government removed some of the high-level employees of the company after taking over the company.

Apparently, Freddie Mac had suffered huge financial losses reported to be in billions along with sister concern, Fannie Mae recently, after making huge investments in various mortgage related areas. Both these firms have received a bailout package amounting to $60 billion so far from the government.

Fannie Mae and Freddie Mac are continuing their rental program for their repo homes despite lifting their moratoriums. According to Freddie Mac spokesperson Brad German, many homeowners can still stay in their repo homes for a time and pay their rent from month to month until the real estate foreclosed homes are sold.

In response to some housing advocates who expressed dismay when the foreclosure moratoriums ended, German said both renters and former owners can apply to the repo homes rental program. Danilo Pelletiere, research chief at the National Low Income Housing Coalition, supported German by saying that perpetual moratoriums are not effective solutions to the foreclosure problem.

However, banks are not receptive to the concept of renting out their repo homes. They reiterated they are not in the real estate management business. The lenders also argue that they should not be blamed for the neighborhood blight and nuisance caused by vacant homes. Robert Klein, chief executive of Safeguard Properties, even claimed that the mortgage service industry has been spending more than $2 billion yearly for the maintenance of vacant repo homes.

Judith Liben, a principal lawyer of the nonprofit advocacy group Massachusetts Reform Institute, said banks should consider the economic benefits of putting renters on vacant repo homes. She said vacant foreclosed homes typically lose about half of their market values before they are sold as REOs.

David Berenbaum, top executive of the National Community Reinvestment Coalition, has also criticized the way banks have been using broker price opinions (BPOs) to sell their foreclosure properties more quickly. BPOs are cheaper alternatives to full professional appraisals and are usually done by real estate brokers with minimal appraisal training. Berenbaum said the banks’ use of BPOs to sell repo homes to speculators and investors at bargain prices have been driving down home prices and overall property values.

Dean Baker of the Center for Economic and Policy Research, said encouraging mortgage lenders to consider the rental option to solve the problem of repo homes remains difficult because the lending industry is not interested in the rental business and many community advocates have not been promoting the rental option for repo homes.

The NCLC claims that 30 states and the District of Columbia allow mortgage lenders to auction off foreclosed homes even without filing notices in the courts. The center also noted that renters in these states are given more consideration than homeowners.

NCLC found that while many states have amended their laws to protect tenants, they have not changed laws that clearly tilt the law against troubled homeowners and favor the mortgage lenders. Lawyer Geoff Walsh, co-author of the NCLC study, said that amending laws related to foreclosed homes will help stop the continued increase of foreclosed properties.

Meanwhile, the National Association of Home Builders applauded the tax credits provided by the Obama foreclosure prevention program for homeowners of energy-efficient homes. More tax credits will entice more homebuyers and will re-energize the homebuilding industry.

The previous energy-efficiency tax credits expired in 2007, but were extended under the Bush Administration. Now it has been expanded under Obama’s stimulus package. Homeowners can claim tax credits for their energy-efficiency features.

On the other hand, the Real Estate Owned (REO) Rental Initiative launched by Freddie Mac was meant to help renters and previous owners of foreclosed homes and prevent them from being homeless. This initiative will enable them to stay in the foreclosed homes as tenants and will pay Freddie Mac’s property management firm from month to month.

To be eligible for the REO initiative, renters and previous owners need to show Freddie Mac that they can afford to pay the rentals and that they are willing to open their properties to prospective buyers while they are renting the properties.

To help more American homeowners at risk of losing their properties to listings of foreclosed homes, Freddie Mac has extended its foreclosure moratorium and has suspended eviction proceedings until the first day of April. The suspension will give more time to borrowers to learn all about available schemes under President Obama’s foreclosure prevention program.

Brian Faith of the Federal National Mortgage Association or Fannie Mae said that thousands of e-mails and calls were received by the government-affiliated agency from troubled owners of distressed properties who want to know if they are eligible for Obama’s anti-foreclosure homes plan.

He explained that over 20,000 distressed homeowners sent e-mails and 10,000 more have called asking whether they have a mortgage loan owned and guaranteed by the agency. He added that the volume of calls was eight times the normal call volume that the agency handles.

Meanwhile, the Federal Home Loan Mortgage Corp. or Freddie Mac was also inundated with e-mails and telephone calls from distressed homeowners.

Brad German of Freddie Mac said that the agency received 1,600 calls and posted 42,000 Web visit for a single day. He claimed that homeowners wanted to call their mortgage servicers to find out about new options that will help them save their properties from foreclosures.

Under Obama’s anti-foreclosure homes plan, Fannie Mae and Freddie Mac will allow borrowers whose loans they own or guaranteed to refinance even if they have little or no equity. Both government-sponsored enterprises will also contribute over $20 billion for subsidizing interest rates to reduce monthly payments for homeowners on the brink or already in default.

Other private entities got their own share of action after Obama unveiled details of his anti-foreclosure homes plan.

Calls received by Countrywide’s central consumer line increased by almost 75 percent. JPMorgan Chase also experienced a heavy volume of calls on its mortgage hotline.

Meanwhile, the servicing department of Wells Fargo Home Mortgage received over 3,500 calls from homeowners who requested information about the anti-foreclosure homes plan of Obama. The volume of calls increased five times two days after Obama unveiled his foreclosure homes prevention plan.

Michael Moskowitz of Equity Now noted that calls received by the lending company were not mostly from troubled owners of foreclosure properties. He said that the anti-foreclosure homes program has been attracting homeowners who are current on their mortgages and can afford to meet their monthly payments.

On the other hand, the Housing and Urban Development registered 252,858 online visits while searches for housing counselors on its Web site increased by 14 percent.