Tag Archives: Investment

On Friday, after years of bills from lawmakers to reform Fannie and Freddie, the Treasury Department unveiled a plan to finally ├â┬ó├óÔÇÜ┬¼├àÔÇ£wind down├â┬ó├óÔÇÜ┬¼├é┬Ø the mortgage giants. According to a release, the Treasury Department will end a past ├â┬ó├óÔÇÜ┬¼├àÔÇ£circular├â┬ó├óÔÇÜ┬¼├é┬Ø arrangement with Fannie and Freddie that allowed the companies to repay the agency with the very funds it received in the first place. The new agreement requires that Fannie and Freddie divert any new quarterly profits back to Treasury in order to repay taxpayers for their losses.

As global investor activity picked up in the second quarter, a number of U.S. cities saw more than half a billion dollars each in foreign real estate investment. Jones Lang LaSalle revealed in its most recent Global Capital Flows Report that global transactional volumes rose to $108 billion in Q2 2012, up 24 percent from a worrying dip in activity in Q1. The Americas posted the most activity, contributing $47 billion to the second quarter's overall total. Activity levels in Q2 still fell 1 percent from the same period in 2011.

A major player in the ongoing Countrywide settlement dropped its suit against the defunct mortgage unit on Monday. According to news services, Walnut Place, otherwise known as Baupost Group, withdrew objections to a proposed $8.5 billion settlement currently under way with Bank of America, which bought Countrywide in 2008. Several reports held that a tentative deal had been reached by institutional investors last year to settle allegations of systematic misrepresentation.

A weakened second quarter may indicate a slowdown in economic activity for the rest of the year, Fannie Mae reported Monday. According to a report from the GSE, its Economic & Strategic Research Group may have been too optimistic in its original 2012 GDP growth projection of 2.2 percent. Its revised growth rate estimate is 2.0 percent. Despite the downgrade in anticipated economic growth, Fannie Mae found a silver lining in the housing market. Year-over-year, home sales increased by 9 percent, and single-family housing starts are nearly 20 percent higher (although still below healthy norms).

Financial reform advocates have two birthdays to celebrate on Saturday. This weekend marks the one-year anniversary of the watchdog Consumer Financial Protection Bureau and the two-year anniversary of the Dodd-Frank Act, the sweeping financial reform law that spawned it. Their stories run parallel to each other ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and rightly so. The consumer bureau squeaked past partisan gridlock this time last year, just one year after Democrats, then in the majority of both houses of Congress, cleared Dodd-Frank for the president├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós signature.

Rallying investors by end of day Friday, JPMorgan Chase posted strong earnings from the second-quarter, with Home Affordable Refinance Program modifications helping boost income for the laggardly mortgage servicing unit year-over-year. For mortgage production and servicing, the financial institution fielded $604 million in net income over the second quarter, a figure that trumps a net loss of $649 million from the past year. Mortgage production rose to $931 million in pretax income for the lender.

The revised figures for economic growth in the year's first quarter were disappointing, but Fannie Mae's Economic & Strategic Research Group is still forecasting moderate growth for the remainder of 2012. A report released by the group Tuesday projected 2.2 percent growth for all of 2012. Several factors presented risks to the economic outlook, including a slowing trend in job growth and potential contagion in the euro zone from Greece's financial issues. Consumer attitudes also influence the economic outlook.

Analysts said Tuesday that a reduction in homicide rates by 10 percent would likely lead to a 0.83 percent increase in housing values and a 2.1 percent increase in housing prices in residential and metropolitan areas around the nation. The Center for American Progress surveyed 8 major metropolitan areas to tally up the costs of violent crime ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô including homicide, rape, and aggravated robbery ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô for residents, cities, and state and municipal governments. According to the study, the results weigh heavily on residential property values and home prices.

The Dodd-Frank Act fell under scrutiny at a hearing of the Senate Banking Committee Wednesday, with lawmakers from the right charging that the reform law will impose arbitrary rules that limit consumer choice and prevent an economic recovery. Much of the light fell on interagency efforts to finalize the controversial Volcker Rule, a rulemaking requirement under Dodd-Frank that bans short-term proprietary trading by systemically important financial institutions like Chase. Witnesses included Consumer Financial Protection Bureau chief Richard Cordray.

Despite some slowdown in housing activity at the end of the first quarter, Fannie Mae projects that home sales will rise and the economy will continue to grow in 2012. Though the first quarter of the year saw substantial housing activity compared to last year, Fannie Mae's internal think tank noticed a drop in momentum late in the quarter. According to the group, this drop may be mirroring many economic indicators and may be a result of the year's unusually warm weather pulling activity slightly forward. Economic growth is at 2.2 percent.