Aug 5 President Barack Obama will propose overhauling the U.S. mortgage finance system in a speech on Tuesday, weighing in on a tangled and polarizing problem that was central to the devastating financial crisis in 2007-2009 and that continues to slow the economic recovery, the White House said. Obama will propose eliminating mortgage finance entities Fannie Mae and Freddie Mac over time, replacing them with a system in which the private market buys home loans from lenders and repackages them as securities for investors, senior administration officials said. The mortgage securitization process is deemed essential to the smooth flow of capital to housing markets and the availability of credit. The government's role would be relegated to providing some form of insurance or guarantee, and to providing oversight, according to officials and a White House statement. Fannie Mae and Freddie Mac, originally chartered by Congress to expand mortgage finance, were taken over by the government in 2008 amid mounting losses in the financial crisis. Propping them up cost taxpayers $187.5 billion, although the firms have now returned to profitability."We have to end Fannie and Freddie going forward and replace them with a commitment to the notion that private capital must be wiped out before the government pays on any form of catastrophic guarantee or reinsurance," a senior administration official told reporters. The departments of Treasury and Housing and Urban Development have been working on an outline for housing finance reform. They outlined several options in a white paper to Congress in 2011. After plunges in home values that wiped out an estimated $7 trillion in homeowner equity and wrecked many Americans' finances, housing markets are staging a modest recovery. Obama, as part of a series of speeches pushing for steps to boost tepid economic growth, is focusing on housing issues in a speech in Phoenix, Arizona, in one of the regions hardest hit by the housing bust.
The president generally agrees with the bipartisan Senate proposal that would replace Fannie and Freddie with a system that would allow private firms to securitize mortgages, a senior administration official told reporters in a conference call. A government reinsurer of mortgage securities could backstop private capital in a crisis, the official said. Obama would want the Senate measure to go farther in helping first-time home buyers and in making sure affordable rental housing is available, the official added. The Senate bill, though, remains at odds with the bill advancing in the Republican-controlled House of Representatives that would liquidate Fannie Mae and Freddie Mac over five years and limit government loan guarantees.
RESTRUCTURING MORTGAGE SYSTEM TO TAKE YEARS Fannie Mae and Freddie Mac became dominant players in housing finance when private lending to home-buyers declined after the financial crisis. The government-backed companies own or guarantee more than half of all U.S. home loans and are critical to keeping capital flowing to lenders and borrowers. Restructuring of the $11 trillion mortgage finance system is expected to take years. Any overhaul must also include a mechanism to maintain stability for the 30-year-fixed rate mortgage even in shaky financial markets, the official said.
Mortgage finance reform should also incorporate a fee on mortgage products to be paid by financial firms that would help fund for lower-income families buy homes, the official added. Analysts say more robust housing activity is being held back by tight credit. Clearing up questions about the future of Fannie Mae and Freddie Mac could help unlock capital for mortgage finance and give housing activity a boost."On Capitol Hill, the odds are against short-term legislation," said Jaret Seiberg, a senior policy analyst at Guggenheim Securities. "Longer-term housing finance reform is gaining momentum. The leading ideas would reduce the government involvement in housing finance, which would mean higher rates for consumers."The administration is also reinvigorating its effort to help underwater borrowers by pushing for an expansion of refinancing for those who purchased homes when rates were above the current historic lows, the White House said. By refinancing, borrowers could save hundreds of dollars a month, adding to their disposable income and stimulating the economy, officials said. So far, legislative efforts to expand refinancing programs have failed in Congress. Obama's nominee to oversee Fannie Mae and Freddie Mac, veteran Democrat Representative Mel Watt, has failed to garner enough support for confirmation in the full Senate. Administration officials are also urging lawmakers to bring Watt's nomination to the Senate floor as part of broader efforts to overhaul the overhaul nation's decades-old housing financial system.
(The author is a Reuters contributor. The opinions expressed are her own. This is part of a five-story package moving on marriage and money, moving June 4-7)By Temma EhrenfeldNEW YORK, June 7 Lindsey Gehl and Ryan Bell have a vision of their June wedding being white - and green, too. The 27-year-olds will pledge their troth in a traditional ceremony, followed by a reception amid the scenic trails and wildlife habitats of the Pilcher Park Nature Center in Joliet, Illinois, to which they're donating $600. Indeed, their dedication to the environment is so true, they've forked out a little more to have invitations printed on recycled paper, and to have drinks served in glasses instead of plastic tumblers."It would have been cheaper to have our wedding at a church, but we both love nature and we believe it's important to do what we can for the environment," says Gehl, a teacher. Gehl and Bell are in good company. In a November survey by chain store David's Bridal, 78 percent of respondents said they were taking steps to green their weddings, while 35 percent planned to serve local food or decorate with local flowers - both steps that reduce a wedding's carbon footprint. Those who have scoffed at "green" as being synonymous with "cheap" may have to eat their words. Wedding planners say there's an increased focus on environmental niceties that may not save money, and may even plump up a wedding bill. Take food, for example. Locally sourced produce tends to cost more than those by large institutions based further away, says Loren Michelle, proprietor of Naturally Delicious, a caterer and event planner based in Brooklyn, New York."I pay $14-$16 a pound for New York State aged cheddar. Regular cheddar would be $6 to $8," she says, while New York wine is more expensive than wine from California. In-season local vegetables may be less expensive, but not by much. Organic food of any kind is pricy. About a quarter of Michelle's customers request free-range, grass-fed meat, which can cost 30 percent more. As a genre of nuptial celebrations, eco-friendly weddings have held steady at about 11 percent of weddings since the economy tanked in 2008, reports TheKnot, a wedding planning website. And hosts are keen on not being wasteful, says TheKnot editor Anja Winikka. To be sure, it can be stylish to be "eco-chic", says blogger Anne Chertoff, who writes for WeddingWire, an online platform for vendors. A bride could give her gown to a charity, or favor a caterer that will donate unused food.
Some green choices can be gentler on the wallet."For my wedding we used locally grown organic dahlias and hydrangea and saved almost $1,500," says Kate Harrison, founder of the Green Bride Guide. Couples can halve their flower budget, and keep a lid on their carbon footprint, if they avoid having exotic flora shipped in from tropical locations, says TheKnot's Winikka. Moving flowers from the ceremony to the reception area can trim some costs, while enjoyment of the blooms may be prolonged by having guests take them home afterwards. GREEN TO THE EXTREME For radical savings, couples can emulate Lane Bigsby, who in October, opened a low-cost rental service for vintage wedding props, Something Borrowed Portland. ( somethingborrowedpdx.com/ ). Instead of "something borrowed, something blue," Bigsby's maxim for her Portland, Washington wedding last August was a green one; everything had to be borrowed, used or homemade, then reused or recycled after the event. She spent $3,000 on a hundred guests, in a year when the average wedding cost $27,021, according to TheKnot survey. A neighborhood seamstress created her dress with a frilly skirt of old curtains. Sheets were cut into napkins, and burlap bags from the local coffee roaster redeployed as table runners. Guests brought entrees and took home leftovers. The goal? Zero waste.
"We had one small grocery bag of garbage, and I took it home and sorted through to save things and compost the rest," says Bigsby, 36, who works as a project administrator at an energy efficiency consulting company. Here are some tips for couples who'd like their big day to be eco and budget this site DRESSES Alter a dress that's already in the family - his or hers. Or buy a used gown for a third of its retail price, according to Harrison. Check out RecycledBride.com, which also offers items like shoes and rings. Sell the dress after the wedding to recoup some costs or donate it to a thrift shop serving a favorite cause. The Bridal Garden in New York City gives all proceeds to benefit education for local children. The Glass Slipper Project ( this site ) and donatemydress.org give bridesmaid gowns to high school students who can't afford prom dresses.
CAR POOL, AND LOCATION POOL Skip the parade of honking cars and hold the reception and ceremony in the same location. Arrange car pooling. WEB INVITES Invitations made from recycled paper and soy ink are fine, but perhaps consider a web invite, or use free wedding websites to provide directions and hotel information. Guests can RSVP online. GREEN GIFTS Create a green registry. Ask only for essential gifts or have guests contribute to a charity. THE RING Consider a vintage ring. Or buy wedding rings made with post-consumer gold and man-made diamonds. GREEN, IN MODERATION Not every green wedding idea is smart. Bigsby - certified in Portland as a "Master Recycler" to educate the public about environmental issues - recommends against 'compostable' dishes; these apparently don't compost in a landfill or in home composts, which don't get hot enough.