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53 » VISIT US ONLINE @ DSNEWS.COM FHFA VOWS TO PROTECT FIRST-LIEN STATUS OF GSE-BACKED MORTGAGES e Federal Housing Finance Agency (FHFA) has released a statement warning organizations that label mortgage loans with "super-priority lien" status will not push mortgages backed by Fannie Mae and Freddie Mac into the secondary position. e warning was aimed mainly at energy retrofit financing programs and homeowners associations that attach super-priority lien status to mortgages because of the risk they pose to taxpayers while Fannie Mae and Freddie Mac are under conservatorship. "One of the bedrock principles in this process is that the mortgages supported by Fannie Mae and Freddie Mac must remain in first-lien position, meaning that they have first priority in receiving the proceeds from selling a house in foreclosure," the statement reads. "As a result, any lien from a loan added after origination should not be able to jump in line ahead of a Fannie Mae or Freddie Mac mortgage to collect the proceeds of the sale of a foreclosed property." Energy efficiency programs such as Property Assessed Clean Energy (PACE) are offered in California and other states. is program and others like it provide loans made through the homeowners' property tax assessment and are repaid as part of the property tax bill; it gives those loans first-lien status. FHFA states that the GSEs' policies prohibit them from purchasing a mortgage with a first-lien PACE loan attached for two reasons. "First, a homeowner with a first-lien PACE loan can't refinance their existing mortgage with a Fannie Mae or Freddie Mac mortgage," the statement reads. "Second, anyone wanting to buy a home that already has a first-lien PACE loan can't use a Fannie Mae or Freddie Mac loan for the purchase. ese restrictions may reduce the marketability of the house or require the homeowner to pay off the PACE loan before selling the house." FHFA said it will aggressively enforce the existing policies prohibiting the purchase of mortgages that include PACE loans and will continue to pursue legal and other actions that will protect the first-lien status of GSE loans. Where homeowners associations are concerned, FHFA announced that the agency and Fannie Mae filed an action in a Nevada federal court on December 5 seeking to declare sales made by HOAs invalid. e Nevada Supreme Court made a controversial ruling in September that gave HOAs the power to foreclose on a home and extinguish a mortgage non-judicially, a ruling that was subsequently appealed by lenders. In order to protect Fannie Mae's and Freddie Mac's property rights, FHFA intervened in two Nevada cases in which an HOA extinguished a mortgage. "ese FHFA actions are based on federal law which precludes involuntary extinguishment of liens held by Fannie Mae or Freddie Mac while they are operating in conservatorships and bars holders of other liens, including HOAs, from taking any action that would extinguish a Fannie Mae or Freddie Mac lien, security interest, or other property interest," the statement reads. "...FHFA is authorized, as conservator, to bring this suit because Enterprise lien interests in collateral constitute property are protected by this provision." FHFA said it would aggressively protect the rights of the GSEs by bringing actions to prevent foreclosures or threaten the first-lien status of Fannie Mae- or Freddie Mac-guaranteed mortgages. CONSUMER CONFIDENCE REBOUNDS e Conference Board's Consumer Confidence Index increased to 92.6 in December from its November reading of 91.0, according to the latest monthly Consumer Confidence Survey released recently. November's reading had been a disappointment for the Consumer Confidence Index following a post-recession high of 94.5 in October. e Present Situation Index jumped up to 98.6 in the latest reading from its November level of 93.7, while the Expectations Index fell slightly from 89.3 to 88.5. "Consumer confidence rebounded modestly in December, propelled by a considerably more favorable assessment of current economic and labor market conditions," said Lynn Franco, director of Economic Indicators for the Conference Board. "As a result, the Present Situation Index is now at its highest level since February 2008 (Index, 104.0). Consumers were moderately less optimistic about the short-term outlook in December, but even so, they are more confident at year-end than they were at the beginning of the year." e main drivers of the increase in consumer confidence for December were consistently falling gas prices and well-received employment reports, according to Chris Christopher, director of U.S. Consumer Economics for IHS Global Insight. With the nation's unemployment rate at a six-year low of 5.8 percent, the percentage of people surveyed who said they believe jobs are "plentiful" increased from 16.2 percent in November to 17.1 percent in December. e percentage who said they believe jobs are "hard to get" declined slightly from 28.7 percent in November to 27.7 percent in December. Christopher says he sees the increases reported in the latest survey as a positive sign for the holiday season, since the cutoff date for the survey was December 16. "Consumer spending is likely to end 2014 on a high note and is also looking bright for 2015," Christopher said in his analysis of the survey. "We expect 2015 real consumer spending growth to outpace 2014, and real median household income is likely to gain some traction in the new year. is is good news for middle income households, since between 2008 and the end of 2013 most of the income gains have been in the upper income brackets." Meanwhile, the percentage of people surveyed who said business conditions were "good" stayed the same from November to December, the percentage who said business conditions were "bad" dropped from 21.8 percent to 19.6 percent. Consumers' outlook for short-term economic improvement was slightly less positive; however, the percentage who said they expect business conditions to improve in the next six months dropped slightly down to 18.0 percent in December from 18.3 percent in November. e percentage expecting more jobs in the months ahead also nudged slightly downward from 15.5 percent to 14.7 percent, while the percentage expecting fewer jobs fell from 16.9 percent to 16.1 percent. Approximately 9.4 million mortgaged homes in the United States, or about 19 percent, have positive equity as of Q3 2014 but are considered under- equitited (less than 20 percent equity), according to CoreLogic. KNOW THIS

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