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56 BILL TO CAP FANNIE MAE AND FREDDIE MAC CEOS' PAY PASSES IN U.S. SENATE A proposed bi-partisan bill to cap the salaries of the CEOs at both Fannie Mae and Freddie Mac passed in the U.S. Senate by a unanimous vote. S.236, known as the Equity in Government Compensation Act of 2015, was co-sponsored Sen. David Vitter (R-Louisiana) and Sen. Elizabeth Warren (D-Massachusetts). e bill was modeled after a similar bill in the House, H.R. 2243, also called the Equity in Government Compensation Act of 2015, introduced by Rep. Ed Royce (R-California) earlier this year. Royce's bill passed in the House Financial Services Committee by a vote of 57-1 on July 29. "Giving massive taxpayer-funded pay raises to Fannie Mae and Freddie Mac isn't just out of touch – it's downright offensive," Vitter said. "ese two companies are wards of the state. ey exist in the current form only because folks across the country paid to bail out the mortgage giants during the financial crisis. In fact, they'd still be on the hook if Fannie Mae and Freddie Mac incurred further losses," Vitter said. "Congressman Royce's hard work in the House built momentum to pass this important bill, and with last night's vote, the Senate has unanimously agreed that capping these pay raises is the common-sense, responsible course of action." Royce introduced his bill in May in response to Mel Watt, Director of the FHFA (the GSEs' conservator), authorizing the GSEs to propose new executive compensation plans for Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton that could be as high as the 25th percentile of the market, which computes to about $7.26 million per year. On July 1, Watt announced a proposed compensation package that would raise the annual pay of Mayopoulos and Layton from the current level of $600,000 up to $4 million. Watt's predecessor, Ed DeMarco, capped the GSE CEO pay at $600,000 more than three years ago after four years of conservatorship. e Vitter-Warren bill would re-instate DeMarco's cap of the salaries at $600,000 per year. "Near universal support in both the House and Senate for capping GSE CEO pay is proof positive that multi-million dollar raises at taxpayer bailed-out and backed organizations are unconscionable," Royce said. "I applaud Senator Vitter for his quick work in getting this bill through the Senate and will work to replicate his success in the House." Both the U.S. Department of Treasury and the White House publicly stated that they did not agree with Watt's proposal. Treasury said it "does not support FHFA's new approach to CEO compensation at Fannie Mae and Freddie Mac and urged the agency to reject any increase," and White House Press Secretary Josh Earnest said "I think it is entirely legitimate for the executives at those institutions to be subject to compensation limits" when asked about the White House's view on executive raises at the GSEs." SHARE OF UNDERWATER BORROWERS DROPS; 'NEGATIVE EQUITY EPIDEMIC IS LIFTING' Approximately three-quarters of a million single-family residential homes regained equity in the second quarter of 2015, bringing the nationwide total of mortgaged residential properties with equity up to 45.9 million (91 percent), according to data released by CoreLogic. e number of homes regaining equity totaled about 759,000 for Q2, which translated to a year-over-year increase in borrower equity of about $691 million for the quarter, according to CoreLogic. About 8.7 percent of all residential homes with a mortgage, or about 4.4 million properties, were in negative equity in Q2 2015– both declines from 10.9 percent and 5.4 million from the same quarter a year earlier. "For much of the country, the negative equity epidemic is lifting. e biggest reason for this improvement has been the relentless rise in home prices over the past three years which reflects increasing money flows into housing and a lack of housing stock in many markets," said Anand Nallathambi, president and CEO of CoreLogic. "CoreLogic predicts home prices to rise an additional 4.7 percent over the next year, and if this happens, 800,000 homeowners could regain positive equity by July 2016." Homeowners with negative equity owe more on their mortgages than their homes are worth and are often referred to as "upside down" or "underwater" homeowners. Declines in home values or increases in mortgage debts, or a combination of both, can cause a negative equity situation in a home. e national aggregate value of negative equity at the end of Q2 was approximately $309.5 billion, which was a decline from $338 billion at the end of Q1 and from $350 billion year-over-year (11.6 percent), according to CoreLogic. Out of the approximately 50 million residential homes with a mortgage nationwide, about 17.8 percent (about 9 million) had less than 20 percent equity at the end of Q2, which is commonly referred to as being "under-equitied," according to CoreLogic. Borrowers who are under-equitied often have a difficult time refinancing their homes or obtaining a loan to buy a new home because of underwriting constraints. About 1.1 million, or 2.3 percent, of homes had less than 5 percent equity at the end of Q2, which is known as "near negative equity"; these borrowers are at risk of falling into negative equity if home prices drop, according to CoreLogic. "Home price appreciation and foreclosure completions both reduce the number of homeowners with negative equity, the latter because most homeowners who lost homes through foreclosure had some level of negative equity," said Frank Nothaft, chief economist for CoreLogic. "Between June 2014 and June 2015, the CoreLogic national Home Price Index (HPI) rose 5.6 percent and we reported the number of homes completing foreclosure proceedings exceeded one-half million. Both of these factors helped reduce the number of homeowners with negative equity by one million over the year ending in June." e state and metro area with the highest percentage of homes with equity at the end of Q2 were Texas and Houston with 97.9 percent and 98.1 percent, respectively. e state and metro area with the highest percentage of homes with negative equity were Nevada and Tampa with 20.6 percent and 20.2 percent, respectively.

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