Entries for February 2008

My recent story offering home buyers tips on how to get a great deal on a house included a suggestion that buyers—who have the upper hand these days—should consider negotiating the real-estate commission with their agents. That brought a flood of mail from folks like real-estate broker Debi Handley, who argues that she and her colleagues "earn every penny" of the commission they charge.

"We should not be badgered about our wages by a customer," she writes. "That is rude and out of line."

Wall Street's love-hate relationship with Fannie Mae and Freddie Mac, the government-backed mortgage holders and guarantors, was on full display Wednesday as a spate of bad news followed by good news sent Fannie's shares bouncing down and up by some 25 percent intraday.

Early in the morning, Fannie announced that it lost $3.55 billion last quarter—about triple what analysts had expected—as rising foreclosures pushed up its credit losses by as much as 50 percent. Fannie's CEO called the sinking house market the "toughest...in a generation" and predicted further declines.

With much fanfare, Treasury Secretary Henry Paulson this week announced yet another plan to stem the tide of some 1 million foreclosures expected this year. This time, six major mortgage lenders will tack an extra 30 days onto the grace period delinquent borrowers have to get up to date on their mortgages before foreclosure proceedings are started.

The six big banks who've signed up for the program, including Bank of America, Citigroup, Countrywide Finance, JPMorgan Chase, Washington Mutual, and Wells Fargo, represent about half of all outstanding mortgages. Each will send a letter to truant borrowers detailing how they can "pause" the foreclosure process for 30 days while the bank evaluates whether they're eligible to modify their loan on better terms.

It may not be big news compared with the Microsoft-Yahoo! merger, or the Labor Department's lousy jobs report, but Beazer Homes' announcement today that it is getting out of the mortgage lending business is a good sign for the long-term health of the housing market and the troubled mortgage-lending industry.

Like lots of other home builders, Beazer has tried to offer customers a one-stop home-buying shop. They arrive at Beazer's sales office, pick out their dream house, and apply for a loan with Beazer's mortgage arm, and it's a fait accompli.