Fannie Mae Adjusts Rules for Borrowers
- Apr 27, 2010
April 27, 2010
By Dees Stribling, Contributing Editor
Fannie Mae has unveiled a change in its eligibility rules for applying for mortgages that the GSE is willing to back. Under the new rules, starting in July 1, beleaguered homeowners who either give up via a deed in lieu of foreclosure or by effecting a short sale will be eligible to apply for a Fannie-backed mortgage once again in two years. Currently the waiting period is four years.
But there are a few conditions. The period is two years provided the borrowers can pony up a 20 percent down payment. Less than that and the waiting will still be four years, unless they can show “extenuating circumstances” such as a job loss or medical crisis.
Borrowers who have been foreclosed still have to wait four years before getting a loan that Fannie will ultimately buy. That’s more often than not a moot point in any case, since foreclosure tends to do enough damage to a borrower’s credit rating that a new mortgage within so few years is very hard to come by.
DDR Foresees Increasing Demand for Retail Space
Mall owner Developers Diversified Realty Corp. reported on Monday that its funds from operations, an important REIT metric, dropped to $28.4 million, or 12 cents per share, during the first quarter of 2010. That figure compares with $140 million, or $1.08 per share, during the same period last year.
Still, the company, which owns 640 retail properties in the United States and other countries, also reported that portfolio-wide, occupancy edged up to 91.3 percent from 91.2 percent during 4Q09. It also reported a growing ability to raise capital, including the fact that it was a participant in first the multi-borrower CMBS deal to close since 2008, which represented $30 million in financing for the REIT to replace loans due this year.
During Monday’s conference call, Paul W. Freddo, DDR’s senior executive vice president-leasing and development, waxed optimistic about demand for retail space in the near future, especially the kind that his company offers. “Strong sales and solid earnings growth for retailers translate into expansion plans, and we’re working with numerous retailers who need space… in the next two years,” he said. “[They] are increasingly viewing square footage expansion as their primary vehicle for top-line growth, particularly in low inflationary to even deflationary environments for some categories.”
Suit Against Wal-Mart to Proceed
In a 6-to-5 ruling on Monday, the U.S. Court of Appeals for the Ninth Circuit in San Francisco is allowing a class-action lawsuit against retail leviathan Wal-Mart Stores Inc. to proceed to trial. It has been a long time in coming. The suit was first filed about nine years ago, alleging that the company engages in a pattern of discrimination against its female employees.
One of the main questions before the court was whether the six individual plaintiffs could bring such an enormous class action against Wal-Mart. “Although the size of this class action is large, mere size does not render a case unmanageable,” wrote Judge Michael Daly Hawkins for the majority.
The dissenting judges said it would indeed be unmanageable. “Never before has such a low bar been set for certifying such a gargantuan class,” wrote Judge Sandra S. Ikuta. Wal-Mart, which pretty much defines gargantuan in the retail world, promised to appeal to the U.S. Supreme Court.
Wall Street had an up-and-down day on Monday and ended up mixed. The Dow Jones Industrial Average barely budged, but did show a 0.75 point gain, or 0.01 percent. The S&P 500 lost 0.43 percent and the Nasdaq declined 0.28 percent.