Back to top

The Zacks Analyst Blog Highlights: Fannie Mae, Freddie Mac, JPMorgan Chase, Bank of America and Citigroup

Read MoreHide Full Article

For Immediate Release

Chicago, IL – August 24, 2012 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Fannie Mae , Freddie Mac , JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and Citigroup Inc.  (C - Free Report) .


Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter:

Here are highlights from Thursday’s Analyst Blog:


New Short Sale Guidelines from GSEs

Homeowners of underwater properties have a reason to rejoice thanks to the introduction of new guidelines from the two government-sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac . On Tuesday, the Federal Housing Finance Agency (FHFA) – the regulator for these two GSEs – announced a number of guidelines that are expected to make short sale simpler and easier. With the implementation of the guidelines effective November 1, short sale of properties would speed up.

The new measures announced by FHFA will have to be followed by mortgage servicers. These will consolidate the current short sale programs into one streamlined program and enable lenders and servicers to promptly and easily get eligible borrowers for short sale.

As part of the new set of rules, property owners with mortgages from either of these two GSEs will be able to short sale their homes despite making timely payments of interest and principal if they have an eligible hardship (death of a borrower or co-borrower, divorce, disability or relocation for a job). The servicers will be able to allow short sales without any additional permission from these GSEs.

Moreover, both GSEs will be lowering the number of documents required to complete a short sale, thereby aiding those homeowners who are in danger of foreclosure. Further, it would also improve the efficiency of the servicers in completing a short sale.

In addition, the servicers will make guidelines clearer and more uniform, leading to faster processing and execution of short sales. Further, the GSEs will offer a maximum of $6,000 to the holders of the second liens (once the short sale is complete), so that mortgage holders do not haggle over the proceeds of the sale.

Moreover, while approving the short sale of property, servicers would evaluate the ability of the homeowner to pay the difference between the balance loan amount and the current sale price of the home. In cases where the property owner has the ability to pay the differential amount, the GSEs will waive off the right to follow deficiency judgment.

Though the FHFA did not provide any projections related to the number of homeowners eligible for the new short sale initiative, there are about 4.6 million borrowers with mortgages backed by GSEs. Out of these, approximately 80% have not missed any loan payments.

The new short sale guidelines are a part of the FHFA’s Servicing Alignment Initiative that is expected to simplify the GSEs plan for short sales and other modes to prevent foreclosures. In framing the new streamlined short sale process, the FHFA and the GSEs worked in collaboration with the National Association of Realtors (NAR). The NAR believes that improving the short sale procedure would help homeowners avert foreclosures and also stabilize the value of residential property going forward.

However, one of the biggest fall-outs of the additional short sales is expected to be for those banks that have provided second mortgages to the borrowers. They will have to record losses on home-equity loans. Some of the major providers of second liens include Wall Street biggies – JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and Citigroup Inc. (C - Free Report) .

Nevertheless, the new short sale process is also expected to be in the larger interest of the overall housing sector and economy. In addition, the real estate agents and home owners planning to sell their property would also benefit from this simplified process.






Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter:

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today:

About Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at

Visit for information about the performance numbers displayed in this press release.

Follow us on Twitter:

Join us on Facebook:

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

JPMorgan Chase & Co. (JPM) - free report >>

Bank of America Corporation (BAC) - free report >>

Citigroup Inc. (C) - free report >>

More from Zacks Press Releases

You May Like