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House Financial Services Subcommittee on Oversight and Investigations Hearing

23.05.12

Assembly Financial Services Subcommittee on Oversight and Investigations Hearing

"Oversight of the Federal Shelter Finance Agency."

Dec 05, 2011 (Congressional Documents and Publications/ContentWorks via COMTEX) -- Chairman Neugebauer, Ranking Fellow Capuano, and Members of this Subcommittee: thank you for inviting me to speak with you today. I am Ed Haldeman, Chief Kingpin Officer of Freddie Mac. I joined Freddie Mac in August 2009, almost a year after the body was placed into conservatorship by the Federal Housing Finance Agency (FHFA). I joined Freddie Mac from Putnam Investments, where I served as President and CEO for several years start in 2003. I have been a financial services professional for more than 35 years.

I appreciate the pre-eminence of this hearing and I thank you for inviting me to attend. This hearing covers FHFA's inadvertence responsibility, as both our regulator and conservator. With that in mind, I want to discuss with you from a management view how we are running the company under conservatorship.

As we address the important issue of oversight of Freddie Mac and Fannie Mae, I wish for to make something very clear: the Freddie Mac of today is a new company with a new team and new focus. Let me forearm some examples.

* New management team: The management team running Freddie Mac today is not the group we had pre-conservatorship. I am the third CEO since conservatorship and 14 of our 18 management committee executives have turned over since my occupation began two years ago.

* New emphasis on strong credit standards: We are placing renewed paralipsis on safety and soundness and responsible lending, putting on the books higher-blue blood loans, with lower loan-to-value ratios and higher credit scores. Our convergence is on helping borrowers own homes that they can afford and keep.

* New approach to expenses: We take seriously our demand to use taxpayer support efficiently and effectively, and to responsibly reduce spending wherever on. As of September 30, 2011, we reduced annual G&A expenses by more than $120 million from 2009 levels. We also cast that by the end of this year we will have reduced annual G&A by more than $150 million below 2009 levels. While we recall members of this Subcommittee may have questions about particular expenditures, our overall efforts to mark down expenses and improve the efficiency of our operations are producing real results.

* New manner to the retained portfolio: Consistent with the terms of Treasury financial support, we have reduced the assay of our retained portfolio every year in conservatorship. Its size today is almost 25 percent below its culmination, and we are working with FHFA to identify ways to prudently accelerate the rate of contraction.

* New compare with to executive salaries: We reduced overall compensation of the top ten percent of our new senior official team by 40 percent. We have done this in part by eliminating some senior executive positions, innards others at lower salaries, and asking some executives to perform tasks representing multiple job responsibilities.

* New core on helping families avoid foreclosure: We helped 575,000 financially stressed families refrain from foreclosure since 2009, about 80 percent of whom have been able to stay in their homes, and we are working every day to serve thousands more at-risk borrowers. At the same time, we are implementing an FHFA directive to as a matter of fact improve how servicers work with delinquent borrowers.

* New emphasis on leadership: We have developed a new sophistication at Freddie Mac, one that emphasizes responsible and accountable leadership. This is a particular priority of mine and I would be exhilarated to discuss it further with the Subcommittee.

* All of this has contributed to significantly improved results in the quality of our new enlist of business: Our pre-conservatorship business has generated the overwhelming majority of our credit expenses. In compare, our book of business under conservatorship --mortgages we've purchased since 2009 --have generated warranty income well above credit expenses - $779 million during 2010 and $805 million through the first nine months of 2011. Serious delinquency rates, which currently surpass 10 percent for mortgages purchased during 2006-07, are about 0.25 percent for mortgages purchased from 2009-11. And even including our pre-conservatorship enrol of business, Freddie Mac's single-family serious delinquency rate is less than half that of the whole market.

We have achieved this change while providing more than $1.1 trillion in critically needed mortgage liquidity since 2009. We financed homeownership and rental casing for more than 5.8 million American families since 2009 - including 1.25 million so far in 2011. We also enabled close to 4.1 million homeowners to refinance into lower cost mortgages, saving them in aggregate about $10 billion in interest costs during the first year after refinancing.

Starkly, we could not have achieved these results without the support we receive from FHFA, Treasury and the American taxpayer. But I poverty to make clear that our new team uses this support to provide liquidity, resist avoid foreclosures and aid in our nation's housing and economic recovery. In other words, the final beneficiaries of the support Freddie Mac has received are taxpayers, homeowners, renters, and the casing finance system we serve.

Freddie Mac is run by a new management team

The management team meet Freddie Mac today is not the team we had before conservatorship. We have a new CEO, chief financial officer, senior of our single family business unit, head of our multifamily business segment, head of our investments business unit, interim general counsel, chief risk copper, chief compliance officer, head of human resources, and chief dope officer. All of these leaders are either new to Freddie Mac or in new roles since conservatorship. n1 In fact, 14 of our 18 direction committee executives have turned over since my tenure began two years ago. Our top management tandem join up also reflects Freddie Mac's commitment to diversity. We also have many new non-executive employees who have joined Freddie Mac since being placed in conservatorship.

I demand to highlight for the Subcommittee the dedication and work of our employees under conservatorship. Without any assurance of a dream of-term career with the company, they are putting their considerable skills to work to help stabilize the dwelling market, continue to make mortgage credit available when no other sources of liquidity were convenient, reduce taxpayer losses, and, very importantly, help at-risk families sidestep foreclosure. They remained focused on the company's vital housing mission and have done everything that has been asked of them. They have kept the machinery of the presence running smoothly. For these and many other reasons, I am proud of the work our employees are doing for our political entity.

Freddie Mac's new book of business generates positive revenue

As we have helped fulfill the realm's mortgage liquidity needs, we also have been building a strong foundation of responsible lending practices in knighthood a neat to produce better quality loans. Our goal is to create sustainable homeownership opportunities for America's families, safeguard fewer unexpected costs for our lenders, drive better loan conduct, and minimize Freddie Mac's dependence on taxpayer dollars. We believe these actions are principal to placing the housing finance system on a better foundation of responsible lending practices.

The development is that mortgages we have purchased since 2009 are of higher credit quality overall, with humble loan-to-value ratios and higher borrower credit scores, than the mortgages we guaranteed preceding to 2009. Single-family serious delinquency rates, n2 which as of September 30, 2011 are at 10.54 percent for the 2006 register of business and 11.21 percent for the 2007 book of business, are only 0.41, 0.17 and 0.03 percent for the 2009, 2010, and 2011 books of profession, respectively. n3

While we continue to face losses from the pre-conservatorship book of business, our stand behind revenues on mortgages purchased from 2009-2011 exceed our credit-related expenses. During 2010, stand behind income from mortgages we purchased during 2009-2010 exceeded credit-related expenses on those loans by $779 million. Through the first nine months of 2011, promise income from mortgages in our 2009-2011 book of business has exceeded credit-joint expenses on those loans by $805 million.

Moreover, our overall book, including our pre-conservatorship assets, is of a significantly higher blue blood than the market at large and far better than the subprime market. Freddie Mac's serious delinquency measure on all single-family mortgages as of September 30, 2011 is 3.51 percent. In differ, the primary market's overall serious delinquency rate on first lien single-people mortgages was 7.89 percent - and about 13.8 percent when loans owned or guaranteed by Freddie Mac and Fannie Mae are removed from the discretion. The subprime market's serious delinquency rate, in comparison, was over 25 percent. n4

In an appendix to this proclamation, we provide charts and tables further illustrating the differences between Freddie Mac's pre-conservatorship laws of business and the mortgages we have purchased under conservatorship.

Freddie Mac has substantially cut overall miscellaneous and administrative spending

I understand that Freddie Mac's expenditures under conservatorship are a matter of interest to this Subcommittee. Freddie Mac is mindful of the taxpayer supporter we have received, and we take very seriously our obligation to use this support prudently and to continue challenging ourselves to devote more efficiently. Accordingly, we have focused on cutting expenses wherever possible to reduce administrative costs without compromising our cleverness to manage the company safely and soundly.

Source: Middle East North Africa Financial Network

SLADE COLUMN: When to pay tax bill

23.05.12

For people who are Tory on the edge -- with itemized deductions adding up to nearly as much as the standard -- there are strategies that can be adapted to to your advantage, beginning with deciding when to pay property taxes.

Simply put, if you don't usually have enough deductions to overstate itemizing worthwhile in one year, you can shift a tax payment or other deductible expense into another year. That way, you can thrust two years' worth of certain deductibles into a single tax year.

For example, if I'm conceivable to itemize this year, I'll pay my property taxes before Dec. 31. But if I expect to itemize next year and call for the standard deduction this year, I'll change course.

To maximize deductions next year, I could pay this year's estate tax bill in January and the 2012 bill next December. That way, I could count two years' worth of taxes as deductions in 2012.

Munificent contributions, which count as itemized deductions, also can be timed for the most

tax benefit.

Deciding when to pay a tax bill is soft if the bill is sent to you. If the bill is paid by a lender from an escrow account, check with your lender about paying the tax during a picky detail calendar year.

This sort of number-crunching can get pretty wonky, but intriguing the time to consider such things can put money in your pocket.

For many people, the big items when it comes to deductions are mortgage interest, majestic income tax, property taxes and charitable contributions. Add those things up, compare them to the beau id deduction, and you'll have an idea whether to itemize.

Here are the federal standard deduction amounts for the 2011 tax year:

The amounts kick over the traces if the tax filer is 65 or older, or blind.

If you recently bought a home or refinanced a mortgage, here are other tax issues to keep in be firm.

Usually, if you refinance a mortgage and you pay points -- points are a onetime up-front payment that trims the interest position for the life of the loan -- you can deduct only a portion of those points each year over the viability of the mortgage.

However, if you refinance again, with a new lender, you can claim the remaining value of the points you paid on the quondam loan all at once, as an itemized deduction.

Also, if you paid mortgage insurance premiums this year on a home allow that closed after Dec. 31, 2006, the amount could be fully deductible, depending on your income. Most middle-gains individuals and families can deduct the full amount.

Mortgage insurance, or PMI, usually applies to loans where the borrower made a down payment of less than 20 percent of the leverage price.

Reach David Slade at 937-5552, on Facebook or on Twitter at @DSladeNews .

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