FHA Announces Loan Modifications Increase

FEDERAL HOUSING FINANCE AGENCY NEWS RELEASE

FANNIE MAE AND FREDDIE MAC LOAN MODIFICATIONS UP BY MORE THAN 50 PERCENT IN FIRST QUARTER
MONTHLY PAYMENTS REDUCED FOR HOMEOWNERS

Washington, DC – Fannie Mae and Freddie Mac modified nearly 37,000 loans during the first quarter of 2009. It is an increase of 57 percent over the fourth quarter of 2008 and more than double the number of modifications in the first quarter of last year. The data were released by James B. Lockhart, Director of the Federal Housing Finance Agency, as part of the Foreclosure Prevention Report for the first quarter of 2009.

The FHFA report details the actions Fannie Mae and Freddie Mac have taken to prevent foreclosures and keep people in their homes. The report reflects loan modification volumes under the Streamlined Modification Program initiated in November 2008 but does not include volumes from the Home Affordable Modification program (HAMP) announced in March 2009 which was still in development in March.

"The use of serious loan modifications by Fannie Mae and Freddie Mac has risen dramatically," said Director Lockhart. "As a result, more homeowners are seeing payments significantly reduced and fewer people will lose their homes."

The report shows that as of March 31, 2009, of the Enterprises’ 30 million residential mortgages:

• Modifications represented 43 percent of all completed foreclosure prevention actions in the first quarter of 2009, up from 33 percent in the prior quarter.

• Modifications with more than 20 percent reduction in monthly payments rose from 2 percent in the first quarter of last year to 52 percent in the first quarter of this year

• Completed actions to prevent foreclosure- including modifications, forebearance, repayment plans and other measures-- rose substantially in the first quarter. Approximately 87,000 of these actions were completed in the quarter, an increase of 20 percent over the prior quarter and more than double the volume of the first quarter 2008.

• Home retention actions – actions that result in a borrower keeping his or her home – accounted for 90 percent of these actions completed during the first quarter consistent with the proportions of foreclosure prevention actions completed over the past year.

• Fannie Mae and Freddie Mac own or guarantee 56 percent of all mortgages outstanding but only 22 percent of all seriously delinquent loans.

• Although the Enterprises’ mortgage delinquencies continued to increase during the first quarter of 2009, the rate of delinquency is consistently lower than the industry average. As of March 31, 2009, the percentage of Enterprises’ mortgage loans that were at least two payments past due (60 plus days delinquent) was 3.6 percent, compared with 6.1 percent for VA loans, 10.2 percent for FHA loans and 9.2 percent for the industry average.

"We encourage servicers to work aggressively to continue to identify borrowers who are willing and able to make affordable mortgage payments," said Lockhart. "These efforts at modifying mortgages and refinancing homeowners into safer mortgages are important elements of the stabilization of the housing market and the U.S. economy. "

Is Your Home's Assessed Value Too High?

Please Note: This article is specific to California property valuation. Please check with your local property tax assessor if you live in another state.

Since the passage of Proposition 13, Californians pay property tax based on the price of the home when they bought it. Every year there after, the assessor may increase that value by the rate of inflation, but never more than 2% per year. The assessor may also increase the value if the homeowner does a major renovation or addition, but otherwise, the property tax increase is predictable from year to year.


Until recently, this has been a great deal for California homeowners. As they watched home values in their neighborhoods climb, their tax rate remained stable. But now that values have dropped throughout the state, many homeowners are complaining that their homes are worth less than what they paid.


Thanks to the passage of Proposition 8, homeowners can ask for a temporary reduction in their valuation. If you have owned your home for many years, even in this real estate downturn, your assessment may still be below current market value. But for people who bought in the past few years, the assessed value as reflected on their 2009-2010 tax bill may be too high.


Starting July 2, if you think the market value of your home as of January 1, 2009, is less than its assessed value for 2009-10, you may ask the assessor to revise it downward. Depending on the county in which your property is located, you have until September 15 or November 30 to file a formal appeal.


If you want to have your assessment revised, go to your county property assessor's website. There you should find information on filing an appeal. Sometimes the assessor will ask for data to back up your claim of decreased valuation. Ask your local Realtor for assistance in providing this information. Beware of companies who offer to file the appeal for a fee. The process is simple and there is no need to pay a third party.


If you do get a reduction, remember that it is temporary. Every January 1, the assessor will review your home value to see if it has increased. If the housing market bounces back, your assessed value could go up by more than 2% a year, but it can never go higher than it would have been if you had never received the temporary reduction.

White House Plan for Regulatory Reform

THE WHITE HOUSE

Office of the Press Secretary
__________________________________________________________________
For Immediate Release June 17, 2009


President Obama to Announce Comprehensive Plan for Regulatory Reform

WASHINGTON – President Obama will lay out a comprehensive regulatory reform plan this afternoon to modernize and protect the integrity of our financial system. While this crisis has had many causes, it is clear now that the government could have done more to prevent these problems from growing out of control and threatening our overall economy.

The President will be joined by Treasury Secretary Tim Geithner, representatives from the regulatory community, consumer groups, the financial industry and members of Congress for an event in the East Room later this afternoon.

The President’s plan will:

•Require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation
•Increase market discipline and transparency to make our markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions
•Rebuild trust in our markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets.
•Provide the government with the tools needed to manage financial crises so it is not forced to choose between bailouts and financial collapse
•Raise international regulatory standards and improve international coordination
Below are links to the White Paper and Fact Sheets:

White Paper: Financial Regulatory Reform:

http://www.financialstability.gov/docs/regs/FinalReport_web.pdf

Fact Sheets:

http://www.financialstability.gov/docs/regulatoryreform/requiring_strong_supervision_reg_finfirms.pdf Requiring Strong Supervision And Appropriate Regulation Of All Financial Firms

http://www.financialstability.gov/docs/regulatoryreform/strengthening_reg_core-markets_infrastructure.pdf Strengthening Regulation Of Core Markets And Market Infrastructure

http://www.financialstability.gov/docs/regulatoryreform/strengthening_consumer_protection.pdf Strengthening Consumer Protection

http://www.financialstability.gov/docs/regulatoryreform/providing_govt_tools_manage_fincrisis.pdf Providing The Government With Tools To Effectively Manage Failing Institutions

http://www.financialstability.gov/docs/regulatoryreform/improving_internatl_reg_standards_co-op.pdf Improving International Regulatory Standards And Cooperation

More Government Money for Loan Modifications

In March, the federal government put aside $50 billion. This money was to entice lenders into allow borrowers to modify their loans so as to be more affordable. But the program has been less than successful.

During first quarter, 2009, 4 millions borrowers were delinquent on their loan payments, but only 50,000 were enrolled in the modification program.

Much of the blame lies with the lenders, who were not prepared for the onslaught of modification applications.

In response, the government has increased their incentive by another $3.1 billion to get banks to streamline their approval process.

Former Countrywide CEO Charged With Fraud

Countrywide Financial CEO and co-founder Angelo Mozilo has been charged with securities fraud and insider trading. The Securities and Exchange Commission (SEC) also hit former Chief Operating Officer David Sambol and ex-Chief Financial Officer Eric Sieracki with similar charges.

The SEC said the men deliberately misled investors, leading them to believe that riskier subprime and option adjustable-rate mortgages were safe. It said the executives ignored the warnings of the company’s risk officer about the firm’s precarious underwriting practices.

The SEC claims Mozilo acknowledged privately that the company was unsure about the performance of option mortgages, but publicly spoke about their soundness. Mozilo is also accused of selling $140 million of his Countrywide shares even though he knew the firm was near collapse.

Lawyers for the men say they are innocent and are being charged because the SEC is looking for scapegoats.

Source: The Wall Street Journal, Liz Moyer (06/04/09)

New Tenancy Rules for Foreclosures

The Helping Families Save Their Homes Act of 2009 signed into law this week by President Obama has a provision that allows a tentant to remain in a home 90 days after it sells in a foreclosure sale.

Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give a month-to-month tenant at least a 90-day notice. 90-day notice is also sufficiant to terminate if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends.

Uniform Process for Short Sales Announced

From:
National Association of REALTORS® Government Affairs Division
500 New Jersey Avenue, NW, Washington DC, 20001

Responding to the call of the National Association of REALTORS®, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-lieu of foreclosure.

Borrowers (Homeowners). Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period.Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate. Incentives.

Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

Standardized Documents. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

Property Valuation by Appraisal or BPO. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.

Timeline. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

Commissions. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

No Borrower Fees. Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

Program Expiration. The program is in effect through 2012.

DIL Option. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

Tax Credit May Be Used for Down Payment

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says.

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Letter from Senator Boxer

Dear Friend:

The Senate recently passed an amendment (SA 1035) I authored requiring that homeowners be alerted within 30 days if their lender sells or transfers their home mortgage loan. The amendment is good news for America’s homeowners.

My amendment provides transparency and gives homeowners another tool to fight illegitimate foreclosures and negotiate loan modifications to help keep families in their homes. Under the measure, if a loan is sold or transferred, the new note holder would have 30 days to notify the homeowner with the following information:

the identity, address, and telephone number of the new creditor;
the date of the transfer;
how to reach an agent or party with the authority to act on behalf of the new creditor;
the place where the transfer is recorded; and
any other relevant information regarding the new creditor.
This is just common sense: If you have a mortgage on your home, you should know who actually holds that mortgage. But too often, homeowners are not able to modify their mortgages to avoid foreclosure simply because they cannot find out who holds their mortgage.

My measure has been endorsed by the National Consumer Law Center, the National Association of Consumer Advocates, Consumer Action, the Consumer Federation of America, Consumers Union, the National Association of Neighborhoods, the National Council of La Raza and the National Fair Housing Alliance.

Sincerely,

Barbara Boxer
United States Senator

Short-Sales Not Without Risk

More people are choosing to do a short sale on their homes. The benefit of a short-sale over a foreclosure is that the homeowner walks away from the sale with their credit intact, and free from mortgage debt.

Or do they?

Some lenders are going after borrowers for the repayment of the balance still owed on the loan. A PMI Group Inc. spokesman says the mortgage insurer "primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value."

So if you plan to do a short-sale, make sure your lender agrees to eliminate the debt after the sale. If not, you could find yourself owing a mortgage without owning a home.