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MBA Opposed Obamas Reduction in Mortgage Interest Deductions

February 3rd, 2010

The Obama Administration released the Fiscal Year 2011 Budget.  Needless to say this budget will deeply effect many industries negatively, but specifically in this article the mortgage housing industry. Under the government finance programs like FHA mortgages, borrowers are able to get access to affordable financing with a minimal down-payment and no penalty for earl pay-off.

How can Obama really think that eliminating the mortgage interest write-offs for higher income homeowners will be good for the real estate market and the economy?

Adam Quinones wrote a good article about how Obama’s new budget would be a disaster for housing sector and mortgage industry in general.  He scanned the budget proposal for terms like mortgage, mortgage loan security, housing, community, GSE, government sponsored enterprise, Fannie Mae, Freddie Mac, etc, etc.

HERE is the message from the President. Its five pages long and basically re-iterates the above statement. This is how he ends his message: “These have been tough times, and there will be difficult months ahead. But the storms of the past are receding; the skies are brightening; and the horizon is beckoning once more “HUD SAYS: “HUD’s budget proposal seeks to make targeted investments in people and places – instead of policies and programs –to effectively support HUD’s mission while being accountable to the American taxpayer. $6.9 billion in projected FHA and Ginnie Mae receipts contribute to the FY 2011 proposed $48.5 billion budget total and to the administration’s deficit reduction plans. Net of the $6.9 billion in projected FHA and Ginnie Mae receipts the Budget proposes overall funding of $41.6 billion, 5% below fiscal year 2010, and makes difficult decisions to cut funding for a number of programs.”

The carefully targeted investments in the Budget will enable HUD programs to: House over 2.3 million families in public and assisted housing (over 58% elderly or disabled); Provide voucher assistance to 78,000 additional families (over 47% elderly or disabled);  Assist nearly 5.5 million households, over 200,000 more than at the end of fiscal year 2009.  More than double the annual rate at which HUD assistance creates new permanent supportive housing for the homeless; Create and retain over 112,000 jobs through the Department’s housing and economic development investments in communities across the country.

THE MORTGAGE BANKERS ASSOCIATION SAYS:

The Mortgage Bankers Association (MBA) issued the following reactions and analysis to the fiscal year 2011 federal budget, as proposed today by the Obama Administration.  “Reducing the federal deficit is vital to the long-term health of the US economy and our industry.  However, we believe it can and should be done without negatively impacting the already-fragile housing market,” said Robert E. Story, Jr., CMB, MBA’s Chairman.  “Limiting the mortgage interest deduction and imposing additional taxes on lenders will only make economic recovery more difficult.”

MBA opposes the proposal to reduce itemized deductions, including the deduction of mortgage interest, for taxpayers reporting income above $250,000 (joint) $200,000 (single).  This would have a negative impact on the housing market, particularly in high cost states like California and New York, as it would increase the cost of mortgages for many potential homeowners, especially those in high-cost states.    MBA also opposes the proposal to tax carried interest at ordinary tax rates (as opposed to the capital gains rate, as it is taxed now), as it would discourage capital formation for lending.

MBA believes the Financial Crisis Responsibility Fee will reduce the availability and increase the costs of real estate loans to consumers and small businesses by discouraging large financial institutions from entering into new, private label commercial mortgage backed securities (CMBS) and residential mortgage backed securities (RMBS) transactions and significantly reducing the profitability of non-agency servicing.

Story also noted that the budget did not offer any indications of the Administration’s plans for the future of Fannie Mae and Freddie Mac.”MBA has been at the forefront of the debate over the future of the government’s role in the second mortgage market,” said Story.  “We rolled out our proposal in September and have been meeting with all stakeholders on Capitol Hill, within the administration, and across the industry to share our perspectives.  Our proposal would provide a new foundation for supporting the core of the mortgage market.  We look forward to continuing our discussions as the administration readies its suggestions.”

MBA has supported the administration’s efforts to improve risk management of the Federal Housing Administration’s (FHA), and thus strongly supports the additional $18 million budgeted to allow FHA loans to implement its improved risk management systems.  MBA also supports the $20 million budgeted to combat predatory lending and mortgage fraud at HUD, as well as additional funding for housing counseling and foreclosure avoidance.”We are pleased to see increased funding for several critical programs at FHA,” added Story.  “We support both the efforts to help FHA better manage its risk.  We also support additional funding at HUD and the Department of Justice to combat mortgage fraud.  I also want to add how pleased I am to see that FHA’s multifamily programs are continuing to show strong performance in the face of the current challenges in the housing market.”

MBA also found troublesome the following additional provisions in the budget proposal: Termination of program authority to allow expensing (for tax purposes) of real estate environmental remediation, or “brownfields” clean up costs.  Reduced federal support for terrorism risk insurance program.  Read the original article online.

Foreclosure News, Home Financing, Housing Articles, Loss Mitigation Articles, Mortgage Industry, Mortgage News, Subprime Mortgage News

California Real Estate Rebounding?

January 8th, 2010

Everyone know the Southern California housing market has been hit hard the last few years, but many realtors believe the California real estate will actually rebound in 2010.  Yet most in the mortgage industry believe their are still a few years of correction coming to the California market.  California loan modifications and California Short Sales continue to play a dominant role in state real estate transactions, but now they are affecting the commercial market place.   Read the complete article > California Real Estate Update.

California Real Estate, Home Financing, Housing Articles, Mortgage Industry

Southern California Home Sales Up but Home Foreclosures Remain a Problem

October 13th, 2009

Southern California home sales rose higher last month, bolstered by late-closing summer transactions, low mortgage rates and buyers hoping to take advantage of a soon-to-expire tax credit. The region’s median sale price remained lower than in September 2008 but, for the first time in years, several counties logged year-over-year gains in the median price paid for resale houses, a real estate information service reported. Last month 21,539 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. Getting a house loan with bad credit is often more difficult then getting approved for a note modification.

According to DataQuick, that was up 0.2% from 21,502 in August and up 5.1% from 20,497 a year earlier, September marked the 15th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases. Sales for the month of September have averaged 24,873, ranging from a low of 12,455 in September 2007 to a high of 37,771 in 2003, based on DataQuick’s statistics, which go back to 1988. Home foreclosures and loan modification plans dominated the housing transactions again this quarter even though REO sales were higher.

Foreclosure News, Housing Articles, Mortgage News, Subprime Mortgage News

Saving Your Home with a Loan Modification

August 28th, 2009

Home foreclosure rates and loan delinquencies continues to break records each quarter in the United States. The housing recession and home equity slide has not hit the bottom yet in many regions of the country. Mortgage relief is available to most struggling borrowers, so if you were turned down recently for mortgage refinancing from your lender, it does not mean you won’t be approved for a loan modification plan.

Getting a loan modification is something that many Americans are looking to do to help save their home and avoid foreclosure. Over the last few years, many homeowners have seen their income decline which has made making a home loan payment very difficult. Unfortunately, some homeowners have even given up and just walked away from their mortgage letting their home go into foreclosure.

If you decide to let your home go into foreclosure, it will take you many years to recover financially. You will be able to buy nothing on credit for an entire decade which is a lot longer than it seems. Once you do get this taken off your financial history, it is still going to be very difficult to get a low interest rate on most loans that you apply for. We suggest exploring all options available to avoid foreclosure. In most cases, it would be more advantageous to default on all your unsecured loans and credit cards than to go into default on your home mortgage which ends in foreclosure and loss of your home.

Foreclosure News, Housing Articles, Mortgage News

Housing Crisis Disappearing

April 6th, 2009

Home Sales in February are beginning to increase with foreclosure defaults supplying much of the housing inventory.  With mortgage interest rates below 5% on thirty-year fixed rate home loans have caused a spike in FHA mortgage lending and home buying for first time homebuyers.

 

Watch Housing Crisis Rebound Video

 

Despite an ongoing recession, dropping home sales and a foreclosure crisis, there are some indications that the housing market may be heading for a recovery. CBS News’ Priya David reports on some positive movement in Portland, Oregon that may reveal signs that the housing crisis could be disappearing.  Some realtors and lenders believe that we are seeing the bottom of the housing slump and that the real estate market in many areas around the country will see a rebound later this year and in 2010.

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Home Foreclosure Crisis Continues

March 12th, 2009

More home financing debates have emerged as to whether President Obama’s mortgage relief plan will to stop the millions of homes now in danger of foreclosure in the near future. Consider the many underwater refinance mortgage programs over the last few years like, the FHASecure, Hope for Homeowners and the Home Affordable Refinance. For the most part each one of these programs has stopped short of solving the mortgage crisis. Most of the lenders in the country were simply not able to carry the risk that our government was because of increasing loan defaults nationally. Anthony Mason reports on whom Obama’s housing plan will risk the mortgage banking system.

Foreclosure News, Housing Articles, Mortgage News

Countrywide Mortgage and Subprime Loans

January 16th, 2009

Not too long ago, Countrywide was being investigated for mortgage security fraud.

The New York Times, which also cited anonymous sources, said the Justice Department is also involved in the Countrywide investigation. “We are not aware of any such investigation,” Countrywide spokeswoman Susan Martin told the Times.  BofA and Countrywide have been very aggressive with loan modification plans, so it looks like in the end Countrywide is trying to get it right. In recent years, bank and lenders are less likely to offer subprime home loans to a borrower that is struggling with affordability.

The Wall Street Journal first reported that the mortgage superpower was the subject of an inquiry, citing law enforcement officials and finance executives with knowledge of the development. FBI spokesman Special Agent Richard Kolko would not confirm if Countrywide is under investigation but said there is an open investigation. “The FBI has been investigating potential fraud in the subprime lending industry, however, we cannot confirm or deny which companies are under investigation, “Kolko said.

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Hank Paulson The Worst is Just Beginning for Housing Markets

January 16th, 2009

A year ago, Treasury Secretary Henry Paulson predicted the fallout from the subprime mortgage crisis was “largely contained.” The reports indicate that housing markets across the nation continue to decline.

Most homeowners and people residing in the United States, would disagree with Treasury Secretary Paulson. The foreclosure rates rose 81% in 2008 and so far in 2009 the foreclosure crisis looks to be a major issue facing President Barrack Obamma.

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Does Bush Hold Responsibility For the Housing & Mortgage Crisis?

January 12th, 2009

Jon Kyl and Chris Dodd talking about the mortgage crisis that evolved into a housing crisis.

Blitzer opens with: A lot of people, Senator Kyl in Arizona, in the housing market out there, they’re suffering big-time right now. How much of the blame, and I know you’re a blunt guy, how much of the blame does the Bush administration deserve for allowing this kind of situation to deteriorate, as it has? Does George Bush Have Any Responsibility For this Mortgage Crisis.

KYL: Virtually none.

BLITZER: Why?

KYL: We’ve been predicting for years that this problem would come along. When I was chairman of the Republican Policy Committee, we wrote papers on it. We provide people with the tools to compare mortgage refinance loans and it is not the Federal government’s job to micro-manage banks.

BLITZER: But isn’t the federal government responsible for making sure this kind of situation doesn’t happen?

KYL: The problem is, there is very little regulatory authority. That’s why this legislation that Senator Dodd has been working on, the one good feature of it is additional regulation. But we should have had that regulation four years ago. The other problem, here, is that much of the bailout here is for the people holding bad loans, not the homeowners. It’s for the speculators, the investors. I know in the oil crisis, everybody’s concerned about the speculators driving up the price. What do you think happened in the housing market?

BLITZER: Senator Dodd, go ahead and respond.

DODD: No, no, no. Very specifically, Jon, we absolutely seclude speculators from having any benefit all the under the act. That’s very clear in the law. Of course, this is a highly regulated industry, Jon. This isn’t like hedge funds. The mortgage market has been a highly regulated industry. Where were the cops? Why weren’t they out there saying when brokers were luring people in and saying I’m your financial adviser, a fully indexed price, don’t worry about it, lie about it if you want, we’ll get you into that home.

Those were people that had a responsibility, that failed in that responsibility, and the regulators watching them should have been doing a better job and they didn’t do it. That’s a major reason why we’re seeing the problems we’re seeing today.

KYL: Just one quick example. There’s much to be said. The provision that Chris alluded to that the Bush administration opposes and would veto the legislation over are these CDBG grants. They don’t help. Get the latest News on the Housing Crisis.

Foreclosure News, Housing Articles, Mortgage News

Fannie Mae OKs Renters to Stay After Foreclosures

December 23rd, 2008

In a recent article, Carol T. Powers analyzes the recent Fannie Mae move that enables relief to thousands of renters who face eviction but draws the federal government even deeper into the housing market. Fannie Mae said recently that it would sign new leases with renters living in foreclosed properties owned by the company. John Taylor, a consumer advocate, said banks should follow Fannie Mae’s example. “There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy group. “It’s really good news that Fannie Mae is doing this. Now the question is whether private sector will follow suit.”

In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. In many cities and states, renters can be evicted after their home goes into foreclosure, regardless of how long their lease stretches into the future. Since then Fannie and Freddie have come together with the “HARP mortgage” that allows their customer to refinance no matter how underwater their liens may be. The HARP 2.0 has already helped thousands of homeowners find a new mortgage with a lower fixed interest rate.

What are Fannie And Freddie Doing to Stem the Foreclosure Crisis

Many financial institutions including JPMorgan Chase and Bank of America have policies to evict renters after foreclosure, company representatives said. Fannie Mae’s initiative is expected to initially benefit as many as 4,000 renters living in foreclosed homes owned by the company. Fannie Mae has traditionally only bought and sold mortgages. But when a loan held by the company goes into foreclosure, Fannie Mae gains ownership of the underlying property until it is resold to new investors.

Fannie Mae owned 67,500 properties in foreclosure at the end of September, according to the company’s most recent filings. Most of those were owner-occupied. Under the new policy, former owners will most likely not be eligible to rent homes they lost in foreclosure.

It is the first national effort to provide significant relief to renters ensnared by the unfolding mortgage crisis, and it will effectively transform Fannie Mae — a government-controlled mortgage finance company into a national landlord. It may also increase pressure on private lenders to establish similar programs and on lawmakers to pass renter relief. Read the complete article at Bloomberg online.

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Federal Panel Considers Economic Issues for the Las Vegas Housing Crisis

December 18th, 2008

Nevada has quickly deteriorated from a boomtown to a place on the brink of economic disaster, and a federal bailout of financial institutions has done little to reverse the trend, a congressional panel was told. “Our economy has gone from the fastest growing in the nation to amongst the worst,” state banking commissioner George Burns testified Tuesday at a meeting of a panel charged with reviewing the use of the $700 billion Wall Street rescue fund. The meeting attracting banking and housing experts and politicians was the first outside Washington for the four-member panel. The recent financial reform bills have focused on making home loan lenders for accountable with increased responsibility. have It comes a week after the group released a report raising questions about the effectiveness of the Treasury Department’s bailout program and its lack of transparency.

The panel is composed of Democratic appointees Richard H. Neiman, superintendent of banks in New York, Elizabeth Warren of Harvard Law School and Damon Silvers, associate general counsel for the AFL-CIO; and Republican Rep. Jeb Hensarling of Texas. Sen. Judd Gregg, another Republican, had been in the group but left it last month, citing the heavy legislative workload facing the Senate. Only the Democratic appointees traveled to Las Vegas, at the urging of Sen. Harry Reid, D-Nev. Few places have been hit as hard by the credit squeeze and the foreclosure crisis. “We need to know how the Wall Street bailout looks from here. Has it worked?” Silvers asked. The answer from those in attendance was a solid no.

In her comments, Rep. Shelley Berkley, D-Nev., said “there is no discernible impact” in Nevada from the bailout money. A $250 billion capital injection program has not yet helped small, community banks that could be in a strong position to encourage lenders to lend more money, said Bill Uffelman, president of the Nevada Bankers Association. The program hasn’t decided on appropriate guidelines for eligibility for the funds. Uffelman said smaller institutions weren’t getting the assistance that was so quickly offered to the large financial institutions whose near-failure prompted the federal action. “It seems to be a matter of too big to fail versus too small to matter,” he said.

Gail Burks, the president of Nevada Fair Housing Center, said her nonprofit receives 600 calls a day from homeowners seeking to prevent foreclosure. She said a typical loan modification takes about 200 hours of staff time. Burks said mortgage modifications should be streamlined and made mandatory for lenders that accept federal aid money. Reid later told reporters he supported mandatory modifications. He also endorsed a 90-day moratorium on foreclosures to give homeowners “breathing room.”

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New Foreclosure Rights for Renters

December 10th, 2008

In a recent article written by Chris Reidy, he reveals a new home foreclosure brochure that outlines renters’ rights. The administration of Governor Deval L. Patrick said today that it has issued a brochure outlining the rights and responsibilities of Massachusetts renters living in foreclosed housing units. According to the Massachusetts Executive Office of Housing and Economic Development and the Office of Consumer Affairs and Business Regulation, the brochure “empowers renters with information to ensure that they understand the foreclosure process and are not unfairly evicted after the building they live in is foreclosed upon.” The days of sponsoring and encouraging no credit loans have disappeared. The administration noted that the Commonwealth’s Division of Banks estimates that 30% of the 7,653 Massachusetts home foreclosure sales in 2007 involved multi-family properties. Foreclosures have jumped as a result of the credit crisis and the slumping economy. Foreclosure news continues to headline newspapers across the country. Unfortunately, millions of Americans have lost their houses during the housing crisis. Hopefully the Dodd-Frank laws will do a better job to protect tax-payers against paying the bill for bad mortgages.

According to state law, a tenant is entitled to at least thirty days written notice if the owner wants them to vacate the property, and a tenant is then entitled to a court hearing if they wish to remain in their home after receiving the proper thirty days written notice, the Patrick administration said in a press release, which added that without court approval, owners do not have the right to evict their tenants. The State of Massachusetts continues to take an active role for home preservation as the are actively promoting foreclosure prevention methods with mortgage relief from mortgage loan modifications and loan work-outs.

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Commission Recommends Enforcing Fair Housing to Minimize Housing Crisis

December 9th, 2008

In a recent article written by Hope Yen, the discussion of Fair Housing, Fair Lending and Quick Reforming is examined. According to recent reports, President-elect Barack Obama is being urged to strengthen enforcement of fair housing laws to curb the sub-prime mortgage debacle and mitigate the housing crisis doesn’t disproportionately hit minorities and the poor. A bipartisan commission pointed Tuesday to waning prosecutions of fair housing complaints, particularly under the Bush administration. “The system doesn’t work,” former Housing and Urban Development secretary Henry Cisneros said at a news briefing on the 85-page report prepared by the commission, which was co-chaired by Cisneros and former HUD secretary Jack Kemp. Cisneros said stronger HUD enforcement is needed in the interim until a separate agency can be created, saying, “This is the only way to address serious problems of housing segregation and discrimination that led us to our current foreclosure crisis.” Ultimately, the panel said Congress and the Obama administration must create an independent agency that would be free of inherent conflicts of interest at HUD. As it stands, HUD is in the awkward position of suing sub-prime lenders it also depends on to administer housing programs.

In its six-month investigation, the commission said a discriminatory lack of lending by financial institutions in lower-income neighborhood communities opened the door for high-cost home loan lenders to set up shop, resulting in “steering” of subprime mortgage lending toward minorities and the poor that later forced them to default. The commission says more than 4 million cases of housing discrimination occur each year, yet fewer than 30,000 complaints are filed to HUD. Of those, the number of cases prosecuted have steadily declined from 88 in 2001 to 31 in 2007. In 1995, HUD prosecutions numbered 125 — higher than recent years but still a fraction of total complaints. HUD’s popular mortgage program, the FHA loans have always made great strides in bridging the gap for minorities to become homeowners.

HUD delays in investigating fair housing complaints also have grown, currently averaging 502 days. Citing in part a “lack of leadership” in the last eight years, Cisneros, who served under President Bill Clinton, said Obama’s transition team had responded “very positively” to the commission’s findings and recommendations. Obama earlier this week expressed impatience with Bush’s response to the mortgage foreclosure crisis. “I expect an open hearing from the top people in the administration when they’re named, including the HUD secretary and the president-elect,” Cisneros said. Kemp, a Republican who served under President George H.W. Bush, said in a statement that the federal government needs to return to the business of “getting things done.” He did not appear at the news briefing, citing health difficulties.

More Fair Housing Recommendations:

o Revive the President’s Fair Housing Council, which has met only once in recent years, to promote coordination of housing enforcement with HUD, the Justice Department, bank regulatory agencies and housing groups.

o Create a five-year HUD multimedia program aimed at educating people about their fair housing rights.

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