Dec
19

BonusSpeak | 2 Month Tax Cut = Hidden Permenant Fee in Future Mortgages to Help Support Freddie & Fannie

Mortgage Fees Would Rise Under Payroll Tax Cut Deal Homebuyers, beware.In exchange for a two-month tax cut, the Senate on Saturday approved a permanent increase in fees attached to mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA). The fee hike would apply to new mortgages and new refinances, and would … Read more Related posts:
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Aug
13

The US Government and the Foreclosure Crisis: Out of Ideas or Out of Will?

It’s old news that federal housing agencies need better ideas about what to do about the foreclosure crisis.  The new development is that they realize it and have issued a blunderbuss “RFI” (request for information) seeking ideas from anyone willing to write in by September 15 describing business structures for the government to off-load foreclosed properties it is holding, particularly in “large scale transactions” to deal with the scale of the problem of lingering “inventory.”  See here.   An RFI is something short of an RFP (request for proposals).  Indeed, this new RFI is careful to note the distinction and also that there may never be a call for actual proposals.   So let’s not get too excited.  Furthermore, the problem of the continuing foreclosure crisis seems to be less about ideas than about will to act.  Most disturbing, the RFI does not even allude to the possibility of beefing up foreclosure prevention as an important way to stem growth in the volume of unsold and vacant foreclosed homes.

So first, what is the government looking for?  Specifically, the Federal Housing Finance Agency (FHFA), in consultation with Treasury and HUD, seeks new options for selling foreclosed one-to-four unit properties held by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).   Bulk sales might be for resale, rental or demolition.

FHFA is conservator for Fannie and Freddie, the government-sponsored entities (GSEs) that predominate in the secondary mortgage market and that went belly-up in the foreclosure crisis and were taken over by the government.  FHA, a government agency funded with premiums rather than tax dollars, is the largest insurer of mortgages in the world.  Together, these three entities held over 250,000 foreclosed homes as of the end of June, about half of foreclosed residential inventory.  Much of this inventory is moldering, causing havoc in neighborhoods and keeping home prices depressed.  Another 830,000 homes are supposedly in the foreclosure pipeline heading toward GSE or FHA ownership.   “Shadow” inventory, meaning homes expected to end up sold at foreclosure, continues to cast a pall over the housing market and economic recovery more generally.   Given the potential size of the problem, FHFA particularly wants proposals to deal with $50 million to $1 billion in assets at a time, and it has the power to go forward without the need for deadlocked Congress to act.

So it is worth coming up with new ideas, even if belatedly, or recycling old ones, and some are excited at the prospect.  Mortgage News Daily, for example, has relentlessly covered ideas for using foreclosed homes to bring down prices in the rental market, including rentals to “previous homeowners.”  (Comment:  What about keeping them in their homes in the first place, perhaps as renters, which those without equity effectively are, but at more affordable rates?  See here for such a proposal, but since it depends on congressional action, forget about it.  We don’t need foreclosures to get there.)   The government’s RFI specifically mentions that it is seeking ideas for business structures for sale of foreclosed homes to be used as rental property (along with approaches to sale for resale or demolition).    The Center for American Progress is enthusiastic, saying that good approaches “could generate much-needed revenue for the government, expand the quantity of energy efficient, affordable housing to thousands of American families, and create well-paying jobs.”  But a note of caution, CAP first put forth the idea of selling foreclosed properties to investors to be renovated and used as scatter-site rentals a year and a half ago.  Similar ideas have already been implemented, for example in Los Angeles and Cleveland, using nonprofits as developers and with lease-purchase options so that longterm renters can become homeowners.  See here.   These sorts of projects have sometimes involved use of foreclosed homes in distressed neighborhoods, turned over at low prices or essentially as gifts from local taxing authorities.

Efforts to put foreclosed properties to good use could be swamped if we don’t also direct more energy to stemming the tide of inventory, a euphemism for what is left after people are tossed out of their homes.  Specifically, it would be nice to see foreclosure prevention linked in the government policy mill to the problem of dealing with foreclosed property.  Seemingly lost in the shuffle is the irony of focusing on large-scale transactions to rent foreclosed properties, to a market that includes their former owners.  Sure, FHFA could implement a program of large transactions in sales of foreclosed homes without congressional action.  But it could also act on its own to implement proposals to have the GSEs modify loans or convert loans to rentals, keeping people in the same homes under different terms while also reducing relocation and transaction costs and emotional toll.  Not all foreclosures can be prevented, but FHFA has done far too little to reduce the inventory problem by keeping properties from becoming foreclosed inventory in the first place.

Jul
06

MERS Sued on Fraud Charges

by Gregg MacDonald | Staff Writer

Filed under: foreclosure
Mar
28

U.S. Plans Big Expansion in Effort to Aid Homeowners

March 25, 2010

U.S. Plans Big Expansion in Effort to Aid Homeowners

By DAVID STREITFELD

The Obama administration on Friday will announce broad new initiatives to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

Another element of the new program is meant to temporarily reduce the payments of borrowers who are unemployed and seeking a job. Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which is straining the economy and putting millions of Americans at risk of losing their homes. But the new initiatives could well spur protests among those who have kept up their payments and are not in trouble.

The administration’s earlier efforts to stem foreclosures have largely been directed at borrowers who were experiencing financial hardship. But the biggest new initiative, which is also likely to be the most controversial, will involve the government, through the Federal Housing Administration, refinancing loans for borrowers who simply owe more than their houses are worth.

About 11 million households, or a fifth of those with mortgages, are in this position, known as being underwater. Some of these borrowers refinanced their houses during the boom and took cash out, leaving them vulnerable when prices declined. Others simply had the misfortune to buy at the peak.

Many of these loans have been bundled together and sold to investors. Under the new program, the investors would have to swallow losses, but would probably be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default. The borrower would once again have a reason to make payments instead of walking away from a property.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new program and the number of homeowners who might be likely to qualify.

One administration official cautioned that the investors might not be willing to volunteer any loans from borrowers that seemed solvent. That could set up a battle between borrowers and investors.

This much was clear, however: the plan, if successful, could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a renewed downturn in the housing market could send that government agency into the red.

The F.H.A. has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened. It now insures more than six million borrowers, many of whom made minimal down payments and are now underwater.

Sources said the agency would use $14 billion in funds from the Troubled Asset Relief Program, some of which it could dangle in front of financial institutions as incentives to participate.

Another major element of the program, according to several people who described it, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, the government’s modification efforts have focused on lowering interest rates.

Lenders began offering principal forgiveness last year on loans they held in their own portfolios. In the fourth quarter, however, this process abruptly reversed itself, for reasons that are unclear. The number of modifications that included principal reduction fell by half.

Bank of America, the country’s biggest bank, announced this week that it would forgive principal balances over a period of years on an initial 45,000 troubled loans.

Another element of the White House’s housing program will require lenders to offer unemployed borrowers a reduction in their payments for a minimum of three months.

An administration official declined to speak on the record about the new programs but said they would “better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.”

The new initiatives would expand the government’s current mortgage modification plan, announced a year ago with great fanfare. It has resulted in fewer than 200,000 people getting permanent new loans. As many as seven million borrowers are seriously delinquent on their loans and at risk of foreclosure.


Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: David Streitfeld, LOAN MODIFICATION, Mortgage, New York Times, Obama administration, principal reduction, TARP
Jan
20

FHA raises fees, tightens loan standards

The Federal Housing Administration is raising fees and tightening lending standards to shore up its strapped finances and avoid a taxpayer bailout.







Federal Housing AdministrationBusinessUnited StatesMortgageHousing

Nov
12

Housing agency’s financial cushion sinks

The Federal Housing Administration says its financial cushion has dipped to a dangerously low level but should remain above zero under “most economic scenarios.”







Federal Housing AdministrationBusinessReal estateHousingResidential

Nov
12

Housing agency’s financial cushion sinks

The Federal Housing Administration says its financial cushion has dipped to a dangerously low level but should remain above zero under “most economic scenarios.”







Federal Housing AdministrationBusinessReal estateHousingResidential

Nov
12

Housing agency’s financial cushion sinks

The Federal Housing Administration says its financial cushion has dipped to a dangerously low level but should remain above zero under “most economic scenarios.”







Federal Housing AdministrationBusinessReal estateHousingResidential

Nov
12

Housing agency’s financial cushion sinks

The Federal Housing Administration says its financial cushion has dipped to a dangerously low level but should remain above zero under “most economic scenarios.”







Federal Housing AdministrationBusinessReal estateHousingResidential

Oct
09

NYT: U.S. mortgage backer may need bailout

A year after Fannie Mae and Freddie Mac teetered, industry executives and policy makers are worrying that the Federal Housing Administration could be the next housing domino.




Oct
09

NYT: U.S. mortgage backer may need bailout

A year after Fannie Mae and Freddie Mac teetered, industry executives and policy makers are worrying that the Federal Housing Administration could be the next housing domino.




Sep
18

FHA faces cash squeeze, commissioner says

The Federal Housing Administration is tightening rules for lenders after reporting that its financial cushion will sink below mandatory levels for the first time in its 75-year history.




Aug
20

Mortgage Delinquencies Still Rising says MBA – More Americans Underwater

I have a lot of conversations with people about our economy, foreclosures and such… from clients to friends in business to attorneys. Everyone who’s asked me what I foresee coming I’ve told them that 2010 will be a very tough year and they better prepare now. We aren’t done yet folks… and the policies of the Obama Administration and our collective disaster we call Congress, are going to make things even worse – and very well will extend the recession quite painfully. I have told people to expect another wave of foreclosures. As long as you have no job creation and more job loss happening every day, this cycle won’t stop. It’s as simple as that.

And with that, I bring you fresh news…

Delinquencies Are Still Climbing and Threatening More Foreclosures on the Horizon, MBA Says

08/20/2009 By: Carrie Bay

More than nine percent of all mortgages in the United States are now delinquent, according to figures released Thursday by the Mortgage Bankers Association (MBA).

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to 9.24 percent of all loans outstanding at the end of the second quarter, MBA reported. The new number breaks the record set in the first quarter of this year, when 9.12 percent of the nation’s homeowners were behind on their mortgage payments.

Important to note is that the biggest jump in delinquencies last quarter came from prime fixed-rate mortgages. These seemingly low-risk loans also accounted for one in three of the nation’s foreclosure starts in Q2. A year ago they were only one in five.

Like prime, Federal Housing Administration loans are generally thought to be “safe,” but foreclosure starts among government-insured mortgages jumped to 9.1 percent last quarter – a record-high for the agency.

The states of California, Florida, Arizona, and Nevada continue to drag down the national numbers. These four had 44 percent of all the nation’s new foreclosures in Q2. Rhode Island, Georgia, and Michigan also posted foreclosure start rates above the national average. All

other states in the country fell below the national benchmark, and roughly half even saw their new foreclosure numbers decline.

But then, there’s the not-so-sunny Sunshine State. Florida has cemented itself as the worst state in the union for mortgage performance. Twelve percent of all mortgages there were somewhere in the process of foreclosure at the end of June, and another 5 percent were more than 90 days past due and about to cross that threshold. Based on MBA’s numbers, Florida has the highest foreclosure and delinquency rates in the country, and MBA’s chief economist, Jay Brinkmann, says he doesn’t expect to see a turnaround in Florida’s housing market for a long, long time.

Some fortunate regional markets are faring better and offsetting Florida’s bad numbers because the nation’s total foreclosure starts during the second quarter actually dropped slightly. Foreclosure actions were initiated on 1.36 percent of the nation’s outstanding mortgages, compared to 1.35 percent during the first three months of the year, MBA reported.

Despite the leveling off of foreclosure starts, the fact that loans 90 or more days past due continues to climb in all categories suggests an overhang of foreclosure activity and engorged inventories of repossessed homes may be looming in the coming months.

So, when is the foreclosure problem going to crest? Brinkmann, points out that unemployment is currently the primary driver behind missed mortgage payments.

The number of jobless Americans is forecast to peak in mid-2010, and Brinkmann says he expects delinquencies to top out at about the same time. But because of the lag time associated with foreclosure proceedings, he doesn’t see a break in the upward trend of foreclosures until six months later, at the close of next year.

Aug
04

TB&W in LIMBO: Thousands Affected

Taylor, Bean & Whitaker has been suspended from originating or underwriting FHA loans according to a press release by the Federal Housing Administration (FHA) today. The company was also terminated as a GNMA Seller-Servicer. One thing is for sure: the impact will be huge.

Aug
04

Taylor Bean Suspended From FHA Lending

This is no surprise. These guys were horrible to deal with and they’ve treated customers terribly. TBW is going down… Colonial Bank looks to be next along with Guaranty Bank. We’ll be on top of it for you… Check back frequently for automatic updates.

From the Wall Street Journal

By JAMES R. HAGERTY and LINGLING WEI

The Federal Housing Administration Tuesday suspended Taylor, Bean & Whitaker Mortgage Corp. from making loans insured by the federal agency, knocking out one of the biggest FHA lenders at least temporarily.

The FHA said the Ocala, Fla.-based lender failed to submit a required annual financial report and to disclose to the FHA “certain irregular transactions that raised concerns of fraud.” Taylor Bean has 30 days to appeal the suspension.

Taylor Bean was the 12th largest U.S. mortgage lender in the first six months of this year, according to Inside Mortgage Finance, a trade publication. Among originators of FHA loans, Taylor Bean was the third largest in May, with a market share of 4%, according to the publication. Only Bank of America Corp. and Wells Fargo & Co. were larger.

Taylor Bean’s woes are a major blow for hundreds of brokers and smaller mortgage banks that sell the loans they originate to the privately owned company. Those small mortgage companies will have to scramble to find new partners if they are to remain in the booming FHA lending business.

FHA loans have surged in popularity over the past two years as other sources of mortgage funding have dried up.

Lee B. Farkas, chairman of Taylor Bean, said in response to questions that he was unaware of the FHA action.

Ginnie Mae, a government agency that guarantees payments to holders of securities backed by FHA loans, said Taylor Bean is also barred from issuing securities backed by Ginnie. Ginnie said it will take control of nearly $25 billion of mortgage securities issued by Taylor Bean.

The moves came a day after federal agents raided the Florida offices of Colonial BancGroup Inc. and Taylor Bean. Taylor had been leading a group of investors that proposed to shore up Colonial by taking a stake in the Alabama-based bank but that transaction fell through last week amid heavy losses at Colonial.

Write to James R. Hagerty at bob.hagerty@wsj.com and Lingling Wei at lingling.wei@dowjones.com