“This is the time for vision and prudence. We must give the American people real solutions to the housing crisis, not multiply problems. The Bush Administration favors responsible, specific efforts to save homeowners and allows FHA to be a central part of any lasting solutions,” Bernardi said.

In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Since then, more than 170,000 families who are current and past due on their home loans have refinanced with FHASecure, FHA’s refinancing product. The number of single family mortgages endorsed by FHA has effectively doubled over the last year, Bernardi said. In the first quarter of 2008, FHA endorsements totaled more than 237,000, which is a 100 percent increase over the same period last year. Homeowners refinancing from the exotic subprime market to FHA are saving approximately $400 a month on their new mortgages.

Earlier this month, the Bush Administration announced additional administrative steps to extend FHA opportunities to troubled homeowners. Using its current regulatory authority, FHA will assist homeowners who are struggling with their current mortgage payments who have no other way to refinance their loans as their homes lose value.

FHASecure will extend assistance to borrowers in subprime adjustable rate mortgages who were late on up to three consecutive monthly mortgage payments or at three different times over the previous twelve months. FHA will allow lenders to voluntary write-down outstanding principal mortgage balances and insure, which will provide an equity cushion and protect taxpayers against risk.

“Expanding FHASecurein this way is a good idea,” Bernardi said. “Borrowers will reduce their principal payments and keep their homes. Lenders will avoid taking a more significant loss at foreclosure. Neighbors will avoid vacant homes in their neighborhood, depressing their home values. And localities will keep a viable tax base to fund community health, schools, and other valuable services. The changes we have made with FHASecurewill help us reach about 500,000 homeowners in total by the end of this year.”

Bernardi also highlighted President Bush’s stimulus package, which will make a positive difference in the mortgage market by temporarily increasing FHA’s loan limits. For the rest of 2008, FHA is able to insure mortgages in higher-cost states and help homeowners hold on to their houses. The new loan limits were announced in March, and the affects of the program should be seen in the coming months.

“The reaction to the new, temporary loan limits should again explain the need for immediate passage of FHA Modernization, which we have urged for two years. Congress needs to make this important bill an immediate priority over other housing proposals that are under consideration. As a first order of business, a good FHA Modernization bill must be sent to the President,” Bernardi said.

The Bush Administration’s proposal to modernize FHA has bipartisan support. Introduced two years ago, this legislation would help hundreds of thousands of homeowners access safe, affordable FHA-backed mortgages by increasing FHA’s loan limits, making downpayment requirements more flexible, and introducing fair pricing of insurance. The House and Senate have passed different versions of this legislation, but have not reconciled their differences and sent the President a final bill.

Bernardi also warned against proposals in Congress that “put us on a slippery slope, rapidly moving in the direction of a federalization of the mortgage industry.”

“Americans don’t want to pay for the risky financial behavior of others. And they don’t want to make the Federal government the lender of last resort, with the private sector dumping bad loans on FHA and the taxpayers themselves. We must not harm our economy through solutions that further erode the foundation of the nation’s housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction,” Bernardi said.

Finally, Bernardi said the mortgage industry, in cooperation with the Bush Administration, has stepped forward and pro-actively implemented workouts to help homeowners avoid foreclosure, but there is still more work to do. With more subprime loan interest rate resets expected, Bernardi urged the industry to have “a strong and effective response that will quickly help to stabilize housing prices.” Yesterday, the HOPE NOW Alliance announced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007 for homeowners with prime and subprime mortgages. This includes 503,000 homeowners in the first quarter of 2008.

“I believe that Congress and the Administration can forge a strong working partnership on housing. There is some common ground which should be explored and extended. I will continue to try to convince our lawmakers that we need wisdom, not over-reaction. We must give the American people real solutions to the housing crisis, not multiply problems,” Bernardi concluded.

For more information, visit: http://www.hud.gov/news/speeches/

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With over 85% of people in the United States living in our nation’s cities and metros, mayors clearly understand how urban issues impact everyday Americans and believe these issues have been mostly overlooked in the presidential campaign. The economy, the foreclosure crisis, global warming and climate protection, vacant and abandoned properties, illegal guns and violent crime, the high school dropout rate and public education, ex-offender re-entry, and the 2010 Census are central items on the mayors’ agenda.

During the meeting, the mayors will adopt policy recommendations on key issues to forward to Congress and the new Administration. Mayors know that despite their geographic location, cities large and small are plagued by the same challenges. They are calling on the presidential candidates, invited to the meeting, to address the mayors on the issues that most impact the lives of everyday Americans.

Invited speakers include: President George W. Bush, presidential candidates Senator Hillary Rodham Clinton (NY), Senator John McCain (AZ) and Senator Barack Obama (IL), as well as House of Representatives Speaker Nancy Pelosi (CA), Senate Majority Leader Harry Reid (NV), Federal Reserve Board chairman Ben Bernanke, Congressional Urban Caucus Chair Chaka Fattah (PA), and Congressional Urban Caucus Vice-Chair Michael Turner (OH).

This is the first annual gathering of the Conference to use ‘green’ practices in most aspects of the meeting. The hotel, evening events and some of the mayors’ transportation will all use energy efficient practices with the goal of reducing carbon emissions.

Also, for the first time, the USCM welcomes a title sponsor for the Annual Meeting. TCP, Inc. is the global leader in energy efficient lighting innovations dedicated to creating high-quality products that are brighter, longer lasting and better for the environment. Headquartered outside Cleveland, Ohio, the company manufactures nearly 1.4 million energy saving compact fluorescent light bulbs (CFLs) every day, accounting for a majority of the CFLs sold in the United States and an annual reduction in carbon dioxide emissions of more than 118 million pounds.

For more information, visit www.usmayors.org.

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Reps. Jerry McNerney, D-Calif., and Gary Miller, R-Calif., introduced H.R. 5958, the Homeowner Opportunity Act, making permanent the increase to FHA and conforming loan limits for high-cost areas. The bill will be considered as an amendment to the larger housing stimulus bill.

“By making the loan limit increases to FHA, Fannie Mae and Freddie Mac permanent the mortgage market will achieve an immediate increase in liquidity,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “This increased liquidity should help drive down mortgage costs and create stability in the mortgage market.”

“As the leading advocate for homeownership, NAR applauds the bipartisan efforts by Congressmen McNerney and Miller in sponsoring this amendment. That can also help veterans, teachers, nurses, police officers and other working families to achieve the dream of homeownership by offering a safe and affordable alternative to risky subprime loans,” Gaylord said.

NAR urges members of Congress to support the McNerney-Miller amendment. Higher loan limits are critical to ensure that homeowners and those who aspire to own a home are given the same safe alternatives for mortgages regardless of where they live. “It is simply a matter of equity for American families who live in high-cost communities,” according to Gaylord.

For more information, visit www.Realtor.org.

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The symposium — “Weathering the Storm in the Wake of Foreclosure” - will examine a range of issues affecting neighborhoods where homeowners are facing foreclosure. Highlights include:

* A speech by Federal Reserve Board Governor Randall S. Kroszner, “The State of the Homeownership Industry: Today’s Landscape and Projections for the Future”

* A panel moderated by FDIC Director Thomas J. Curry: “What Happens Next? Challenges and Opportunities For Communities with REO Properties”

* A speech by Michael Stegman, of the MacArthur Foundation, “What Does the Tightening of Mortgage Credit Mean for the Next Generation of Borrowers?”

These and other break-out sessions at the symposium will take place during one of the largest and most important NeighborWorks Training Institutes (NTI) in years. With the number of foreclosure filings increasing, trained counselors are needed more than ever to help homeowners understand their options. It’s expected that more than 600 people will take foreclosure intervention and related training courses at the NTI, attracting more than 1,900 registrants, and significantly increasing the supply of qualified professionals just when the housing market needs them most.

“This infusion of new foreclosure counselors will enable more at-risk homeowners to identify the best solutions available in today’s ever-changing housing environment,” said Kenneth D. Wade, CEO of NeighborWorks(r) America. “More counselors than ever before will receive advanced foreclosure intervention education, which will help create long-term stability for homeowners and not just a quick fix.”

More than 20 training courses are available for beginning and advanced-level counselors, including individual professional certification in foreclosure intervention and three other related content areas.

“Options overwhelm homeowners, and they don’t know whom to trust,” said Wade. “Through this training, NeighborWorks will significantly increase the number of educated and certified counselors adhering to standards that homeowners can go to with confidence.”

For more information, visit www.nw.org.

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RISMEDIA, May 2, 2008-(MCT)-Tara Poulsen bought a four-bedroom house in Mission Viejo, Calif., for $469,000, after waiting out the housing market for more than three years. To do it, she and her husband went with a federal loan program that waned in popularity in some areas during the housing boom.

They got a loan insured by the Federal Housing Administration, which accepts borrowers with spotty credit. Poulsen’s husband has a midrange credit score and filed for bankruptcy about 10 years ago, she said.

Some lenders and brokers say consumers who have dinged credit or are short of cash should consider FHA, which is filling the void left by the implosion of subprime lenders. FHA backing protects lenders from loss, so they are more willing to make riskier loans.

Poulsen, who manages a medical office, said she recommends FHA to other buyers but warns that the process can be long, involves extra costs, and requires a lot of paperwork, including tax returns, paycheck stubs and bank statements. Her expected 30-day escrow turned into 45 days, she said.

“It was super stressful,” Poulsen said. “I didn’t sleep for two weeks. Every night I was wondering, is our loan going to close?”

But she said she is glad to finally have a house and to have gotten a loan amid the credit crunch. She and her husband have waited out the market since their marriage in 2004.

Some FHA employees envision a comeback.

“With everybody else walking away, FHA is absolutely the dominant player left standing,” said Meg Burns, director of the agency’s division that establishes policies to qualify borrowers.

Burns likens the current market to a recession in the 1980s that hurt housing markets in Texas and other oil-producing states. Lenders tightened standards in those markets, and private mortgage insurers pulled back, leaving the FHA to step in and stabilize markets, she said.

The FHA has a history of helping consumers and stabilizing markets.

Congress created the agency in 1934 to boost homeownership amid the Great Depression. In the 1940s, the FHA financed military housing as well as home loans for World War II veterans.

Today, consumers who might not have ever considered an FHA loan might find it their best option. The FHA accepts low credit scores and targets any homebuyer with little in savings.

Al Hensling, head of United American Mortgage in Irvine, Calif., which brokered the Poulsens’ loan, said larger FHA-insured loans compare favorably to larger loans sold to government-sponsored enterprises like Fannie Mae, the largest U.S. funder of loans.

The FHA allows lower credit scores and lower down payments-as little as 3%-than Fannie Mae and Freddie Mac do, Hensling said. He said GSEs require at least 10% down on larger loans.

One downside: The FHA requires an insurance premium on all loans, usually 1.5% of the loan amount. The premium can be “financed”-added into the loan amount. GSEs require insurance on loans above 80% of the value of a home.

Hensling said the recent collapse of investment banking giant Bear Stearns, a big player in mortgage-backed securities, illustrates the breakdown of a private market for loans.

“There is no secondary market right now,” he said. He described the FHA as just about the “salvation for the market.”

And the FHA is seen as a tool to stem foreclosures on subprime loans. President Bush has twice expanded the types of subprime loans the FHA can back. Last month the FHA said it can insure an adjustable-rate loan after a lender slashes the principal balance to make it more affordable, even if the borrower missed two or three payments.

Still, some academic experts expressed concern over the FHA backing larger loans.

Kerry Vandell, professor of finance and director of the Center for Real Estate at University of California-Irvine’s Paul Merage School of Business, said FHA loans tend to default more often than loans sold to Fannie and Freddie. The trend correlates with the FHA’s historical push into inner cities as well as generally to borrowers with marginal credit, he said.

President Bush has said the FHA expansion will be funded by insurance premiums paid by borrowers and not with taxpayer funds. Vandell isn’t so sure.

“Whether this movement is going to maintain the viability of the insurance reserve pool is another question,” Vandell said. “It’s not clear to me exactly what they are going to do or which part of that market they are going to take.”

© 2008, The Orange County Register (Santa Ana, Calif.).
Distributed by McClatchy-Tribune Information Services.

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“This is the time for vision and prudence. We must give the American people real solutions to the housing crisis, not multiply problems. The Bush Administration favors responsible, specific efforts to save homeowners and allows FHA to be a central part of any lasting solutions,” Bernardi said.

In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Since then, more than 170,000 families who are current and past due on their home loans have refinanced with FHASecure, FHA’s refinancing product. The number of single family mortgages endorsed by FHA has effectively doubled over the last year, Bernardi said. In the first quarter of 2008, FHA endorsements totaled more than 237,000, which is a 100% increase over the same period last year. Homeowners refinancing from the exotic subprime market to FHA are saving approximately $400 a month on their new mortgages.

Earlier this month, the Bush Administration announced additional administrative steps to extend FHA opportunities to troubled homeowners. Using its current regulatory authority, FHA will assist homeowners who are struggling with their current mortgage payments who have no other way to refinance their loans as their homes lose value. FHASecure will extend assistance to borrowers in subprime adjustable rate mortgages who were late on up to three consecutive monthly mortgage payments or at three different times over the previous twelve months. FHA will allow lenders to voluntary write-down outstanding principal mortgage balances and insure, which will provide an equity cushion and protect taxpayers against risk.

“Expanding FHASecurein this way is a good idea,” Bernardi said. “Borrowers will reduce their principal payments and keep their homes. Lenders will avoid taking a more significant loss at foreclosure. Neighbors will avoid vacant homes in their neighborhood, depressing their home values. And localities will keep a viable tax base to fund community health, schools, and other valuable services. The changes we have made with FHASecurewill help us reach about 500,000 homeowners in total by the end of this year.”

Bernardi also highlighted President Bush’s stimulus package, which will make a positive difference in the mortgage market by temporarily increasing FHA’s loan limits. For the rest of 2008, FHA is able to insure mortgages in higher-cost states and help homeowners hold on to their houses. The new loan limits were announced in March, and the affects of the program should be seen in the coming months.

“The reaction to the new, temporary loan limits should again explain the need for immediate passage of FHA Modernization, which we have urged for two years. Congress needs to make this important bill an immediate priority over other housing proposals that are under consideration. As a first order of business, a good FHA Modernization bill must be sent to the President,” Bernardi said.

The Bush Administration’s proposal to modernize FHA has bipartisan support. Introduced two years ago, this legislation would help hundreds of thousands of homeowners access safe, affordable FHA-backed mortgages by increasing FHA’s loan limits, making down payment requirements more flexible, and introducing fair pricing of insurance. The House and Senate have passed different versions of this legislation, but have not reconciled their differences and sent the President a final bill.

Bernardi also warned against proposals in Congress that “put us on a slippery slope, rapidly moving in the direction of a federalization of the mortgage industry.”

“Americans don’t want to pay for the risky financial behavior of others. And they don’t want to make the Federal government the lender of last resort, with the private sector dumping bad loans on FHA and the taxpayers themselves. We must not harm our economy through solutions that further erode the foundation of the nation’s housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction,” Bernardi said.

Finally, Bernardi said the mortgage industry, in cooperation with the Bush Administration, has stepped forward and pro-actively implemented workouts to help homeowners avoid foreclosure, but there is still more work to do. With more subprime loan interest rate resets expected, Bernardi urged the industry to have “a strong and effective response that will quickly help to stabilize housing prices.” Yesterday, the HOPE NOW Alliance announced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007 for homeowners with prime and subprime mortgages. This includes 503,000 homeowners in the first quarter of 2008.

“I believe that Congress and the Administration can forge a strong working partnership on housing. There is some common ground which should be explored and extended. I will continue to try to convince our lawmakers that we need wisdom, not over-reaction. We must give the American people real solutions to the housing crisis, not multiply problems,” Bernardi concluded.

For more information, visit http://www.hud.gov.

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This proposal was initially floated by economist Martin Feldstein, chairman of the Council of Economic Advisers under President Reagan, professor at Harvard University and president/CEO of the National Bureau of Economic Research. “A voluntary loan-substitution program could reduce the number of defaults and dampen the decline in house prices - without violating contracts, bailing out lenders or borrowers, or increasing government spending,” said Feldstein, who helped review the comments sent to Congress by the CMPS Institute.

About 6% of all mortgage borrowers are behind on their payments, and 17% of all sub-prime borrowers are behind on their payments. Approximately 10% of all US mortgage borrowers owe more on their mortgages than the value of their homes, thus making their mortgages “unrefinanceable” for the most part.

“Some of the more aggressive proposals before Congress would drive the mortgage industry toward nationalization, while some of the more limited proposals would do little or nothing to solve the crisis,” Nicholas said.

“This entire situation can be greatly remedied by reducing homeowners’ mortgage balances to the point where they are no longer in a situation of little or no equity,” said Nicholas.

Doing so would give all homeowners incentives to keep up their mortgage payments as property values continue to stagnate or decline. Distressed homeowners would be empowered to refinance their otherwise “unrefinanceable” mortgages into more affordable loans without an increase in their overall debt level. Property values will stabilize, consumer confidence will rise to shore up the economy and taxpayers will avoid incurring unnecessary and excessive risk.

For more information, visit www.CMPSInstitute.org or call 888.608.9800.

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This FHASecure expansion will help more homeowners who are struggling to keep up with mortgage payments on their high-cost subprime loans. With this expansion of FHASecure, the Administration expects about 500,000 families to refinance into prime-rate FHA-insured mortgages in total by the end of this year.

“Our plan will help hundreds of thousands of desperate families who have no place else to turn for safer, lower cost ways to keep their homes,” said Federal Housing Commissioner-Assistant Secretary for Housing Brian D. Montgomery at a hearing of the House Financial Services Committee. “We want to be able to help families who are in the right house, but the wrong mortgage.”

In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Now, FHASecure is expanding its eligibility standards. Homeowners who believe they meet this additional eligibility criteria must fall into one of the following categories:

Borrowers with adjustable rate mortgages who were late on two consecutive monthly mortgage payments or at two different times over the previous twelve months. FHA will require a 97% loan-to-value (LTV) ratio for these borrowers to refinance, the same LTV as FHA’s current standard.

Borrowers with adjustable rate mortgages who were late on three consecutive monthly mortgage payments or at three different times over the past 12 months. FHA will require a 90% LTV ratio for these borrowers to refinance.

With these new criteria, the expanded FHASecure can help additional borrowers access a more viable refinancing option and will offer lenders an alternative to foreclosing on these individuals. Lenders may voluntarily write down the outstanding subprime mortgage principal balances to a 97% or 90% LTV ratio depending on the borrowers’ circumstances. FHA will also encourage lenders to make other arrangements, such as subordinate financing, to “fill the gap” between the existing loan balances and the FHA-insurable loan amount. The refinanced loan amount backed by the FHA would be based upon a new appraisal, performed by an FHA-approved appraiser.

FHA will insure new, more affordable mortgages in exchange for this equity cushion, which will protect FHA’s insurance fund, and thus the taxpayer, against risk. Currently, FHA’s insurance fund is self-sustaining, meaning that it requires no appropriation of taxpayer dollars because homeowners pay for the product themselves. Further, any new FHASecure loans will continue to meet FHA’s no-nonsense underwriting standards. Lenders will be required to ensure borrowers have the capacity to repay their mortgages; show a reasonable credit history; employment history; and fully document and verify their incomes.

Like all FHA-insured loans, borrowers will be required to pay upfront and annual premiums on their loans, which directly contribute to the soundness of FHA’s insurance fund and protect taxpayers. FHA will also be simultaneously updating the pricing policy for these premiums. The new policy will base premiums on the individual borrower’s credit risk profile. More than 90% of FHA-backed loans are 30-year fixed rate mortgages. Homeowners currently using FHASecure are saving $400 a month on average compared to their previous subprime loans.

“More homeowners continue to turn to FHA to find mortgage terms they can afford. We’re keeping families in their homes while doing what’s in the best interest of future generations who will rely on the safety and soundness of FHA to put a roof over their heads. The modifications to the existing FHASecure product offer a prudent, yet appropriate, way to help more families refinance without putting the government or taxpayers at risk. Consistent with FHA’s historical mission, the changes are designed to help FHA provide additional liquidity and stabilize local real estate markets.”

Since September 2007, FHA has helped pump nearly $68 billion of much-needed mortgage activity into the housing market, $28.5 billion of which was through FHASecure. FHASecure has helped more than 150,000 homeowners who are current or past due on their loans avoid foreclosure, and, with today’s announcement, it is expected to assist 500,000 total families by December 31, 2008.

For more information, visit www.fha.gov.

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“At a time when the housing market needs them more than ever, Fannie Mae and Freddie Mac have failed to adequately respond to the mortgage crisis,” Jerry Howard, executive vice president and CEO of NAHB, told members of the Senate Banking Committee. “Rather than aggressively pursue market solutions, they are hunkering down to shore up financial results and shareholder returns - and are even taking steps that will further burden struggling mortgage borrowers.”

Because their regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), continues to impose a 30% capital surcharge on both companies, Fannie and Freddie are attempting to build their capital reserves by imposing higher fees that will raise mortgage borrowing costs at the worst possible time, Howard said.

“OFHEO is constraining the ability of Fannie and Freddie to do all they can to promote affordable housing and to help strapped borrowers. At the same time, HUD’s mission oversight over the two GSEs is lacking. HUD should be requiring them to do more, not less, in the present dire mortgage market circumstances,” said Howard. “This just underscores why major reform of this flawed, bifurcated regulatory framework is long overdue and urgently needed.”

NAHB believes that H.R. 1427, the Federal Housing Finance Reform Act of 2007, which passed the House last May, makes significant progress in allowing the GSEs to operate in a safe and sound manner while preserving the vitality of their government-sponsored status for the fulfillment of their vital housing mission.

In crafting a Senate bill to strengthen the regulatory framework of the GSEs, Howard urged lawmakers to:

- Balance the GSEs’ housing mission with safety and soundness concerns.

- Provide Fannie Mae and Freddie Mac the flexibility to respond promptly, within their charters, to meet market needs.

- Extend the increase of conforming loan limits in high-cost areas.

- Focus and enhance GSE benefits to expand affordable housing opportunities.

- Employ capital as a precise instrument of risk management

- Preserve GSE portfolios as tools for achieving liquidity and their affordable housing mission.

“With the U.S. housing market now in the contraction phase of the most pronounced housing cycle since the Great Depression, passage of a GSE regulatory reform bill has the ability to greatly relieve liquidity and inventory pressures in the nation’s mortgage markets, help stabilize housing prices and bolster consumer confidence. This would bring immediate benefit to the overall economy,” said Howard.

For more information, visit www.nahb.org.

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The defendants are Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC, Silverstone Financial, LLC, Southeast Advertising, Inc., Keystone Financial, LLC, MT25 LLC, Peter J. Porcelli II, Bonnie A. Harris, and Christopher Tomasulo.

According to the FTC’s complaint, Safe Harbour, Porcelli, Harris, and Tomasulo target homeowners facing foreclosure with claims such as “We have all the funds available to pay your bills and save your home from foreclosure. GUARANTEED!” The Silverstone companies and Keystone then provide high-cost, interest-only, short-term balloon-payment loans secured by second mortgages on homes already subject to foreclosure.

The lenders allegedly violate HOEPA by extending credit based on the value of consumers’ collateral without regard to their repayment ability, by requiring balloon payments after only six months, by providing negatively amortized loans that cause consumers to owe more at the end of the loan than at the beginning, and by failing to make required disclosures. They allegedly violate TILA by grossly understating the annual percent rate (APR) and finance charges. For example, in at least one instance the disclosed APR was 28% but the actual APR was more than 100%.

All of the defendants are charged with violating TILA and its implementing Regulation Z by failing to make timely written disclosures and by failing to disclose accurately the amount being financed, the finance charge, the annual percentage rate, the payment schedule, the total payment amount, and the fact that the creditor has or will acquire a security interest in the consumer’s home. They also allegedly violate the FTC Act by understating the APR for the loans.

In a related civil contempt action, the FTC alleges that this conduct by Porcelli, Harris, Tomasulo, and others violates court orders entered in FTC v. Bay Area Business Council (see press releases dated May 13, 2004 and February 3, 2005), which prohibit them from marketing credit-related products to consumers.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

For more information, visit http://www.ftc.gov.

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“Because we are seeing continued liquidity problems in the jumbo mortgage market, NAHB and HPC support a temporary increase in the conforming loan limit to allow Fannie Mae and Freddie Mac to purchase mortgages in high-cost areas as part of prompt action on GSE reform legislation,” the two groups said.

Specifically, NAHB and HPC are calling on the Senate to swiftly approve legislation similar to House-passed legislation H.R. 1427, which would reform the oversight of Fannie Mae and Freddie Mac and allow them to increase liquidity in the nation’s mortgage markets.

While H.R. 1427 includes a provision calling for a permanent adjustment for high-cost loan areas based on the area median home sales price up to 150% of the national limit, NAHB and HPC believe that the increase should be temporary for two years. At the end of two years, the increase would be terminated if the jumbo market returns to a normal spread between conforming and non-conforming mortgage rates.

“With the potential for an economic recession increasing, now is the time for all of us to put aside our parochial interests and focus on the job of stabilizing the housing market and getting the economy back on track,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif. “The Housing Policy Council and NAHB are committed to doing just that by working with other industry stakeholders, the administration and the Senate to move GSE reform now and get the job done.”

“Fannie Mae, Freddie Mac and the Federal Home Loan Banks play an important role in the mortgage finance system, assisting in maintaining the mortgage market’s stability and promoting affordable housing,” said John H. Dalton, president of the Housing Policy Council. “Therefore it is crucial that Congress complete action on comprehensive legislation to strengthen oversight of these vital GSEs.”

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

“This is an important step forward as Congress seeks solutions to the current housing and mortgage crisis. Many potential buyers can’t make a traditional 20% down payment, and a loan with tax deductible mortgage insurance may make the difference in their ability to become homeowners safely,” said Kevin Schneider, president of the U.S. mortgage insurance business for Genworth Financial, Inc. Schneider is also the president of the Mortgage Insurance Companies of America (MICA), the industry trade association.

Mortgage insurance makes it possible for buyers without a 20% down payment to finance a home with a single fixed-rate mortgage which will not reset to higher interest rates in the future. Using mortgage insurance, home buyers with a small down payment can avoid the risks associated with combo loans, which are beginning to cause problems for many. In addition, the insurance is cancelable once a homeowner builds 20% equity in their home.

Mortgage insurance is available through private mortgage insurance companies, and through government programs (Federal Housing Administration, Rural Housing Service, and Department of Veteran Affairs).

“On average, this annual tax break amounts to $350 per taxpayer. That’s cash in the pockets of hard working homeowners,” said Schneider. Homeowners with adjusted gross incomes of $100,000 or less can deduct the full cost of their mortgage insurance premiums under the new legislation. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction.

For more information, visit http://www.genworth.com.

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“The introduction of this bill is an important development as it will jumpstart the debate in the Senate over how to prevent a reoccurrence of the current troubles facing the mortgage market. We are still reviewing the specific language in the bill, but there are several provisions that concern us deeply.

Senator Dodd’s bill does not provide a uniform national standard to protect consumers from predatory lending, a step we feel is necessary to ensure a smooth and efficient marketplace. Further, we are troubled by the bill’s ‘duty of care’ and assignee liability requirements.

We welcome the coming debate over the bill and look forward to working with Chairman Dodd, Ranking Member Shelby and senators on both sides of the aisle
as the bill progresses.”

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 400,000 people in virtually every community in the country.

Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field.

For more information, visit www.mortgagebankers.org.

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H.R. 6, the Energy Independence and Security Act, emphasizes energy efficiency by raising vehicle fuel economy standards and encouraging consumers to purchase plug-in hybrid vehicles; extending valuable federal income tax incentives for energy-efficient home improvements and commercial buildings; phasing out inefficient lighting products and improving the efficiency of other home appliances; and encouraging development of zero-emission commercial buildings.

“Enactment of H.R. 6 would not only represents the most significant energy-saving legislation this country has enjoyed in the last three decades, but it also will serve as a very effective environmental policy tool for tackling the urgent problem of global climate change, as the bill is projected to lower greenhouse gas (GHG) emissions significantly,” said Alliance President Kateri Callahan.

“This bill is a win-win for consumers who are struggling under the burden of spiraling energy costs and growing increasingly aware and alarmed at the impact that our wasteful use of energy is having on our climate and our environment.”

Callahan also called upon both the House and the Senate to work together to ensure that a meaningful energy bill can be sent to the president for signature before adjournment of the first session of the 110th Congress.

“While passage of good legislation by one chamber of Congress is laudable, the American people only benefit if such policy becomes law,” Callahan stated. “Poll after poll shows that Americans want relief from high energy costs and want swift, effective action by their government on climate. Now is the time for the House and Senate to come together on comprehensive energy policy that delivers both - energy savings and reduction of greenhouse gases and other pollutants.”

H.R. 6 would increase Corporate Average Fuel Economy, or CAFE, standards from the current average of about 25 miles per gallon for passenger cars, light trucks, and SUVs to 35 mpg by 2020. This would save American families up to $1,000 a year in gasoline costs, for a total of $22 billion in net consumer savings in 2020. It also would reduce U.S. oil consumption by 1.1 million barrels per day in 2020 - half of what we currently import from the Persian Gulf - and cut GHG equivalent to taking 28 million of today’s cars and trucks off the road.

The bill also provides an income tax credit for purchase of so-call “plug-in” hybrid electric vehicles that can be refueled by electricity and/or liquid fuels. Callahan noted that innovative technologies like plug-in hybrids must become options for consumers to ensure a sustainable energy future, and that the federal government has an important role in helping such technologies gain a “foothold” in the marketplace through tax and other incentives.

The bill also would extend for one year the current federal income tax credits for homeowners who make specific energy-efficient home improvements. Details in English and Spanish on those tax credits, which will otherwise expire on December 31, are at www.ase.org/taxcredits.

In addition to the CAFE increase and the existing home and plug-in hybrid tax credits, the Alliance worked to have the following energy-efficiency provisions included in the House bill and urges their adoption:

- Lighting standards that would result in the phase-out of today’s 40-, 60-, 75- and 100-watt incandescent bulbs from January 2012 to January 2014 and their replacement by more efficient standard and halogen incandescents, compact fluorescents, and light-emitting diodes (LEDs) that produce the equivalent amount of light.
- A Commercial Building Initiative (CBI) authorizing research, development, and deployment of new commercial buildings that would use energy efficiency and clean energy sources to produce zero GHG. If fully funded, this could result in savings of 5 quadrillion but in 2020, about 5% of all energy use and 25% of commercial building energy use. The Alliance emphasized that full funding of the CBI by separate appropriations legislation is essential.
- Increased energy efficiency in federal buildings; new efficiency standards for appliances including dishwashers, clothes washers, refrigerators, and freezers; and permanent authorization of Energy Savings Performance Contracts, an innovative financing tool for upgrading the energy efficiency of federal buildings.
- A five-year extension of tax incentives for increased energy efficiency in commercial buildings; three years of incentives for manufacturers of certain energy-efficient appliances; and a new 10% tax credit for combined heat and power.

“The House and Senate have brought us to a point where we could, as a nation, see the most sweeping energy efficiency - and therefore climate - legislation of the past three decades become law,” Callahan said. She added, “The Alliance is hopeful that the Congress will fulfill this promise and deliver an energy-efficiency ‘Christmas present’ to the president and the American people that will yield energy, money, and greenhouse gas savings for decades to come.”

For more information, visit www.ase.org.

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“FHASecure is providing tens of thousands of families with a powerful incentive to obtain affordable and safe home loans,” Jackson said during his keynote address to the Office of Thrift Supervision’s National Housing Forum.

“Homeowners finally have an opportunity to save their American Dream without risking their financial future, and they’re taking advantage of it everyday.”

On August 31, 2007, President Bush announced the creation of FHASecure. Backed by the government, FHASecure is enabling homeowners who have a history of on-time mortgage payments under their original interest rates, but missed payments after their rates reset, to refinance into FHA’s mortgage insurance program. Families with high-cost mortgages and mortgages that are due to reset, but are still current on their loan, also continue to refinance through FHASecure. This is a more viable option because FHA-backed loans are less likely to result in foreclosure.

HUD’s Federal Housing Administration (FHA) is on target to insure over 240,000 FHASecure home loans in Fiscal Year 2008, nearly two and one-half times the number served in Fiscal Year 2007. Since the creation of FHASecure three months ago, FHA has received more than 113,000 refinance applications from families whose loans are current or past due.

FHA refinancing has increased 125% over the past year, and is expected to increase further next year as more homeowners examine their mortgage options. FHASecure will save the average subprime homeowner about $400 a month, or $30,000 over the expected life of the loan.

As a result of extensive nationwide consumer outreach, more subprime borrowers recognize they have a choice and are turning to FHA for assistance. FHA’s toll-free call center has received more than 137,000 calls over the past three months. Nearly 900 FHA-approved lenders around the country are participating in FHASecure by helping families refinance with home loans insured by FHA.

“This is a decisive moment in the economic history of our country…We must turn the housing market around, and create greater stability and predictability…In the near future, homeownership should continue to be the bedrock of our economy, this time with affordable loans that won’t implode,” Jackson added.

Jackson also said FHA could reach more borrowers who need safe and affordable financing alternatives if Congress approves bipartisan legislation to further modernize the 74-year old agency. HUD estimates 200,000 more first-time homebuyers and current homeowners who need access to capital could obtain FHA-insured mortgages next year if Congress expedites passage of FHA reform legislation. Higher FHA loan limits and flexible down payment requirements would help more subprime borrowers refinance, particularly in high-cost areas such as California and the Northeast United States. Expanded FHA activity will also stabilize local real estate markets by reducing foreclosures.

“Each day of delay by the Congress unnecessarily places thousands of families at risk of foreclosure. These families are in danger of losing their homes. Think of what this means to them,” Jackson added.

The House overwhelmingly approved The Expanding American Homeownership Act on September 18, 2007. The Senate Banking Committee approved similar legislation the following day. Yet, the full Senate has delayed passing this critical legislation.

For more information, visit www.FHA.gov.

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“Thousands of hurricane victims still need help,” said HUD Secretary Alphonso Jackson. “That’s why earlier this year we decided to extend the rental housing program, but for FEMA to hand it over to HUD since we are in the long-term housing business.”

On December 1, thousands of families affected by the hurricanes will continue to receive the housing assistance they need to rebuild their lives and regain self-sufficiency. Families who have been contacted by a local public housing agency will continue to see no break in rent payments.

“If you think you’re eligible for assistance, but have not been contacted, please call us immediately. We are committed to doing whatever it takes to help those who need it most,” added Secretary Jackson.

To ensure help reaches all eligible families, HUD continues to work closely with approximately 375 PHAs and 12,000 landlords who will be implementing and managing the temporary rental assistance under the new Disaster Housing Assistance Program (DHAP) now run by HUD. In the past seven months, HUD and PHAs have been aggressively reaching out to families eligible for assistance, sending letters, knocking on doors and calling households. HUD will deploy nearly 20 staff members to cities where the largest numbers of displaced families are currently living, including Houston, Dallas-Forth Worth, New Orleans, Atlanta, Baton Rouge, and Memphis.

To date, participating PHAs are working hard at reaching out to approximately 29,000 people for DHAP, linking them with case managers that help them gain access to job training, housing counseling and other forms of support, enabling them to regain self-sufficiency. However, individuals who believe they may be eligible for the DHAP program, but do not think they have been contacted, should calls HUD’s toll-free referral center immediately at 1-866-373-9509. Operators are available Monday through Friday from 9:00am to 7:00pm EDT, 9:00am to 1:00pm EDT on Saturday and Sunday.

“All hands are on deck to make this transition as seamless as possible for these families who have already been through so much. Working with HUD’s extensive network of public housing agencies and thousands of landlords, we have built a coalition that is working overtime to help families get the housing assistance they need. We will not rest until every eligible family has a roof over their head,” Jackson added.

HUD is also requiring all landlords and PHAs participating in DHAP, like it does for all its programs, to meet basic housing quality standards by providing residents with decent, safe and sanitary living conditions. PHA’s are required to conduct limited inspections of units to make sure there are no serious health and safety items that may impact the life and well being of these families.

DHAP will also be vital for helping families rebuild their lives and become self-sufficient. Starting March 1, 2008, the level of rental assistance will begin to be gradually reduced to help put program participants on a path to independence. While still receiving supportive services, program participants will have ample time to prepare themselves for self-sufficiency. Residents will pay a small portion of the housing cost, which will begin at $50 per month in March and incrementally increase each month thereafter until the program concludes on March 1, 2009. Seniors and the disabled whose primary source of income is Supplemental Security Income or other fixed income that make them eligible to receive assistance under existing HUD programs will be protected.

Finally, beginning January 2008, HUD will begin working with FEMA to transition remaining eligible families out of travel trailers and into rental housing in the private market.

For more information, visit www.fha.gov.

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Mi Sueno, an informative video produced in Spanish with English subtitles, walks viewers through the home buying process, providing critical information on predatory lending dangers as well as safe and secure home loan alternatives for home buyers. Mi Sueno — translated, My Dream — is a component of MSHDA’s Save the Dream campaign. The approximately 27-minute program has been released to public access, cable access and public television channels across the state. Local producers are enthused about Mi Sueno and what it means for Michigan residents. Richard Cory of Romeo’s WBRW Channel 6 said, “We are excited to participate in this program. At WBRW, we feel it is important to reach out to the Hispanic community, as we cater to a growing population of Hispanic residents.”

Leaders at MSHDA are encouraged by the enthusiastic response. In 2005, MSHDA created a Five-year Housing and Community Development Action plan that includes several strategies to improve homeownership in Michigan. This plan included 17 workgroups, one of which was targeted at reaching emerging homeownership markets like the Hispanic population. Mi Sueno and the partnership with the Michigan Hispanic Caucus are the result of the Emerging Homeownership Markets workgroup’s ongoing commitment to helping Michigan’s Hispanic population overcome the barriers currently keeping home ownership out of reach.

MSHDA Executive Director, Michael R. DeVos said, “At MSHDA we are committed to providing all Michigan residents with the programs and tools necessary to bring their homeownership dreams to life.” DeVos continued, “This means taking a long look at what is out there and crafting programs that have the potential to reach all groups in all regions of the state.”

In a separate statement, MSHDA Director of Homeownership, Mary Townley, agreed with DeVos. Townley said, “With programs like Mi Sueno available, we are able to give Michigan residents that otherwise would have been scared away from the home buying process the tools they need to achieve the dream of homeownership.”

For more information, visit http://www.michigan.gov/mshda.

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The AARP-backed Homeowner Protection Act, sponsored by Senator Jacqueline Collins (Chicago) and Representative Karen Yarbrough (Broadview), will help eliminate misleading loan information, serve to better inform consumers, and hold mortgage brokers more accountable.

“Nearly 30% of older borrowers have their home loans at a sub-prime rate, leaving them at an increased risk of losing their most valuable asset, their home,” said Bob Gallo, State Director for AARP Illinois. “AARP commends the Governor, Senator Collins and Representative Yarbrough for moving to protect Illinois homeowners from the crisis of facing a foreclosure due to a misleading home loan.”

AARP pressed for the new law as older homeowners are increasingly targeted for predatory mortgage loans. Among the key provisions, the Homeowner Protection Act:

– Requires mortgage brokers and mortgage lenders to assess the borrowers’ ability to repay the loan, including the initial monthly payment and the higher balloon payment.

– Holds the broker accountable to provide the borrower with the best loan.

– Requires the borrower to be informed of changes in loan terms and provided with a copy of the appraisal, prior to closing.

– Prohibits misleading statements implying a “low monthly payment” includes taxes and insurance.

According to the Center for Responsible Lending, 20% of Illinois homeowners with sub-prime mortgage loans were forced into foreclosure in 2006. Nationwide, over 7 million families hold sub-prime mortgages, with nearly 15% in default.

For more information, visit http://www.aarp.org.

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“Today, by putting a stop to HUD’s rule banning downpayment assistance, the Court has restored hope for an immeasurable number of American families. The efforts of downpayment assistance programs such as The Nehemiah Program have helped more than 600,000 American families realize the dream of homeownership. Moreover, in step with League’s initiative to promote economic stability among African Americans, these programs have specifically helped low-to-middle income minorities build equity and financial strength. The additional challenge of obtaining homeownership without private downpayment assistance is one devastating to imagine. Luckily, because of actions taken today and the efforts of many over recent months, we can look forward to the continued success of these programs and continued access to homeownership despite the current mortgage environment.”

- Marc Morial, President of the National Urban League

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RISMedia, November 2 -Genesis Foundation (Genesis) and Home Downpayment Gift Foundation, Inc. (HDGF), both 501(c)3 charitable entities dedicated to helping low and moderate income families create and maintain homeownership, announced yesterday that is had prevailed in its temporary injunction in the Unites State District Court. The decision by the court halts the rule set to go into effect October 30, which would have eliminated the opportunity for over 100,000 families each year to become homeowners.

Seller-funded downpayment programs have a 94% success rate with homeowners and the rule rather than addressing the unsuccessful borrower’s seeks to eliminate these programs and puts at risk many potential homebuyer’s throughout the country. The judge agreed that HUD ignored the arguments made by respected industry groups that had argued that there were more effective ways to address HUD’s concerns with these programs.

“We felt it was necessary to get involved in this lawsuit and take a leadership role because potential homeowners were not being adequately represented.” said Kelly Schwedland, President Genesis. “The decision today affirmed our belief that HUD had failed to consider reasonable proposed alternatives to the regulation.

The injunction stops the rule from going into effect until there is a resolution to the lawsuit against HUD. This allows all seller assisted down payment programs to continue in their efforts of enabling homeownership.

“I am thrilled by the courts decision. Indeed this was a significant victory for homeowners. I still believe that HUD’s rule is without merit and lacks and a real attempt to seek out alternative solutions, Said Rick Del Sontro, CEO of Home Downpayment Gift Foundation. To make matters worse, HUD has twice attempted to engage in improper selective enforcement of this rule. Such treatment from a federal agency is not merely irrational; it is outrageous. I believe the court took this into consideration when they rendered their decision.”

Responding to the needs of those they serve, the organizations’ legal actions arose out of HUD’s recently issued rule which seeks to terminate successful downpayment assistance (DPA) programs sponsored by HDGF, Genesis and other charities. These programs provide cash gifts to aspiring homeowners who are able to make monthly payments on the mortgages on modestly priced homes, but cannot come up with the downpayments required to qualify for loans guaranteed by the Federal Housing Administration (FHA).

Current law requires home buyers seeking FHA loans to make at least a 3% down payment on their homes, but permits them to receive some or all of the downpayment amount as gifts from charities. Beginning in the mid-1990s, a number of 501(c)3 organizations initiated down payment assistance programs to enable low and moderate income families to purchase their own homes, with faith-based organizations first taking the lead.

From those modest beginnings, DPA programs grew rapidly, helping hundreds of thousands of families. Though HUD is actively seeking statutory authority to offer FHA loans equal to 100% of a home’s purchase price by having buyers assume more debt in lieu of a down payment, HUD has moved to prevent charities from giving low-income families the down payment outright.

HUD’s proposed rule was criticized sharply by Members of Congress in a June 22, 2007 hearing conducted by the House Financial Services Subcommittee on Housing and Community Opportunity on DPA programs. HUD’s action also reverses its previous position regarding the provision of down payment assistance, and reneges on its written commitment to provide six months notice before changing that position.

“We believe the SFDPA has served a critical role in homeownership. HUD is attempting to take a private market solution and replace it with a program that would cost taxpayers dearly. From the beginning of this process I have believed that HUD knew the outcome they wanted and has worked backwards with little regard for people or process,” said Del Sontro.

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