The Federal Reserve Board this week proposed and asked for public comment on changes to Regulation Z (Truth in Lending) to protect consumers from unfair or deceptive home mortgage lending and advertising practices. The rule, which would be adopted under the Home Ownership and Equity Protection Act (HOEPA), would restrict certain practices and would also require certain mortgage disclosures to be provided earlier in the transaction.
The Home Ownership and Equity Protection Act amended the Truth in Lending Act (TILA). Under HOEPA, the Board has the responsibility to prohibit acts and practices in connection with mortgage loans that it finds to be unfair or deceptive. “Our goal is to promote responsible mortgage lending, for the benefit of individual consumers and the economy,” said Federal Reserve Chairman Ben S. Bernanke. “We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated.” The proposal includes four key protections for “higher-priced mortgage loans” secured by a consumer’s principal dwelling:
Creditors would be prohibited from engaging in a pattern or practice of extending credit without considering borrowers’ ability to repay the loan.
Creditors would be required to verify the income and assets they rely upon in making a loan.
Prepayment penalties would only be permitted if certain conditions are met, including the condition that no penalty will apply for at least sixty days before any possible payment increase.
Creditors would have to establish escrow accounts for taxes and insurance.
The rule would define “higher-priced mortgage loan” to capture loans in the subprime market but generally exclude loans in the prime market. A loan would be covered if it is a first-lien mortgage and has an annual percentage rate (APR) that is three percentage points or more above the yield on comparable Treasury notes, or if it is a subordinate-lien mortgage with an APR exceeding the comparable Treasury rate by five points or more.
“Unfair and deceptive practices have harmed consumers and the integrity of the home mortgage market,” said Federal Reserve Board Governor Randall S. Kroszner. “We have listened closely and developed a response to abuses that we believe will facilitate responsible lending.”
The following protections would apply to all loans secured by a consumer’s principal dwelling, regardless of the loan’s APR:
Lenders would be prohibited from compensating mortgage brokers by making payments known as “yield-spread premiums” unless the broker previously entered into a written agreement with the consumer disclosing the broker’s total compensation and other facts. A yield spread premium is the fee paid by a lender to a broker for higher-rate loans. The consumer’s written agreement with the broker must occur before the consumer applies for the loan or pays any fees.
Creditors and mortgage brokers would be prohibited from coercing a real estate appraiser to misstate a home’s value.
Companies that service mortgage loans would be prohibited from engaging in certain practices. For example, servicers would be required to credit consumers’ loan payments as of the date of receipt and would have to provide a schedule of fees to a consumer upon request.
The proposed revisions to TILA’s advertising rules require additional information about rates, monthly payments, and other loan features. The amendments also would ban seven deceptive or misleading advertising practices, including representing that a rate or payment is “fixed” when it can change.
Under the proposal, creditors would have to provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer’s principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans. In addition, consumers could not be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer’s credit history.
The Federal Reserve has engaged in extensive outreach efforts with consumer groups, the financial services industry, lawmakers, and others to ensure that the proposed rules are likely to achieve the goal of protecting consumers from unfair practices without shutting off access to responsible credit. The proposal takes into consideration testimony given at four public hearings the Board held in the summer of 2006, and a hearing held in June 2007, as well as public comment letters received in connection with those hearings. The Board also consulted with other federal and state agencies and its own Consumer Advisory Council.

Super Bailout Fund For Mortages Securities Cancelled

Banks to abandon 'Super-SIV' fund
Citigroup, JPMorgan and BofA cancel plans for a mortgage backed securities rescue fund, but leave the door open in case of more credit woes.

http://money.cnn.com/2007/12/21/news/companies/super_siv/index.htm?postversion=2007122119

Bay Area home sales stuck at two-decade low; price picture mixed

----------------------------------------------------------------------------------------------

Source: DataQuick Information Systems

December 20, 2007
La Jolla, CA.----The Bay Area's housing market remained in a bit of deep freeze in November, when sluggish demand kept sales at a two-decade low for the third straight month. Prices continued to hold up best in the region's core markets, while some outlying areas posted more double-digit annual declines, a real estate information service reported.
A total of 5,127 new and resale houses and condos sold in the Bay Area in November. That was down 6.5 percent from 5,486 in October, and down 36.2 percent from 8,042 in November 2006, DataQuick Information Systems reported.
Sales have decreased on a year-over-year basis for 34 consecutive months. Last month was the slowest November in DataQuick's statistics, which go back to 1988. Until last month, the slowest November was in 1990, when 6,015 homes sold. The strongest November, in 2004, saw 11,906 sales. The average for the month is 8,367.
"This fall's sharp decline in jumbo-loan financing continued to weigh heavily on Bay Area home sales, though we do see evidence the problem has stabilized. The percent of all transactions financed with jumbo mortgages increased slightly in November for the first time since the credit crunch hit in August. We expect sales to pick up at least modestly as the price and availability of jumbo loans improves," said Marshall Prentice, DataQuick president.
The percent of all Bay Area home purchases financed with jumbo loans, or those exceeding $417,000, rose to 44.1 percent in November. That?s up from 42.6 percent of purchases in October but still well below normal. In the first seven months of this year, before the credit crunch, 62 percent of all Bay Area purchases were jumbo-financed.
The number of homes purchased with conforming loans (up to $417,000) fell 12 percent in November compared with a year ago, while jumbo-loan purchases fell 58 percent from last year.
The median price paid for a Bay Area home was $629,000 last month, down 0.3 percent from $631,000 in October, and up 1.5 percent from $620,000 in November last year. Last month?s median was 5.4 percent lower than the peak median of $665,000 reached last June and July.
Prices in the core metro markets close to large job centers or the coast are holding up relatively well, while areas far from the core are experiencing the most price erosion. Individual counties have seen their median prices decline from peak levels by as little as 2.4 percent in San Francisco and by as much as 21.9 percent in Solano.
In some cases those price declines appear to be stoking more sales, especially within the new-home market. In Solano County, for example, new home sales rose nearly 19 percent between October and November. The county's new-home median price is down almost 15 percent on a year-over-year basis and is 22 percent off its peak.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Due to late data availability, the November statistics for Alameda County were extrapolated from the first three weeks of the month.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,964 last month, down from $3,000 the previous month, and up from $2,883 a year ago. Adjusted for inflation, current payments are 13.3 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 10.7 percent below the current cycle's peak in June last year.
Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages have dropped sharply. Down payment sizes and flipping rates are stable, and non-owner occupied buying activity has edged up, DataQuick reported.

Secretary Paulson Prepared Remarks: Stockton, CA.

US TREASURY DEPT

December 18, 2007hp-743
Secretary Paulson Prepared Remarks Before Stockton Housing Town Hall Meeting
Stockton, Cali. -Good afternoon. Thank you, Governor, and thanks to all of you for joining in a discussion of the current housing market. After years of unsustainable home price appreciation and an abundant supply of easy credit, the U.S. housing market is experiencing an inevitable downturn. Here in Stockton, house prices increased by an average of over 17 percent a year from 2001 to early 2006. That trend has now reversed and house prices declined 10 percent in the last year. Your city has been particularly hard-hit by foreclosures. Although the housing market downturn is a significant challenge, homeownership remains a vital and positive aspect of American life --- 68 percent of American households own their own home and 93 percent of Americans pay their mortgages every month, right on time. We do expect that the housing market turbulence will take some time to work through, and that there will be some penalty on our short-term economic growth. Stockton is facing these difficulties with a somewhat weaker economy than other parts of the country, with an unemployment rate about five percentage points above the national average.
Overall, the U.S. economy will continue to grow and is fundamentally sound. Core inflation is contained, continued job gains are providing a good foundation for household spending, corporate balance sheets remain healthy overall, and strong growth abroad is supporting U.S. exports. Our economy is operating against the backdrop of a strong global economy. We want, when possible, to minimize the housing market downturn's impact on the national economy, California's economy and cities like Stockton. A spike in home foreclosures can pose costs for whole neighborhoods, causing property values to decline and crime to increase. This can undermine the financial stability of neighboring families and communities.
Foreclosure isn't only expensive for homeowners. Investors – the owners of the mortgage – also get hit with steep losses. Investors would rather find a solution other than foreclosure, if there is one.
In any normal business situation where both sides see that they are going to suffer losses, they would get together and strike a deal to minimize those losses. But this situation isn't normal; the company that made your mortgage may no longer hold it. Instead, mortgage investors are spread all over the world, making it very difficult for them to reach an individual decision on each troubled mortgage.
Until recently, our system has been able to shoulder the burden of this complexity because the volume of struggling borrowers was manageable in a period when home prices were generally increasing. But today, there are a rising number of subprime borrowers who will face a problem when their mortgage interest rate resets and their monthly payments increase. We anticipate that 1.8 million owner-occupied subprime mortgage resets will occur in 2008 and 2009. This rising volume makes it impossible for the investors who own the mortgages to deal with them in the usual way.
The government acted to prevent a market failure and to try to avoid unnecessary harm that would result from a cumbersome, difficult decision-making process due to a coming wave of struggling subprime borrowers. We developed a solution that involves no government funding or subsidies for industry or homeowners.
Our solution centers on bringing mortgage market participants together in the HOPE NOW alliance. The alliance is a coalition of mortgage servicers - the people who collect your payments - counselors and investors that are working to avoid preventable foreclosures.
As I see it, subprime borrowers fall into three broad categories. There are those who can afford their adjusted interest rate; these homeowners need no assistance. There are homeowners who haven't even been making payments at the loan's starter rate and may not have the financial wherewithal to sustain home ownership; some of these homeowners will become renters again.
A third category is homeowners with steady incomes and relatively clean payment histories who cannot afford the higher adjusted rate. These are the homeowners we need to see fast-tracked into a modification or refinancing.
Through the HOPE NOW alliance we are focusing on this third group, determining who they are and what steps may appropriately assist them. With HOPE NOW, we announced a three point plan to aggressively help as many able homeowners as possible keep their homes.
First, we are increasing efforts to reach able homeowners who are struggling with their mortgages. We learned that 50 percent of foreclosures occur without borrowers ever asking for help. Many borrowers in trouble are afraid to speak to their lenders. But we know that the sooner a struggling borrower reaches out to address the problem, the more likely it's possible that it can be resolved. Nothing is worse than doing nothing.
HOPE NOW is sending outreach letters to borrowers likely to be facing trouble, and has expanded a toll-free number where concerned homeowners can talk to mortgage counselors about their financial circumstances.
Second, we are working to increase the availability of affordable mortgage solutions for these borrowers. The industry is developing modifications and other mortgage products that may allow more people to stay in their homes. HUD has implemented FHASecure, which is already refinancing more homeowners into FHA mortgages. I am very hopeful that Congress will pass a final version of an FHA modernization bill, so more borrowers will have the option of an affordable FHA mortgage.
Third, we have led the industry to develop a systematic means of efficiently moving able homeowners into sustainable mortgages. The industry came together and developed straight-forward criteria to allow them to quickly identify borrowers who can't afford their mortgage reset, but have the financial wherewithal to continue to own their home. For the mortgages in this group, both the borrower and the investor are better off if foreclosure is avoided. The industry announced two weeks ago that they will now be able to fast-track these borrowers into mortgage modifications --- which will result in a 5-year interest rate freeze for some mortgage holders.
This effort is not an across-the-board mortgage payment freeze. There are many subprime borrowers who will be able to afford their higher mortgage payments, so they don't need help. Others will not be eligible for fast-tracking, but will go through a longer process to demonstrate that they can't afford the mortgage reset. And, of course, some may not be able to afford any reasonable mortgage modification.
The fast-tracking of a significant portion of these subprime borrowers into a refinance or a modification frees up resources so that lenders can work with other borrowers. We are working to prevent a market failure by avoiding foreclosures that otherwise would occur just because someone wasn't reached in time or the system could not respond quickly enough to produce an outcome in the best interest of the homeowners and the investors who own the mortgages.
And let me say to all of you here today – that if you, a friend or family member is worried about losing their home, please call the HOPE NOW hotline or your mortgage servicer immediately.
Our plan won't prevent every foreclosure, and modification will be available only when it's a financially feasible and necessary solution. The industry has committed to reporting results of this effort, and we will measure our success by number of foreclosures prevented, not the number of mortgages modified.
This plan is neither a silver bullet, nor is it perfect, but it is the best way to deal with the unprecedented volumes that threatened to overwhelm the normal functioning of this market. We can, and will, monitor the situation closely and do our best to address issues as they arise.

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December 18, 2007

Treasury Statement on Federal Reserve Rules to Improve Mortgage Oversight
Washington- U.S. Treasury Under Secretary for Domestic Finance Robert K. Steel issued the following statement today regarding the Federal Reserve Board of Governor's release of proposed rules for the Home Ownership and Equity Protection Act:
"Treasury commends the Federal Reserve's efforts announced today to improve mortgage lending practices. The Federal Reserve has used its authority to restrict certain practices that are unfair or deceptive and to provide enhanced information to consumers. We support the development of such rules, which recognize the need to protect consumers without unnecessarily restricting their access to credit."

California Gov - "Fiscal Emergency"

This is something I just read, it's a little wordy yet I thought you might find it interesting; these two sentences stood out in the text."....The real estate market is collapsing. California Gov. Arnold Schwarzenegger announced on Friday that he will declare a "fiscal emergency" in January and ask for more power to deal with the $14 billion budget shortfall from the meltdown in subprime lending....""..."Not major"? 3.5 million potential foreclosures, 11-month inventory backlog, plummeting home prices, an entire industry in terminal distress..."Entire story linked belowThe coming collapse of the modern banking system <---------click on the link and read the whole story...................

U.S Treasury Auctions

http://www.ustreas.gov/auctions/treasury/rp/

S. 2338, The FHA Modernization Act of 2007

The so-called “The FHA Modernization Act of 2007″, approved overwhelmingly by a 93-1 vote, would cut the required down-payment for FHA loans in half, from 3% to 1.5%, and also raise the maximum loan amount the FHA can insure.
The Senate bill will also raise the maximum loan size the FHA can insure in high-cost areas from $362,790 to $417,000, the conforming limit currently used by mortgage financiers Fannie and Freddie.
“This legislation is the perfect example of the kind of help Americans are looking for,” Senator Charles Schumer, a New York Democrat who co-sponsored the bill, said on the Senate floor today. “It is definitely and desperately needed.”
The bill will also allow the FHA to insure more reverse mortgages and simplify requirements for condominium loans.
A similar bill was passed by the House in September, so now the two chambers will have to come to an agreement before sending the final bill to the White House for approval.
“We’re pleased that the U.S. Senate passed a bill today that would give FHA some of the additional flexibility it needs to provide more families with a safe, affordable mortgage financing option,” White House Press Secretary Dana Perino said in a statement.
The FHA, created in 1934 to help low-income borrowers, currently insures about 3.7 million mortgages, but its share of the single-family mortgage market has dwindled to roughly 4 percent, down from 19 percent over 10 years ago as subprime lending gained in popularity.

LOANS GONE WILD

December 13, 2007



Secretary Paulson to Visit Florida, Missouri, California to Discuss the Administration’s Efforts to Reduce Foreclosures
Secretary Henry M. Paulson, Jr. will travel to Orlando, Kansas City, Stockton, Calif. and Los Angeles next week to discuss the Administration's efforts to address mortgage market issues and help families struggling with their mortgage avoid foreclosure. Paulson will meet with local officials, community leaders, and representatives from local businesses to discuss what has been proposed and what can be done to help more people. Last week Paulson joined President Bush and HUD Secretary Jackson to commend a private sector effort to streamline the refinancing and modification process and deliver quicker help to homeowners facing foreclosure. (For more information on this announcement go to: http://www.treasury.gov/topics/financial-markets/.)
He will also participate in an event to highlight the importance of open investment in Los Angeles on Wednesday.
Details on the events will be announced later this week.

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(I was told over a holiday dinner by someone very close to me who works for Country Wide that - "All the stuff you hear in the media about CW is not true" - I wonder what dose of industrial psychology is being used at the Corporate offices. Ever notice when upper managment cans middle managment becasue of cost cutting measures and then - things like - "loans gone wild" happen; then the board stands like deer in the headlights when they realized the very people being paid the brass bucks were not watching the chicken in the hen house)

LOANS GONE WILD

The Illinois attorney general is investigating the home loan unit of Countrywide Financial as part of the state’s expanding inquiry into dubious lending practices that have trapped borrowers in high-cost mortgages they can no longer afford.
Lisa Madigan, the attorney general, has subpoenaed documents from Countrywide relating to its loan origination practices, a person briefed on the matter said. Rick Simon, a Countrywide spokesman, said the company was cooperating with the investigation but declined to comment further.
The inquiry follows an investigation by Ms. Madigan’s office into One Source Mortgage, a Chicago mortgage broker that recently closed its doors. Ms. Madigan sued One Source on Nov. 27, contending that the company misled borrowers by promising low rates on mortgages without advising them that their payments would jump sharply shortly after the loans were made. Countrywide was One Source’s primary lender, according to the lawsuit.
Countrywide, the nation’s largest mortgage lender and loan servicer, is coming under increased scrutiny as the home loan crisis deepens. In addition to the Illinois investigation, the company is also fielding inquiries from the Securities and Exchange Commission about significant stock trades made by Angelo R. Mozilo, the chief executive, before Countrywide’s stock plummeted this year.
The United States trustee, which oversees the bankruptcy court system, is investigating Countrywide’s actions in two cases involving borrowers in South Florida whose loans were serviced by the company. The trustee is trying to determine if the company’s conduct in those cases represents abuses of the bankruptcy system. The attorney general’s lawsuit contended that One Source put borrowers into loans with terms they did not understand, especially so-called pay option adjustable-rate mortgages. These loans allow borrowers to pay only a fraction of the interest owed and none of the principal, resulting in a growing rather than a shrinking mortgage balance. Countrywide was One Source’s main provider of pay option loans, documents in that case show.
“This company’s conduct is a prime example of unscrupulous mortgage brokers that has led to a foreclosure crisis for many Illinois homeowners,” Ms. Madigan said when she filed the suit against One Source.
Mark D. Belongia, a lawyer at Belongia & Shapiro in Chicago, represents One Source and its president, Charles G. Mangold. Mr. Belongia said his client denied all of the suit’s charges and expected to be vindicated in court.
Donald Wagner, a professor of Middle East studies and comparative religion at North Park University on Chicago’s North Side, is a One Source client who has talked to the attorney general about his troubles with a Countrywide pay option loan. In March 2005, he refinanced his fixed-rate mortgage to help pay for his daughter’s college education. He said the One Source broker did not tell him his low teaser rate — less than 2 percent — would jump after just one month.
“I kept asking them and checking on that,” Mr. Wagner said. “Then it jumped to more than 7 percent and now it’s up to 8 percent plus and it’s going to jump again. I am actually paying out over 60 percent of my monthly income, and it’s only so long that I can do that.”
Because Mr. Wagner cannot afford to pay both the interest and principal, the amount of his Countrywide loan has risen to $307,000, from $292,000 two and a half years ago. He has had to borrow against his 401(k) and university pension to meet his payments, he said. Making matters worse, when he tried to sell his house last summer to get out from under the mortgage, he learned that the loan carried a prepayment penalty of $12,000.
Mr. Wagner has asked Countrywide to drop the prepayment penalty, but it has declined to do so.
Of the 69 borrower cases examined by the attorney general’s office, 26 of the first mortgages and 4 of the second liens were made by Countrywide. Fremont Investment and Loan, a unit of the Fremont General Corporation, was One Source’s second-largest lender, with 20 loans. Last March, Fremont Investment consented to a cease-and-desist order issued by the Federal Deposit Insurance Corporation, which contended that the company had practiced unsound lending and had violated laws or regulations.
The Illinois suit against One Source Mortgage said the company lured borrowers with misrepresentations about the interest rates on their loans. For example, one borrower was told that he would have an interest rate of less than 1 percent for the first year of his mortgage, but the rate rose to 7.5 percent after a month, according to the complaint. One Source also used high-pressure tactics to rush borrowers through their loan closings, according to the suit. Most of the closings took less than 30 minutes, the attorney general said, with some only 10 to 15 minutes. One borrower was told that “it would take two days to explain everything,” and that the closing had to take place before that. Some borrowers told Illinois investigators that they did not know One Source brokers had inflated their incomes to get them a larger mortgage. One consumer provided pay stubs and tax returns to One Source showing her income to be $2,200 a month, the suit said. Only later did she discover that One Source had listed her monthly income as $9,000.
The Illinois attorney general has been aggressive in moving against mortgage lending abuses. State officials were part of the executive committee that negotiated the settlement reached in January 2006 between Ameriquest, a big mortgage lender, and 49 state attorneys general. Under that deal, the company, without admitting or denying the accusations of loan improprieties, agreed to pay $295 million to consumers in 49 states and more than $30 million to cover costs of the investigation.

J.D Power and Associates Ranks......

Home Equity Line Loan Origination Ratings
1. Wachovia
2. B Of A
3. Benefical
4. Chase
5. Citi Bank

(When you look at the top 5 you can easily tell that customer service is a true part of the business model and executed in company policy)

Won't mentioned the obvious names that didn't make the top - hey - customer service plays a vital part in the overall experience - when are the others going to understand that.....

Perceptions anyone?

Office of Federal Housing Oversight

OFHEO Director James Lockhart spoke about GSE reform and the notion of raising the conforming loan limit today at the American Enterprise Institute, a Washington, D.C.-based think tank.
Lockhart said a temporary increase in the conforming loan limit “might make some sense,” but only if the mortgage financiers improve the risk management of their loan portfolios.
Fannie Mae and Freddie Mac “would need to put in all the proper safety and soundness risk management around it rather than just jumping in,” Lockhart said, but also warned that entering the jumbo loan market could threaten their main purpose, which is to provide affordable housing.
Last month, the OFHEO decided to keep the conforming loan limit at $417,000 for the third straight year, despite the fact that the average October-to-October change in home prices fell 3.49%.
The California Association of Mortgage Brokers has been lobbying to raise the conforming loan limit from $417,000 to $625,000, which they estimate will allow tens of thousands of homeowners to obtain more favorable financing terms.
Fannie Mae and Freddie Mac, as well as certain Senators have also been pushing for a temporary lift of the conforming limit to ease the credit crunch, though the Bush Administration and Fed Chief Bernanke have been strongly opposed.
The House of Representatives approved legislation in May as part of their GSE reform bill that would permanently increase the conforming loan limit and take into account higher home prices in pricier markets throughout the United States.
Lockhart said the recent turmoil in the financial markets “prove it is time for the Senate to act” on its version of GSE reform, remarking, “if not now, then when?”
In regard to recent capital woes plaguing the GSEs, Lockhart said he would consider whether the 30 percent capital surplus “is lifted entirely or changed” and said “portfolio limits could come off as early as late February.”
But said, “I’d hate to relax the capital requirement just because they are losing money. That is not the reason to relax the capital requirement.”
Government sponsored entities Fannie Mae and Freddie Mac own or guarantee roughly 40 percent of the $11.5 trillion U.S. residential mortgage debt.

According to a CreditSights report released Tuesday, the Bush Administration’s recent mortgage interest rate freeze proposal will likely create more problems than solutions for most homeowners.
The report claims the freeze plan will undermine the viability of the secondary market that has played a key role in providing mortgage loans, and will set in place similar expectations for Alt-A borrowers who face resets in coming years.
Creditsights analyst Christian Stracke noted that fifty percent of mortgage loans since 2002 have been made available via lending from the securitization markets, and said loan modifications would reduce the value of residential mortgage backed securities (RMBS).
“The potential contagion into the broader RMBS market could jeopardize the extension of credit through the securitization market, further undermining the benefits generated from the modification plan,” said Stracke.
He also argued that Alt-A mortgage resets could turn out to be just as bad as their subprime brethren, forcing the government to step in yet again to assist another set of at-risk borrowers.
“The combination of option adjustable rate mortgages and traditional Alt-A adjustable rate mortgage resets will be just as bad, if not worse, in terms of the absolute par loan dollar amount as the subprime reset problem, although it is not set to peak until 2010-2011,” Stracke said.
“Assuming the housing market has not shaken off the current slump by 2010, the wave of resets could create yet another wave of foreclosures among a class of homeowners that is going to remember the forbearance offered to subprime borrowers all too vividly,” he added.
Stracke also believes homeowners will lie about their income, and/or intentionally damage their credit scores to attain eligibility for the freeze program.
“We find it hard to believe that borrowers who have too much income and/or too high credit scores to qualify for the modification will not find some way to convince their mortgage servicers that they do in fact qualify,” he wrote.
“The incentive to lie, or even to damage one’s own credit score, is too high,” he added.

December 10, 2007hp724
Under Secretary Steel Speaks at Subprime Lending and Foreclosure Summit
Under Secretary Steel Speaks at Subprime Lending
and Foreclosure Summit

Under Secretary for Domestic Finance Robert K. Steel will speak Wednesday at the New York City Subprime Lending and Foreclosure Summit. The summit is a collaborative forum between New York City federal banking regulators and the city's Department of Housing Preservation and Development.
The forum will focus on national solutions to the current subprime mortgage situation, as well as programs designed specifically to address the needs of New York City homeowners.
Who Under Secretary for Domestic Finance Robert K. Steel
What Remarks at New York City Subprime Lending and Foreclosure Summit
When Wednesday, December 12, 2007 9:00 a.m. EST
Where City University of New York Graduate Center
365 Fifth Avenue
Manhattan, N.Y.

FREDDIE MAC ANNOUNCES OPERATIONAL CHANGES FOR PURCHASING DELINQUENT LOANS FROM MORTGAGE PCs

McLean, VA – Freddie Mac (NYSE: FRE) announced today that the company will generally purchase mortgages that are 120 days or more delinquent from pools underlying Mortgage Participation Certificates ("PCs") when:
the mortgages have been modified;
a foreclosure sale occurs;
the mortgages are delinquent for 24 months;
or
the cost of guarantee payments to security holders, including advances of interest at the security coupon rate, exceeds the cost of holding the nonperforming loans in its mortgage portfolio.
Freddie Mac had generally purchased mortgages from PC pools shortly after they reach 120 days delinquency. From time to time, the company reevaluates its delinquent loan purchase practices and alters them if circumstances warrant.
Freddie Mac believes that the historical practice of purchasing loans from PC pools at 120 days does not reflect the pattern of recovery for most delinquent loans, which more often cure or prepay rather than result in foreclosure. Allowing the loans to remain in PC pools will provide a presentation of its financial results that better reflects Freddie Mac's expectations for future credit losses. Taking this action will also have the effect of reducing the company's capital costs. The expected reduction in capital costs will be partially offset by, but is expected to outweigh, greater expenses associated with delinquent loans.
Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.

Consumer Alert

Commerce is about making money - but at the expense trashing your customers? We all know customer service at most places is non existent. We also know major outpost such as Wells Fargo, WaMU and Wal Mart will disregard a few customers becasue a few customers don't amount to a hill of beans on the over all P/L statements. Its odd how places such as Wells Fargo, WaMU and Wal Mart will postion as customer friendly but treat parts of their customer base like garbage.

http://wellsfargosucks.com/index.php?page=read


http://www.berkeleydailyplanet.com/article.cfm?storyID=20669

http://www.screw-paypal.com/horror_stories/horror_stories.html

http://www.walmart-blows.com/

http://www.walmart-blows.com/forum/viewforum.php?f=3



The above links will aid you in your thought process about these places of commerce....

President Bush Announces Private-Sector Plan To Help Struggling Homeowners, Calls On Congress To Join Administration In Acting

( If you have family or friends that need help with this please contact me michael@valleyfinance.com we are well versed in this matter)

President Bush Discusses Housing in Roosevelt Room
Today, President Bush outlined steps the Administration is taking to help American homeowners and called on Congress to join him in delivering relief to homeowners in need. In August, President Bush announced measures to help many struggling homeowners, including directing Treasury Secretary Henry Paulson and Housing and Urban Development (HUD) Secretary Alphonso Jackson to work with lenders, loan servicers, mortgage counselors, and investors on an initiative to help struggling homeowners. Secretaries Paulson and Jackson responded by assembling a private-sector group called the HOPE NOW Alliance. HOPE NOW is an example of government bringing together members of the private sector to voluntarily address a national challenge – without taxpayer subsidies or government mandates. Today, the President announced that these efforts have yielded a promising new source of relief for American homeowners. President Bush announced that representatives of HOPE NOW have developed a plan under which up to 1.2 million homeowners could be eligible for assistance. Many individual homeowners feeling financial stress have "adjustable rate mortgages," which typically start with a lower interest rate and then reset to a higher rate after a few years. The HOPE NOW plan is designed to help subprime borrowers who can at least afford the current, starter rate on a subprime loan, but will not be able to make the higher payments once the interest rate goes up. HOPE NOW members have agreed on a set of new industry-wide standards to provide systematic relief to these borrowers in one of three ways:
Refinancing an existing loan into a new private mortgage;
Moving them into an FHASecure loan; or
Freezing their current interest rates for five years. Since The President's Announcement In August Of Targeted Actions To Assist Homeowners, The Administration Has Moved Forward With Three Key Steps
1. The President and his Administration have launched a new initiative at the Federal Housing Administration (FHA) called FHASecure. FHASecure expands the FHA's ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. In just three months, the FHA has received over 120,000 refinancing applications and has already helped more than 35,000 people refinance. By the end of 2008, the FHA expects this program to help more than 300,000 families.
The FHA is also on track to start charging mortgage insurance premiums based on the individual risk of each loan, using traditional underwriting standards. Risk-based pricing will expand access and enable FHA to help even more low-to-moderate income families who could not otherwise qualify for prime-rate financing.
2. Secretaries Paulson and Jackson have assembled the private-sector HOPE NOW alliance. This morning, representatives of HOPE NOW briefed the President on the plan they have developed. In addition:
HOPE NOW recently mailed hundreds of thousands of letters to borrowers falling behind on their payments. In the past, some lenders and mortgage servicers may not have contacted borrowers until after their loans were delinquent. The Alliance is trying to reach families early, before their mortgage problem becomes overwhelming.
HOPE NOW has supported a toll-free hotline, 1-888-995-HOPE, which is available 24-hours a day to provide mortgage counseling in multiple languages.
3. The Federal government is taking several regulatory actions to make the mortgage industry more transparent, reliable, and fair. Later this month, the Federal Reserve intends to announce stronger lending standards that will help protect borrowers. In addition, HUD and the Federal banking regulators are each taking steps to improve disclosure requirements so that homeowners can be confident they are receiving complete, accurate, and understandable information about their mortgages.
If Members Of Congress Are Serious About Responding To The Challenges In The Housing Market, They Can Start With Several Steps Of Their Own
1. Congress needs to pass legislation to modernize the FHA. In April 2006, President Bush first sent Congress an FHA modernization bill that would increase access to FHA-insured loans by lowering downpayment requirements, allowing the FHA to insure bigger mortgages in high-cost states, and expanding FHA's authority to price insurance fairly, with risk based premiums. The House passed the bill with more than 400 votes last year. This year, the House passed it again, yet the Senate has not acted.
The liquidity and stability that FHA provides the market are needed now more than ever, and the President urges the Senate to move as quickly as possible. This bill could allow the FHA to help 250,000 additional families by the end of 2008.
2. Congress needs to temporarily reform the tax code to help homeowners refinance during this time of housing market stress. Under current law, if the value of your house declines and your bank forgives a portion of your mortgage, the tax code treats the amount forgiven as taxable income. The House recently passed this tax relief with bipartisan support, and the Senate should pass relief as soon as possible.
The Administration has also proposed allowing cities and States to issue tax-exempt mortgage bonds to refinance existing loans, and the President calls on Congress to approve this temporary measure quickly. Under current law, cities and states can issue tax-exempt bonds to finance new mortgages for first-time homebuyers, and this measure would make it easier for State housing authorities to help troubled borrowers.
3. Congress needs to pass funding to support mortgage counseling. Non-profit groups like NeighborWorks provide an essential service by helping homeowners find affordable mortgage solutions and prevent foreclosures. The President's FY 2008 Budget requests $120 million for NeighborWorks and another $50 million for HUD's mortgage counseling program. Congress has had these requests since early February, and it needs to stop delaying and get this funding to the President's desk.
4. Congress needs to pass legislation to reform Government Sponsored Enterprises (GSEs) like Freddie Mac and Fannie Mae. GSEs provide liquidity to the mortgage market that benefits millions of homeowners, and it is vital that they operate safely and soundly. The President has called on Congress to pass legislation that strengthens independent regulation of the GSEs and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start, and the Senate needs to pass legislation soon.

The Latest From Washington aprox noon 12/06

Statement by Secretary Henry M. Paulson, Jr. at Press Conference to Announce Framework to Help Preserve Communities by Preventing Foreclosure
Washington, DC -- Good afternoon. Thank you, Secretary Jackson, Chairman Bair, Comptroller Dugan, Governor Kroszner, Director Lockhart, Director Reich and representatives from the American Securitization Forum, HOPE NOW, the Mortgage Bankers Association and the Housing Policy Council for your creativity and flexibility during these recent months. We have worked through an evolving process to help minimize the impact of the housing downturn on homeowners, neighborhoods and the U.S. economy.
The infrastructure to reach struggling borrowers is now in place: outreach letters are being sent to borrowers likely to be facing trouble, a toll-free number has been expanded and there are counselors available to work with struggling borrowers.
The American Securitization Forum represents mortgage investors and mortgage servicers, and they have announced today a set of guidelines to streamline the process of refinancing and modifying subprime loans for able homeowners. We hope that these guidelines will be adopted as reasonable and customary standard practice across the entire servicing industry.
This is a private sector effort, involving no government money; so some may ask "Why are these government officials here today?" We are here because we all know that it is in everyone's interest – homeowner, servicer, investor – to develop a market-based approach to avoid foreclosures that are preventable. And the current system for working out those problem loans would not be sufficient to handle the anticipated 1.8 million owner-occupied subprime mortgage resets that will occur in 2008 and 2009. The investors who own these loans recognize that foreclosure is costly, and that a workout plan or mortgage modification often brings them greater value than foreclosure. But the standard loan-by-loan evaluation process that is current industry practice would not be able to handle the volume of work that will be required. Instead, the industry needed a streamlined approach to address this increased volume.
The complexity that exists in current mortgage and mortgage securities markets poses some very practical and difficult problems. The vast majority of mortgage servicers are collecting homeowners' payments on behalf of investors scattered around the world. While each of these participants has an interest in avoiding preventable foreclosures, they are not equipped to handle the anticipated volume on their own. I saw a role for government here – to convene market participants with common interests to determine if, and then how, they could develop a shared framework to address both the market complexity and the upcoming volume of mortgage resets.
The industry standards announced today do not change the nature of the responsibilities in the servicing industry – servicers will continue to modify loans when it is in the best interests of the investors. Indeed, these industry standards announced today are the product of discussions among investors and servicers.
With the investor community on board and as a clear beneficiary of this approach, the risk of litigation should be manageable. Therefore, I expect servicers across the industry to pursue this streamlined approach.
The HOPE NOW alliance represents servicers who cover 84% of currently outstanding subprime mortgages. HOPE NOW estimates that under this streamlined approach up to 1.2 million subprime ARM borrowers will be eligible for fast-tracking into consideration for affordable refinanced or modified mortgages. Servicers have committed to reporting progress, and we all look forward to transparent and monthly reports on the results of these efforts.
We owe thanks to the mortgage investors who have stepped up and enabled servicers to streamline the modification and refinancing process. Streamlining will free-up resources so servicers can better focus on borrowers whose situations require more in-depth review. Thank you, also, to the HOPE NOW members for significantly increasing resources to identify, contact and counsel struggling homeowners.
Additional thanks to the regulators who are here today. They regulate mortgage lending, servicing and investing institutions, so they see this issue from all perspectives. Their support for this effort is much appreciated by all participants.
The approach announced today is not a silver bullet. We face a difficult problem for which there is no perfect solution.
Today's announcement is a significant step. I know that everyone here has worked very hard since August, and we will continue working. As events unfold, our approach will continue to adapt and evolve.
Now, Secretary Jackson will make a few remarks.

Teaser Freezer

U.S. Treasury Secretary Henry Paulson Thursday unveils his "teaser freezer" plan to put a five-year hold on some mortgage interest rates and help keep millions of homeowners out of foreclosure. He's hoping to apply the plan to certain subprime mortgages underwritten between 2005 and this year, the rates for which are to reset higher starting in January. The administration is eager to show resolve in blunting the credit crisis that threatens to tip the economy into recession. Foreclosure notices have shot up 74% so far this year, to 1.8 million. Home prices are dropping across the country, and lenders have pulled back from the freewheeling days of just one or two years ago. More than 2 million mortgages introduced at low "teaser" rates start resetting to higher rates in January, in some cases 30% higher, putting in a bind borrowers who stretched to buy a bigger home or whose home values have dropped below their mortgage balances. Decried as a bailout of irresponsible borrowers by some and a financial industry wrist slap by others, the plan is not mandatory for the financial industry, though more than three-quarters of lenders and servicers say they embrace the idea. The biggest, Countrywide Financial (nyse: CFC - news - people ), Wells Fargo (nyse: WFC- news - people ), Citigroup (nyse: C- news - people ) and JPMorgan Chase (nyse: JPM- news - people ), who collectively service $4.3 trillion in mortgage loans, all support the plan.
Still, independent mortgage-servicing firms, some of which are not overseen by federal banking regulators, could opt out, leaving their borrowers still vulnerable to foreclosure.
And investors may not like it. The financial industry lobby worked aggressively to make sure the plan included indemnification for them so investors of bonds backed by these mortgages won't sue them after lenders change the terms of the loans. The more lenders who volunteer to join the program, the less vulnerable they'll all be to lawyers, saying it had become industry practice.
Another issue: The plan only applies to those who are current in their mortgage payments but who are determined to be unable to afford higher reset rates. It won't apply to those who are already faltering, and it won't apply to those who face resets but are deemed able to afford it.
That raises the inevitable moral hazard question. "I'm very skeptical of this," says Bert Ely, a banking regulation consultant in Arlington, Va., who was among the first to say in the 1980s that there would be a taxpayer bailout of the federal deposit insurance fund in the midst of the real estate lending crisis of that decade. "It's government-sponsored collusion."
Paulson, plucked last year to lead Treasury after a successful, and lucrative, career at the helm of Goldman Sachs (nyse: GS - news - people ), pressed through the fall to get a handle on the credit crisis, though some say not quickly enough. Many in the industry said as early as last year that the housing market would slow and that millions of loans made to borrowers with shaky credit would come under pressure.
But Paulson and other banking regulators sat tight until the subprime mortgage market imploded in the summer, bringing down with it a few hedge funds and, more significant, putting a virtual freeze on the fixed-income markets.
Paulson got the biggest three U.S. banks together earlier this fall to hammer out some way of alleviating the crisis, and what they came up with was also met with harsh criticism. It was a $100 billion superfund to buy up the short-term debt of off-balance-sheet entities the banks had set up to invest in some of the mortgage securities that had come under distress.
Citigroup, on the line for $80 billion of this structured investment vehicle debt, is seen as the main beneficiary of the superfund, also backed by Bank of America (nyse: BAC - news - people ) and JPMorgan Chase. Despite efforts to get other banks on board, they haven't found many takers. HSBC (nyse: HBC - news - people ) said last month it would instead just take the $45 billion in its SIVs and put them back on its balance sheet.
Housing advocates call Paulson's plan weak, saying it falls way short of the Bush administration's purported goal of keeping people in their homes. The plan applies to certain mortgages and to those who are current with their payments, not to those borrowers already in default or facing foreclosure.
Those people are still left out in the cold. "It's very disappointing," says Michael Shea, executive director of Acorn Housing, a Chicago advocate for low- and moderate-income borrowers.
"Wall Street has made billions" on mortgage financing and securitization, Shea says, and "they blew it up by being greedy, and now they're hardly paying anything at all."
On Wednesday, presidential candidate Hillary Clinton announced her own proposals, including a voluntary 90-day moratorium on home foreclosures; a five-year freeze on rate increases; and status reports on loan workouts. She also proposed a $5 billion fund to help troubled borrowers.
Lost in the noise: Many of the largest servicers are already working with borrowers to reset terms. "Citi is engaged in ongoing dialogue with Secretary Paulson, the administration and other key stakeholders to explore solutions for the current challenges in the mortgage industry," a Citi spokesman said.
In October, Countrywide announced a $16 billion plan to reset adjustable-rate mortgages for borrowers who weren't going to be able to afford the higher rates. Countrywide has its own set of problems too. It arranged a $2 billion infusion of capital from Bank of America in September.
But the financial industry is almost certain to embrace the Paulson plan over one being kicked around in the Senate. The bill, introduced by Illinois Sen. Richard Durbin, would allow bankruptcy judges to modify the terms of a mortgage in a Chapter 13 proceeding without the lender's input.
The financial industry is outraged at the idea. "If a mortgage loan can be modified during bankruptcy, it will be far more difficult to originate or sell mortgages in the secondary market," says a Dec. 4 letter from the Securities Industry and Financial Markets Association to the Senate's Judiciary Committee. "These proposals would reduce liquidity and make it harder for Americans to obtain a new mortgage or refinance their existing mortgage, the exact opposite of what the mortgage market needs now."

For Your Information

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Paulson, Jackson to Host Mortgage Briefing

Treasury Secretary Henry M. Paulson, Jr. will join Housing and Urban Development Secretary Alphonso Jackson, members of the mortgage industry, as well as mortgage investors and mortgage counselors Thursday for a press conference to discuss the Bush Administration's ongoing efforts to help struggling homeowners keep their homes.
The press conference will be followed by an additional technical briefing. Cameras will not be permitted in the technical briefing.
The following events are open to the media:
What Press ConferenceWhen Thursday, December 6, 1:45 p.m. EST Where Department of the TreasuryMedia Room (4121)1500 Pennsylvania Avenue, NWWashington, D.C.Note Media without Treasury press credentials should contact Frances Anderson at (202) 622-2960 or frances.anderson@do.treas.gov with the following information: full name, Social Security number, and date of birth.
***What Technical Briefing When Thursday, December 6, 2:35 p.m. EST Where Department of the TreasuryWest Gable Room (5432)1500 Pennsylvania Avenue, NWWashington, D.C.Note No cameras will be permitted. Media without Treasury press credentials should contact Frances Anderson at (202) 622-2960 or frances.anderson@do.treas.gov with the following information: full name, Social Security number, and date of birth.

Helping Homeowners Keep Their Home

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Owning a home has always been at the center of the American Dream. For many homeowners, however, that dream is threatened by foreclosure. An estimated 240,000 families can avoid foreclosure by refinancing their mortgages using the new FHASecure plan. FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

A HUD statement released today noted that more than 33,000 borrowers have already refinanced out of their subprime loans with FHASecure, the HUD’s new government-backed refinance loan program.
“FHASecure is providing tens of thousands of families with a powerful incentive to obtain affordable and safe home loans,” HUD Secretary Alphonso Jackson said during his speech at 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.”
Another 20,000 FHASecure loans are in the pipeline to be approved this month, keeping the FHA on track to hit its goal of 240,000 FHASecure loans in Fiscal Year 2008.
Since the FHASecure was released in September, the FHA has received more than 113,000 refinance applications from both current and delinquent borrowers, meaning nearly half of those who applied have either successfully refinanced or are set to be approved.
Jackson also called on the Senate to approve FHA legislation so another 200,000 borrowers could benefit from the FHA’s flexible financing options.
“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.
FHA refinancing has increased 125% over the past year, with more growth expected next year as government-backed loans continue to gain in popularity.
In a previous news release, Jackson noted that the average subprime borrower who refinances with a FHASecure will save $400 a month, or $30,000 over the life of the loan.