Thread: Bush signs housing bill to provide mortgage relief

Bush signs housing bill to provide mortgage relief
By JENNIFER LOVEN, Associated Press Writer
42 minutes ago


WASHINGTON - President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.

Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.

"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."

The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.

It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.

The House passed the bill a week ago; the Senate voted Saturday to send it to the president.

Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.

But he withdrew that threat early last week, saying hurting homeowners could not wait — and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.

Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.

Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.

The bill takes several approaches to curing the ailing housing market.

It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.

The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.

The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.

It goes far beyond addressing the current crisis, however.

The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.

The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.

The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.

Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

http://news.yahoo.com/s/ap/20080730/...tTYwWJu2us0NUE

Foreclosure Rescue: Who Gets Help
By TIM PADGETT / MIAMI GARDENS
Mon Jul 28, 3:45 PM ET



The spate of hurricanes that battered South Florida three years ago blew the shingles off Tatrisha Harvin's modest house in Miami Gardens, Fla. But this year's housing catastrophe could do something much worse. Two years ago, Harvin, 44, a Miami-Dade corrections clerk, turned to interest rates that were at a historic low to ease her household finances. The apparent windfall came at a critical time: her husband was injured and a daughter was diagnosed with diabetes. She refinanced with an adjustable-rate mortgage, taking out a chunk of her home equity. But she says she never realized the ultra-low teaser rate would jump so high so soon, raising her monthly mortgage payment by more than $1,000. "That was never explained to me," she says. "If it was, I never would have signed any documents." A year behind on her payments, Harvin faces foreclosure.

She and thousands of others in her community. When America's category 5 housing hurricane hit Florida this year, its eye came ashore at Miami Gardens. More than 4,000 of its 22,000 residential units are in foreclosure, giving this predominantly African-American city just north of Miami one of the state's - and one of the nation's - highest mortgage failure rates. Few places were as glad to hear that Congress this week had passed a housing relief bill that could help some 400,000 desperate homeowners like Harvin keep their homes via mortgage refinancing aid. They're happier still that President Bush said he'll sign it, despite his objections to the refinancing trust fund as well as the $4 billion set aside to help local governments buy up and refurbish already foreclosed homes (the President described these provisions as giveaways). "We feel a large measure of hope," says Miami Gardens councilman and real estate lawyer Andre Williams. "This isn't just about maintaining houses, it's about preventing the destruction of families and communities. A city's quality of life is also on the line."


But the daunting trick for cities like Miami Gardens will be making the federal dollars work effectively and, perhaps more important, equitably. The triage process may require local officials to identify not only those homeowners who are most likely to make the best use of the aid - the most long-term, creditworthy bets - but also those who were genuinely victimized by predatory or unscrupulous lenders as opposed to those who simply made bad financial decisions (especially property flippers) and took on more housing debt than they and their salaries could ever afford. "We want folks to be able to hold on to the American dream," says Daniel Rosemond, the Miami Gardens director of community development. "But at the same time, in a low-wage region like South Florida, we have to be realistic about people who, frankly, aren't ready to be homeowners yet."


Under the new legislation, which also provides billions to save the country's two largest mortgage banks, Fannie Mae and Freddie Mac, the Department of Housing and Urban Development (HUD) has 60 days to lay out a plan for how the homeowner aid will be disbursed via state and local agencies. After that it has 30 days to send it out. Officials like Rosemond, who this summer created a foreclosure prevention program in his city to help distressed homeowners buy more time, hope that lenders who are poised to pounce with notices will hold off until the money arrives to help debtors make up for delinquent mortgage payments and refinance into more affordable mortgages backed by the Federal Housing Administration. One key, according to homeowner advocates, will be whether or not the program will prompt lenders in general to be more generous from here on out. "So far we're not seeing the loan modifications we need from lenders," says Jackie Duran, a foreclosure counselor for the non-governmental Neighborhood Housing Services, which has been overwhelmed in recent months by homeowners from all over the Miami area. "When you've got people whose [interest] rates have jumped to 11 or 12%, a 1% reduction isn't going to work. You need at least a 3% break."


The housing bubble was good to Miami Gardens, a working/middle-class city that prides itself on its family and community cohesiveness. The city was incorporated, in fact, in 2003, at the height of the boom, which has since helped its population of 110,000 reach a 71% homeowner rate. "It's the core of our existence," says Rosemond. The city's property tax revenue leapt by 65% last year - and its property values have risen 120% the past five years. But for a city with a median income less than $40,000, it was all a bit out of whack. Rosemond notes that before the bubble burst last year the average Miami Gardens home value was nearing $300,000 when it should have been closer to $200,000. As a result, the city and its minority residents have been a special target of what Williams calls "scoundrels and criminals dressed as mortgage brokers" duping low income or subprime buyers with risky mortgage products.


Williams is quick to note that not all the lenders involved in the Miami Gardens disaster were disreputable - and he acknowledges that "there were too many folks here who were totally irresponsible as buyers and shouldn't be able to take advantage of this process." He agrees, for example, with a stipulation in the new bill that defaulting homeowners who get bailed out must return all or a significant portion of any profit they make on the subsequent sale of their house to the federal government. But he also stresses that one of the things he hopes the city can do with the federal aid is reform the reckless culture of home-buying by setting up tools like lender databases and buyer workshops. "This has to become an educational process as well as a relief process," he says.


Rosemond agrees. He's already envisioning rules for the federal aid when it reaches Miami Gardens - such as prohibiting refinancing with adjustable-rate mortgages and requiring 30-year fixed loans in order to be eligible for relief. He also hopes to establish rent-to-own programs, providing landlords with incentives to give house and apartment renters the option to buy their units once they've saved enough and built a strong enough employment and credit history. "We need people to rent longer before they buy houses, but we also need renters to feel like they have a stake in those properties," Rosemond says. "This would motivate them and create the kind of homeownership you want for a community, not the houses built on sand."


Residents like Harvin, however, don't have the luxury of looking that far ahead. When told about the new federal relief, she said it was the best news she'd had in years. "A lot of us in this community haven't even recovered yet from the 2005 hurricanes," she says. "Then the housing mess started hitting us, and you take into account we're all strugglin' to buy food and gasoline. Seems the least they could do." Americans should know by Christmas whether that will be enough to preserve the quality of life in Miami Gardens and countless other U.S. cities still recovering from the housing storm.

http://news.yahoo.com/s/time/2008072...cuewhogetshelp

Who qualifies for mortgage help and how to get it By DAVE CARPENTER, AP Business Writer
Tue Jul 29, 11:02 PM ET

http://news.yahoo.com/s/ap/20080730/...age_relief_q_a


Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend to try to steer as many as 400,000 struggling homeowners away from foreclosure:

Q: What exactly will the legislation do?

A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30-year fixed-rate loans for up to 90 percent of the home's current value. The FHA will insure a total of $300 billion of the loans over a three-year period.

But the decision on whether to write such a loan remains up to banks, which would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure.

Q: Who is eligible?

A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated no later than Jan. 1, 2008, and be on the borrower's primary residence. And the borrower's income must be verified.

Q: When does the program start?

A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn't likely to have it operating at full capacity until next year.

Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?

A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans.

Even then, keep expectations limited.

"Servicers are going to be reluctant to take the government up on their offer," predicted Mark Zandi, chief economist at Moody's Economy.com. "The earliest they'll start taking them up on it is early next year. And even then it's likely to be modest."

Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank?

A: Not really. The best step is to keep up your payments as best you can.

Q: But doesn't this provide an incentive to NOT pay your mortgage, if you're barely keeping ahead of bills and are underwater on your house, so you can qualify?

A: No. If your situation deteriorates enough, the bank may reject any possible new loan.

"Turning yourself into a financial basket case is not going to work," said Dan Seiver, a finance professor at San Diego State University. "If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it."

Q: So what should I be doing now besides trying to keep up with payments?

A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance — an industry group trying to coordinate a response to the mortgage crisis — at 1-888-995-HOPE. It is available 24 hours a day to provide mortgage counseling in multiple languages.

Mary Thomason, director of resource development for The Impact Group of Atlanta, a housing counseling group, also suggests tracking expenses and income closely in order to be able to forecast your cash flow for the next six months and give yourself better control of your finances.

Q: If the banks and lenders refuse to write these loans, then what?

A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.

Q: What happens if I'm able to sell my home after I refinance?

A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What's more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter.

The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.

Q: Where can consumers find more detailed information about the plan?

A: There is a six-page summary of the housing act at

http://banking.senate.gov/public/_fi...ActSummary.pdf

and the FHA's Web site at http://www.fha.gov is a place to watch for updated information. The entire 694-page bill is at http://www.house.gov/apps/list/press..._bill_text.pdf

What? No Bush-bashing?

Originally Posted by jbbarn

What? No Bush-bashing?

Well since you mentioned it, LOL this is only going to help 5% of the homeowners, so I'm sure the other 95% who are losing their homes are really thrilled about the help.

Big Whoopee. This has nothing to do with the homeowners, but bailing out the mortgage companies. Besides, I have no sympathy for anyone that signed up for variable interest rates. So now, tax money is going out the door to bail out stupidity.

tngirl,you rock!!

Originally Posted by jbbarn

What? No Bush-bashing?

Now, you had to know it was coming, you just didn't give them enough time...

Originally Posted by tngirl

Big Whoopee. This has nothing to do with the homeowners, but bailing out the mortgage companies. Besides, I have no sympathy for anyone that signed up for variable interest rates. So now, tax money is going out the door to bail out stupidity.

I have been kicking up dust about this for MONTHS ...

http://www.bigbigforums.com/news-inf...ac-racket.html

http://www.bigbigforums.com/news-inf...age-probe.html

http://www.bigbigforums.com/news-inf...lawmakers.html

http://www.bigbigforums.com/news-inf...y-renters.html

http://www.bigbigforums.com/news-inf...lout-plan.html

http://www.bigbigforums.com/news-inf...age-fraud.html

http://www.bigbigforums.com/news-inf...d-animals.html




Extreme stupidity:
No tears for latest “victims” of foreclosure
July 30, 2008

I’ll get to the extreme stupidity of the “victims” of the “Extreme Makeover” home foreclosure in just a moment.

But first, a reminder: If you go through my entire archive of subprime crisis posts over the past year– starting with this one from last August blasting Hillary’s socialist housing bailout plan and continuing through this post in December on a supposed subprime sob story involving an unemployed couple $600,000 in debt and looking for a housing bailout to this post in January on irresponsible borrowers walking away from their mortgages and this one on the need for a “Suck It Up” candidate, to this one on outraged readers sick of the moochers riding the bailout bandwagon to this one in April on irresponsible borrowers trashing their homes, leaving their pets behind, and setting their houses on fire– you’ll note a prominent and recurring theme.

A theme that most media coverage refuses to spotlight.

A theme that only a few rare politicians in Washington dare to raise.

The theme is that the subprime crisis isn’t merely the result of “predatory lenders,” but of countless predatory borrowers and reckless homeowners as well who bought more home than they could afford and binged on home equity loans–and now expect responsible renters and conscientious borrowers to cover their asses and assets.

Enter Milton and and Patricia Harper and their three children, the Atlanta-area beneficiaries of a massive home giveaway on ABC’s popular Extreme Makeover TV show three years ago. The four-bedroom, three-garage home–the largest project of the Extreme Makeover team to date – is now in foreclosure. After accepting a quarter-million in charitable contributions from homebuilder Beezer Homes’ employees and company partners, moving into a free home that cost upwards of $450,000, enjoying an all-expenses-paid trip to Disneyland while the house was being built, and also raking in enough money from the show to cover taxes on the house for 25 years, the Harper family turned around and put their custom-made dream mansion up as collateral for a $450,000 loan that purportedly went to fund the Harpers’ failed construction business.

Now: Tell me where in any of the bipartisan housing bills that Washington has passed there is protection of my tax dollars from going to bail out people like these? Where?

The Associated Press is casting the Harpers and their soon-to-be foreclosed home as “victims.”

No, you ninnies.

People who scrimped and saved and acted responsibly are the victims. People who will be forced to fork over their money to prevent foreclosures on homes owned by squanderers like the Harpers are the victims.

People who are protected from the consequences of their actions are beneficiaries.

People who have to pay for the consequences of the bad decisions of others are victims.

Got it?

http://michellemalkin.com/2008/07/30...f-foreclosure/

I know of a guy who was offered a loan for 450,00. He's a fricken janitor at a school. He was SMART enough to say no to something he KNEW he could never repay. After we remortgaged our home after the 9/11 attacks they had a man come up from the Washington DC area for our appraisal & claimed our home was worth more then 175.00. We had just bought it in 1998 & we knew he was way too high for this poor county. We only took what we actually needed instead of taking all the extra cash. We now have a 15 year loan & make extra payments. I think we'll be safe because we were smart enough not to take something on that may have been impposible to keep up with.

Now, if our jobs stop going overseas (thank you clintoon for signing that final paper & destorying a lot of American's jobs) we will have our home paid off in a few more years.

People are also using their home as if it's a bank account well guess what people????? It's not one. Start looking before you leap & half or more wouldn't be in this situation to begin with.

Sure, there is some people (IE military folks, etc) that do need help & it's only the military people who do deserve some kind of bail out. Not someone who was/is too stupid to realize that a 50,000 a year job qualifies them to a 1/2 million dollar home.