Subject: Foreclosure & Financial Crisis
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Foreclosures continue to decimate communities around the nation, with black neighborhoods being the hardest hit. Some pundits and politicians point to federal policies that encouraged homeownership in low- and moderate-income communities, coupled with reckless behavior on the part of greedy…
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Congressional action is hard these days. Last year, Congress came close, but failed, to passing significant reforms to bankruptcy rules that would have allowed judges to treat primary residence mortgages the same way they treat vacation homes and virtually all other assets. This policy would have given banks an incentive to pursue modifications rather than risk how a court’s decision to modify the mortgage terms.
But recently, another attempt by lawmakers is taking hold in the form of a bipartisan plan proposed by Sen. Jeff Merkley (D-Ore.) and Sen. Olympia Snowe to create a level playing field for families as they negotiate with their lenders. This legislation would require banks and other mortgage servicers to create a single point of contact for borrowers, end the dual track process of foreclosing while homeowners are still negotiating modifications, and allow homeowners the right to an independent, third-party review before sending them to foreclosure. These steps would go a long way to reforming the mortgage servicer industry in meaningful ways.
These are such good ideas that they should be incorporated into the ongoing negotiations between the big banks and state attorneys general to reach a settlement that avoids future litigation over robo-signing and other widespread fraud by lenders and mortgage servicers that has led to foreclosures that should have and could have been avoided. The banks and their servicers appear to be on the hook for some serious cash. A recent offer of $5 billion was reported in the press, but the stakes may be substantially higher. Georgetown law professor Adam Levitin recently estimated that the mortgage servicers saved at least $25 billion by failing to comply with the law. Issuing a fine for this amount would only be a claw back of wrongful profits (albeit one of the largest consumer frauds in U.S. history). more
Three years ago, New York state passed land banking legislation, but it went down to veto by Gov. David Paterson, who said he supported land banks, but argued that the bill contained some technical flaws in implementation, such as lack…
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Joe Kriesberg, director of the Massachusetts Association of CDCs, is tired of hearing people bash HAMP. He wrote this piece about it last December, and it’s only gotten worse since Republicans have targeted the program for extinction. His argument is…
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Despite now-stalled attempts by the Republican-controlled House of Representatives to end a cocktail of foreclosure programs — Home Affordable Modification Program, Neighborhood Stabilization Program, and the Emergency Homeowner Loan Program — the fact remains that some of the administration’s efforts…
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Having a “single point of contact” for borrowers has been a repeated theme among those advocating for reform of HAMP, such as Sen. Jeff Merkley. According to Treasury, in guidance released Wednesday that applies to the 20 largest servicers participating…
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Laura Buxbaum, the director of housing resource and policy development at the Maine-based Costal Enterprises Inc. showed up at this year’s National Community Reinvestment Coalition conference to hear about what other organizations were doing in their respective communities. But the…
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Last year, Ray Brescia wrote in Shelterforce about the potential for lawsuits against banks that engaged in predatory lending or reverse redlining, based on both “toxic product” and discrimination bases. Yesterday the New York Times reported that two of the…
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While housing counseling funding is being slashed, it’s worth noting that Arkansas has enacted a modest yet important law (hat-tip Naked Capitalism) requiring that servicers give homeowners in danger of foreclosure a lot more information about what’s going on and…
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Today’s panel discussion at the 2011 NCRC Conference was loaded with passionate views on the cause of the housing meltdown, how “homeownership” fits into the zeitgeist of today’s America, and concerns about creating another homeownership class if the qualified residential…
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One of the many themes running through the interactive session “The Future of Mortgage Finance in America,” this morning at NCRC’s annual conference was the question of how to get to sustainable homeownership. Despite the best efforts of John Taylor…
Housing counseling works. Counselors form a critical bridge between servicers and homeowners in distress, advocating for them in the face of perverse servicer incentives, lost paperwork, and unclear outcomes, and helping them navigate a modification system that Sen. Jeff Merkley of Oregon (pictured) described yesterday, in the case of HAMP, as “absolute hell” and impossible to make worse even if you were trying to design a system to maximize stress for homeowners.
But it seems in the current atmosphere of making working people pay for crises caused by recklessness on the part of financiers and those supposed to be regulating them, that not only funding for neighborhood stabilization and mortgage modification, but even for counselors is seen as expendable.
John Taylor, executive director of the National Community Reinvestment Coalition, and Sen. Merkley, in their opening remarks for NCRC’s annual conference today (which Shelterforce will be covering throughout the next few days on Twitter, Facebook, and here on Rooflines), both decried the federal budget cuts to housing counseling programs that were announced this week. $88 million — the entire FY10 appropriation for Housing Counseling Assistance — is slated to be cut from in the April 8 FY11 proposal. more
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The financial costs of the seemingly endless foreclosure crisis have been widely reported with Credit Suisse estimating that as many as 12 million families will lose their homes before this is all over. The predatory lending that led to the…
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On Tuesday, the Senate Banking Committee is slated to consider the administration’s nomination of Joseph A. Smith Jr., the commissioner of banks for North Carolina, to head to head the Federal Housing Finance Agency, Fannie Mae’s and Freddie Mac’s regulator.…
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We’ve been talking about the pragmatic component of strategically walking away from your mortgage for some time now. For a while, there was a typical double standard where it was OK for large developers to default because it was the…
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HUD has announced round three of the Neighborhood Stabilization Program, which allows for an additional $1 billion of funding to states and communities fighting the effects of the foreclosure crisis. In all, NSP has allocated $7 billion — $4 billion as part of HERA in 2008, $2 billion more in ARRA in 2009, and now this latest round, included in the Wall Street Reform and Consumer Protection Act.
From HUD. Click here for a full funding chart.
U.S. Housing and Urban Development Secretary Shaun Donovan today awarded an additional $1 billion in funding to all states along with a number of counties and local communities struggling to reverse the effects of the foreclosure crisis. The grants announced today represent a third round of funding through HUD’s Neighborhood Stabilization Program (NSP) and will provide targeted emergency assistance to state and local governments to acquire, redevelop or demolish foreclosed properties. For a complete listing of the allocations announced today, click here.
“These grants will support local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods,” said Donovan. “We want to make certain that we target these funds to those places with especially high foreclosure activity so we can help turn the tide in our battle against abandonment and blight. As a direct result of the leadership provided by Senator Chris Dodd and Congressman Barney Frank, who played key roles in winning approval for these funds, we will be able to make investments that will reduce blight, bolster neighboring home values, create jobs and produce affordable housing.”
The funding announced today is provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act. To date, there have been two other rounds of NSP funding: the Housing and Economic Recovery Act of 2008 (HERA) provided $3.92 billion and the American Recovery and Reinvestment Act of 2009 (Recovery Act) appropriated an additional $2 billion. Like those earlier rounds of NSP grants, these targeted funds will be used to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures and falling home values. Today, 95 cents of every dollar from the first round of NSP funding is obligated — and is in use by communities, buying up and renovating homes, and creating jobs. more
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The Federal Reserve System is sponsoring a national summit on September 1 and 2 to discuss methods and resources for encouraging neighborhood stabilization in the aftermath of the U.S. home mortgage foreclosure crisis. The forum will showcase findings from Federal…
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Here’s a headline o’ the times, courtesy of The Wall Street Journal though it’s a shame that we were ever in a place where buying a home was anything other than buying a place to live:
“Fed’s Hoenig: Mistake To View Housing As Investment Opportunity.”
The article stemmed from a statement issued by Thomas Hoenig, president of Federal Reserve Bank of Kansas City, who said during testimony at a field hearing by the U.S. House Financial Services Committee’s oversight and investigations subcommittee in Overland Park, Kan. that “if the American people are looking at the housing market to be their investment opportunity, I think they are making a mistake.”
This no-brainer comes with the news that, for the 17th month in a row, foreclosure filings have topped 300,000. In July alone, In 92,858 homes were repossessed, according to a New York Times editorial that cited data provided by RealtyTrac.
“As repossessed homes are put up for sale, house prices are likely to fall further. As prices fall, more borrowers end up “underwater” — owing more on their mortgages than their homes are worth. That’s a big risk factor for default, especially when coupled with high unemployment. Moody’s Economy.com estimates that 1.9 million homes will be lost this year, down only slightly from 2 million in 2009.”
What’s more is that the editorial goes on to cite a staggering figure — and one that we already know — that fewer than 400,000 loans have been permanently modified through the administration’s loan modification program and that just over 1 percent — $3.21 million — of the program’s $30 billion allotment has been spent in the program that is voluntary for lenders. more
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All we can say is “ouch.” Dow Jones reports that Thursday’s hearings held by the House Oversight and Government Reform Committee designed to assess HAMP’s progress resulted in what amounted to a criticism of the changing rules and bureaucratic hurdles…
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Financial regulators proposed yesterday to allow all activities carried out under the auspices of NSP to count toward a lender’s CRA compliance. This would only last as long as NSP is in effect. So, for example, donating foreclosed properties in…
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National Housing Institute
