Don't reduce your property insurance coverage to reflect lower home values
Experts say it costs more to rebuild than it does to start from scratch, so the market value of a house doesn't indicate the amount of insurance you need.
Reporting from Washington -- There are a number of steps every homeowner should take to lower the cost of property insurance. But reducing the amount of coverage to match today's lower values is probably not one of them.Because it costs more to rebuild than it does to start from scratch, the market value of a house is not a reliable indicator of the amount of insurance you need. Too little coverage and your policy may not assume the cost to return your place to its original condition if needed.
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"There has been a lot of noise lately around market values, but market value and the cost to rebuild are two totally different things," said Elaine Baisden, vice president of national property for Travelers Cos., the Hartford, Conn.-based property casualty insurer. "So lowering policy limits could leave you underinsured."Despite the downward spiral in housing prices, home repair costs increased nearly 4% nationally, according to Xactware, whose software products estimate building and repair costs. Marshall & Swift, an authority on building-cost data, says it can cost as much as 30% more to rebuild a house as opposed to building a new one.Reconstruction costs are greater because the process usually involves the demolition and removal of damaged property. On-site mobility often is limited by the need to work around existing landscaping, power lines and other buildings. There are no economies of scale like there are when building row upon row of houses. Then there's the issue of newer, often more rigid building codes that might have to be met.
Market value, on the other hand, is often influenced by factors that have absolutely nothing to do with the cost to rebuild -- the quality of nearby schools, for example, the local tax base or the proximity to rapid transit.Value also is affected by the cost of the land on which the house sits, and that is something you should factor in when considering how much coverage to carry.Typically, the building lot accounts for 25% of a home's value. But you can get a better reading from your tax bill, which usually separates the value of the land from the value of the house. You shouldn't use the property's assessed value to determine how much coverage you need, but you can use the percentage ratio of the lot to the total to at least get an idea of what's needed.Still, it's probably not a good idea to arbitrarily make these kinds of decisions without first sitting down with your agent and discussing your needs. The wrong choice could prove to be an expensive one, Travelers' Baisden said."Home insurance limits are in place to financially protect your family should something go wrong," she said. "If there's a fire or a significant weather event, you want to make sure you have enough coverage to rebuild your home in its entirety."How to saveHere are some other steps you can take to save money while still protecting what may be your most valuable asset.* Check your credit records. For years, insurers based their rates mainly on the location and age of the property and its distance from the nearest firehouse. Now, like mortgage lenders and other credit issuers, they "score" policyholders based on information in their credit histories.It's a controversial practice, but insurers maintain that insurance scores are highly predictive of risk. Some use scoring only when other factors suggest that you are likely to file more claims, but others use it more extensively as both an underwriting tool and a mechanism for setting rates.Whether you agree with the practice or not, it is important to pay your bills on time and make sure that there are no errors in your credit records.* Avoid nuisance claims. The more claims you file, the more you are going to be charged, even if the claims are legitimate. So use your coverage for its intended purpose -- to protect against losses from which you cannot recover on your own -- and take care of the minor incidents yourself.* Shop around. Prices vary from company to company. You won't be able to negotiate rates, but you may be able to lower your costs by comparison shopping. Premiums can vary substantially from one insurer to the next.Although price is important, there are other factors to consider when choosing an insurer. You want a company that's financially stable, and an agent who takes the time to answer all your questions. And make sure that the company isn't prone to cutting loose anyone and everyone who files a claim.You can check the financial health of the various carriers with rating companies such as A.M. Best and Standard & Poor's. To get an idea about service, talk with friends and relatives about their experiences, or consult consumer guides (such as Consumer Reports) that rate insurers every few years on readers' overall satisfaction with their companies.* Raise your deductible. A deductible is the amount you pay toward a loss before your coverage kicks in. The higher the deductible, the lower the premium.According to the Insurance Information Institute, an industry-supported nonprofit communications organization, bumping the deductible from $250 to $500 could cut your costs 12%. You could save as much as 25% by jumping to a $1,000 deductible, and up to 30% by going to $2,500.But since you will be self-insuring, be careful. Don't go so high that you don't have the cash reserves to cover your share of the loss.* Look for discounts. It may be possible to lower your costs by buying all your insurance from the same company. Some insurers will cut their premiums up to 15% if you buy two or more policies from them. But be sure that the combined price is lower than buying the same coverage from competing companies.Other discounts abound. You may get a break of up to 10% if you're a longtime policyholder, say, for six years or more. And if you are over 55 and retired, you may qualify for a senior discount under the theory that since you're now home more, there's less chance of a major loss because you will be there to catch the fire or leak before it gets out of hand.You usually can obtain a premium reduction ranging from 5% to 25% if you have protective devices such as burglar alarms or even deadbolt locks. Article By Lew Sichelman June 7, 2009 lsichelman@aol.com http://www.latimes.com/classified/realestate/news/la-fi-lew7-2009jun07,0,3514957.story
Showing posts with label Folsom. Show all posts
Showing posts with label Folsom. Show all posts
Friday, July 3, 2009
Is Mediation the Answer?
Is Mediation the Answer?
By Jennifer Harmon
Foreclosures are costly to the borrower, servicers and the investors who take losses on the sale of those properties. It’s also expensive to the taxpayers in the communities where these foreclosures are taking place. Foreclosures drive down property value. They often result in an increased level of blight and crime, and property tax revenue decreases because of the decline in value.
The Obama administration is doing everything in its power to reduce foreclosures through the Home Affordable Modification Program. While many are focusing on the refi and modification components of the plan, the Center for American Progress says that mandatory mediation should be incorporated into that process to make sure that the people who are eligible for these programs will in fact get the assistance that they need.
The report, “It’s Time We Talked: Mandatory Mediation in the Foreclosure Process,” outlines how foreclosures can be reduced by as much as 75% if the federal government takes a more direct role in providing opportunities for mediation.
Philadelphia and Connecticut are two places that have had mediation programs in place for about a year now. About three-quarters of all cases that go through mediation are able to avoid foreclosure, according to Andrew Jakabovics, the organization’s associate director for housing and economics. “That really shows that there is an alternative to foreclosure that is beneficial to everybody,” he said. “I think it can be wrapped up nicely into the ongoing administration’s efforts.”
Mediation is simply a voluntary negotiation between two parties in the presence of a neutral third party. The important thing about it is that it’s voluntary negotiation. It’s not bankruptcy and it’s not a cramdown.
Mandatory mediation begins when a foreclosure notice goes out to both parties at the beginning of the process. The servicer and homeowner are required to appear at a particular time on a particular date for a mediation session.If a servicer is participating in a mediation session and feels like it is not beneficial and doesn’t think he will make more from settling than in foreclosure, the servicer never has to settle.
One of the potential pitfalls in the program is that borrowers who are eligible for HAMP are not necessarily getting the modifications under the program either because the servicers are applying the wrong numbers or they are actively steering borrowers to non-HAMP-compliant loans, said Mr. Jakabovics.
“One of the things mediation would do is simply say if a borrower in the process of getting foreclosed on goes to a mediation session, the servicer is there and says, ‘Look, you didn’t qualify.’ This gives the borrower basically an appeals process that is currently missing from HAMP so the borrower can say, ‘Here are my numbers. What numbers were you looking at?’ The servicer might go back and look at them and see if they can actually reach a deal.”
Given that the compliance checks on HAMP are several months out, the detailed checks are not likely to start until October. There are problems these compliance checks might not catch. “Certainly, come October if something gets flagged and is eligible for HAMP, but the borrower was not offered the modification, it does the borrower very little good if they are already out of their home,” said Mr. Jakabovics.
Getting borrowers and servicers together in the same room appears to have tremendous value. Mediation might be an ideal way to make sure the servicer is getting it right. They are not going to be making any more deals that are less valuable to them than what they would have gotten in foreclosure.
By Jennifer Harmon
Foreclosures are costly to the borrower, servicers and the investors who take losses on the sale of those properties. It’s also expensive to the taxpayers in the communities where these foreclosures are taking place. Foreclosures drive down property value. They often result in an increased level of blight and crime, and property tax revenue decreases because of the decline in value.
The Obama administration is doing everything in its power to reduce foreclosures through the Home Affordable Modification Program. While many are focusing on the refi and modification components of the plan, the Center for American Progress says that mandatory mediation should be incorporated into that process to make sure that the people who are eligible for these programs will in fact get the assistance that they need.
The report, “It’s Time We Talked: Mandatory Mediation in the Foreclosure Process,” outlines how foreclosures can be reduced by as much as 75% if the federal government takes a more direct role in providing opportunities for mediation.
Philadelphia and Connecticut are two places that have had mediation programs in place for about a year now. About three-quarters of all cases that go through mediation are able to avoid foreclosure, according to Andrew Jakabovics, the organization’s associate director for housing and economics. “That really shows that there is an alternative to foreclosure that is beneficial to everybody,” he said. “I think it can be wrapped up nicely into the ongoing administration’s efforts.”
Mediation is simply a voluntary negotiation between two parties in the presence of a neutral third party. The important thing about it is that it’s voluntary negotiation. It’s not bankruptcy and it’s not a cramdown.
Mandatory mediation begins when a foreclosure notice goes out to both parties at the beginning of the process. The servicer and homeowner are required to appear at a particular time on a particular date for a mediation session.If a servicer is participating in a mediation session and feels like it is not beneficial and doesn’t think he will make more from settling than in foreclosure, the servicer never has to settle.
One of the potential pitfalls in the program is that borrowers who are eligible for HAMP are not necessarily getting the modifications under the program either because the servicers are applying the wrong numbers or they are actively steering borrowers to non-HAMP-compliant loans, said Mr. Jakabovics.
“One of the things mediation would do is simply say if a borrower in the process of getting foreclosed on goes to a mediation session, the servicer is there and says, ‘Look, you didn’t qualify.’ This gives the borrower basically an appeals process that is currently missing from HAMP so the borrower can say, ‘Here are my numbers. What numbers were you looking at?’ The servicer might go back and look at them and see if they can actually reach a deal.”
Given that the compliance checks on HAMP are several months out, the detailed checks are not likely to start until October. There are problems these compliance checks might not catch. “Certainly, come October if something gets flagged and is eligible for HAMP, but the borrower was not offered the modification, it does the borrower very little good if they are already out of their home,” said Mr. Jakabovics.
Getting borrowers and servicers together in the same room appears to have tremendous value. Mediation might be an ideal way to make sure the servicer is getting it right. They are not going to be making any more deals that are less valuable to them than what they would have gotten in foreclosure.
California shows recovery in Housing
California housing market shows pockets of recoveryA surge in home sales that started in some of California 's more affordable inland areas has begun to spread to several more expensive coastal areas, another indicator that the state's real estate market may be in recovery mode. Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed. Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates. Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.Although the median price in the state has risen for four consecutivemonths, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers' problems getting jumbo mortgages to make purchases. This month's Market Snapshot features: Buyers who are having difficulty arranging financing or coming up with a down payment may want to consider rent-to-own or lease-options. Generally, these deals require buyers to pay extra amounts of rent each month, in addition to the normal market-rate rent, plus up-front fees of approximately 5 percent of the purchase price. The owner keeps the regular rent, but the additional payments are used to buy down the price of the home. While rent-to-own options may be a viable choice for some buyers, most real estate experts recommend buyers and sellers work with attorneys experienced in drafting lease-option agreements. Although rent-to-own options enable buyers to walk away from the deal for a variety of reasons, including deciding the home or neighborhood isn't a good fit; one drawback is that by walking away, buyers agree to forfeit the up-front fees and the additional monthly rent they've been paying. Additionally, at the end of the term, if the buyer still is unable to secure financing they also may have to forfeit the money.
Chinese Drywall Litigation about to Snowball Industry
Chinese Drywall Insurance Litigation
Wednesday, 24 June 2009
We have seen this to date from the perspective of increasing claims being made, both state and federal regulators seeking ways to regulate, protect consumers and also determine responsibility and liability for the damages caused by Chinese drywall. Concurrently, the first lawsuits regarding insurance coverage for these claims are starting to move through the courts. Following is a discussion of the issue from that perspective.
Homeowner's PoliciesIn March 2009, Baker v. American Home Assurance Company, No. 09-cv-188 was filed in the United States District Court for the Middle District of Florida. Baker is the first complaint regarding homeowner’s insurance for drywall claims. In the Baker case, two Florida policyholders sued their homeowners’ insurer, seeking coverage for property damage resulting from Chinese drywall in their home. The Complaint filed was rather plain. with the policyholders alleging that they notified their insurer of a loss in December 2008 caused from the gases emitted by drywall. The Complaint alleges further that the insurer verbally denied the claim based on “contamination,” but that no formal declination has been issued. In its answer, the insurer denied coverage based upon policy exclusions for pollution, wear and tear, and faulty materials. The insurer also answered that the claim fell outside the policy period. Apparently, the insurer is trying to base some of its reasoning for denial of coverage that the damage occurred at the time the drywall was installed, not the time it began to emit noxious odors. Commercial General Liability PoliciesInsurance disputes concerning contractors' Commercial General Liability ("CGL") policies are also pending. In April 2009, it was reported that Lennar Corporation, one of the principal defendants in Florida’s Chinese drywall litigation, stated that it believed that its insurance would cover the drywall claims. There has been no comment from the insurer. However, the insurer of another homebuilder commenced a declaratory judgment action in the Eastern District of Virginia, Builders Mutual Insurance Company v. Dragas Management Corporation, 2:09-cv-185. Builders Mutual is seeking a declaration that it did not owe defense or indemnity to its insured for Chinese drywall based on the pollution exclusion and the work-product exclusions.
The Component Not Product ArgumentInsurance industry experts are watching the Chinese drywall suits and comparing them to past litigation involving EIFS (Exterior Insulation and Finishing Systems), a building product that provides exterior walls with an insulated finished surface, and waterproofing in an integrated composite material system. The analogy between Chins Drywall and EIFS is that both products are components incorporated into a structure, and as such were intended to have the same useful life of the structure. In Keck v Dryvit Systems, Inc., 830 So.2d 1 (Ala. 2002), the Alabama Supreme Court held that such components are not “products” within the meaning of the Alabama Extended Manufacturers Liability Doctrine (AEMLD), stating:
The owner of a house or of any building should reasonably expect that many components will have the same useful life as the house or building itself and will not need to be replaced over the life of the building. Such components include, by way of example, an exterior brick wall, a staircase, or a fireplace. There are also certain components of a house or a building the purchaser reasonably expects to wear out and to require replacement in the course of normal and ordinary usage, such as roof shingles, a dishwasher, a furnace, or a hot-water heater. Whether an item that is incorporated into real property may be considered a “product” for purposes of the AEMLD is determined by whether the item is a part of the structural integrity of the house or building that is reasonably expected to last for the useful life of the house or building. If it is, then the item cannot be considered a “product” for purposes of the AEMLD. However, if the item is attached or incorporated into real property and, yet its very function and nature clearly makes it an item that one would reasonably expect to repair or to replace during the useful life of the realty, the item may be considered a “product” for purposes of the AEMLD. For instance, although paint, when applied to the structure of a wall, becomes incorporated into the surface of the wall, paint is a structural improvement that does not have the same useful life as the wall itself or the building to which the wall is attached; one would expect to have to repaint a wall to maintain the quality of the first application. Therefore, paint would be considered a product for purposes of the AEMLD.The Keck Court held that EIFS was intended to last for the useful life of the structure, and was not subject to the AEMLD. Further, the Court also held that it was not a “good” under the Uniform Commercial Code, and therefore was not subject to the rules concerning warranties of merchantability. An analogous argument could made that Chins drywall would satisfy the Court's test in Keck , and would therefore not be classified as either a “product” or a “good.”Of particular interest to the default servicing industry is whether a builder or installer would be potentially held liable on a negligence theory for the installation of Chinese drywall. This could be a key difference between Chinese drywall and EIFS litigation. The negligence theories against builders and installers in EIFS often revolved around arguments that the system was improperly installed, and that installation led to problems with moisture intrusion, termites, and other resulting problems. In contrast, the issues concerning Chins drywall are based upon the problems with the product itself, not the installation.. Note that generally, a builder is not liable for latent defects in building materials that are used and “he is not liable to the owner for the latent defect or liable for the amount of damage to the building caused by such defect.” 13 Am. Jur. 2d, Building and Construction Contracts § 27 (1997); Wood-Hopkins Contracting Co. v. Masonry Contractors, Inc., 235 So.2d 548 (Fla. Ct. App.1970). Unless a building owner is able to show that the builder or installer had knowledge of the problems associated with Chinese drywall, he or she may have problems with holding those entities accountable.
Civil LitigationGovernment and regulatory actions are occurring that may pave the way for a wave of civil lawsuits by or on behalf of homeowners affected by Chinese drywall. Florida Senators Mary Landrieu, D-La. and Bill Nelson, D-Fla, continue to voice concerns regarding Chinese drywall at the federal level. Both state and Federal agencies have been investigating the drywall itself. Procedures for developing interior air quality tests for the presence or impact of Chins drywall are reportedly being developed by a number of federal agenciesNew Orleans Times-Picayune reported on June 7, 2009 that Sen. Landrieu’s staff said that the federal tests could lay the groundwork for the Consumer Product Safety Commission to bring a civil action against the drywall manufacturers. Stephen Mysliwiec, a partner at the law firm DLA Piper, observed that it will not become clear who is liable for the defective product until consensus emerges on the precise cause of the problems. He noted that, one theory ventures that gypsum mined in China contains excessive sulfur, while another ventures that fly ash, a byproduct of the burning of coal, was used during the manufacturing process. "Until the science of what is causing the problem is settled, it is very difficult to know which party is going to be held liable for the cost of making repairs," Mysliwiec said. On June 15, 2009, a panel of federal judges ruled that lawsuits filed around the country against home builders, suppliers and manufacturers of Chinese drywall will be moved to New Orleans, where U.S. District Judge Eldon Fallon will preside over discovery and pre-trial hearings. By transferring all of the cases to federal court in New Orleans, the judicial panel is trying to ensure that lawyers for both the plaintiffs and the defense would not have to duplicate their efforts in multiple courts during discovery. Of equal importance, the panel seeks to prevent judges in different districts from handing down inconsistent rulings.
http://www.nola.com/news/index.ssf/2009/06/chinese_drywall_lawsuits_to_be.html.
A legal conference on Chinese drywall, closed to the public, took place in New Orleans on June 18, 2009. The conference presented by HB Litigation Conferences is designed for representatives of homeowners, builders, insurance companies and government agencies.
http://blog.nola.com/tpmoney/2009/06/new_orleans_hosts_legal_confer.html
Wednesday, 24 June 2009
We have seen this to date from the perspective of increasing claims being made, both state and federal regulators seeking ways to regulate, protect consumers and also determine responsibility and liability for the damages caused by Chinese drywall. Concurrently, the first lawsuits regarding insurance coverage for these claims are starting to move through the courts. Following is a discussion of the issue from that perspective.
Homeowner's PoliciesIn March 2009, Baker v. American Home Assurance Company, No. 09-cv-188 was filed in the United States District Court for the Middle District of Florida. Baker is the first complaint regarding homeowner’s insurance for drywall claims. In the Baker case, two Florida policyholders sued their homeowners’ insurer, seeking coverage for property damage resulting from Chinese drywall in their home. The Complaint filed was rather plain. with the policyholders alleging that they notified their insurer of a loss in December 2008 caused from the gases emitted by drywall. The Complaint alleges further that the insurer verbally denied the claim based on “contamination,” but that no formal declination has been issued. In its answer, the insurer denied coverage based upon policy exclusions for pollution, wear and tear, and faulty materials. The insurer also answered that the claim fell outside the policy period. Apparently, the insurer is trying to base some of its reasoning for denial of coverage that the damage occurred at the time the drywall was installed, not the time it began to emit noxious odors. Commercial General Liability PoliciesInsurance disputes concerning contractors' Commercial General Liability ("CGL") policies are also pending. In April 2009, it was reported that Lennar Corporation, one of the principal defendants in Florida’s Chinese drywall litigation, stated that it believed that its insurance would cover the drywall claims. There has been no comment from the insurer. However, the insurer of another homebuilder commenced a declaratory judgment action in the Eastern District of Virginia, Builders Mutual Insurance Company v. Dragas Management Corporation, 2:09-cv-185. Builders Mutual is seeking a declaration that it did not owe defense or indemnity to its insured for Chinese drywall based on the pollution exclusion and the work-product exclusions.
The Component Not Product ArgumentInsurance industry experts are watching the Chinese drywall suits and comparing them to past litigation involving EIFS (Exterior Insulation and Finishing Systems), a building product that provides exterior walls with an insulated finished surface, and waterproofing in an integrated composite material system. The analogy between Chins Drywall and EIFS is that both products are components incorporated into a structure, and as such were intended to have the same useful life of the structure. In Keck v Dryvit Systems, Inc., 830 So.2d 1 (Ala. 2002), the Alabama Supreme Court held that such components are not “products” within the meaning of the Alabama Extended Manufacturers Liability Doctrine (AEMLD), stating:
The owner of a house or of any building should reasonably expect that many components will have the same useful life as the house or building itself and will not need to be replaced over the life of the building. Such components include, by way of example, an exterior brick wall, a staircase, or a fireplace. There are also certain components of a house or a building the purchaser reasonably expects to wear out and to require replacement in the course of normal and ordinary usage, such as roof shingles, a dishwasher, a furnace, or a hot-water heater. Whether an item that is incorporated into real property may be considered a “product” for purposes of the AEMLD is determined by whether the item is a part of the structural integrity of the house or building that is reasonably expected to last for the useful life of the house or building. If it is, then the item cannot be considered a “product” for purposes of the AEMLD. However, if the item is attached or incorporated into real property and, yet its very function and nature clearly makes it an item that one would reasonably expect to repair or to replace during the useful life of the realty, the item may be considered a “product” for purposes of the AEMLD. For instance, although paint, when applied to the structure of a wall, becomes incorporated into the surface of the wall, paint is a structural improvement that does not have the same useful life as the wall itself or the building to which the wall is attached; one would expect to have to repaint a wall to maintain the quality of the first application. Therefore, paint would be considered a product for purposes of the AEMLD.The Keck Court held that EIFS was intended to last for the useful life of the structure, and was not subject to the AEMLD. Further, the Court also held that it was not a “good” under the Uniform Commercial Code, and therefore was not subject to the rules concerning warranties of merchantability. An analogous argument could made that Chins drywall would satisfy the Court's test in Keck , and would therefore not be classified as either a “product” or a “good.”Of particular interest to the default servicing industry is whether a builder or installer would be potentially held liable on a negligence theory for the installation of Chinese drywall. This could be a key difference between Chinese drywall and EIFS litigation. The negligence theories against builders and installers in EIFS often revolved around arguments that the system was improperly installed, and that installation led to problems with moisture intrusion, termites, and other resulting problems. In contrast, the issues concerning Chins drywall are based upon the problems with the product itself, not the installation.. Note that generally, a builder is not liable for latent defects in building materials that are used and “he is not liable to the owner for the latent defect or liable for the amount of damage to the building caused by such defect.” 13 Am. Jur. 2d, Building and Construction Contracts § 27 (1997); Wood-Hopkins Contracting Co. v. Masonry Contractors, Inc., 235 So.2d 548 (Fla. Ct. App.1970). Unless a building owner is able to show that the builder or installer had knowledge of the problems associated with Chinese drywall, he or she may have problems with holding those entities accountable.
Civil LitigationGovernment and regulatory actions are occurring that may pave the way for a wave of civil lawsuits by or on behalf of homeowners affected by Chinese drywall. Florida Senators Mary Landrieu, D-La. and Bill Nelson, D-Fla, continue to voice concerns regarding Chinese drywall at the federal level. Both state and Federal agencies have been investigating the drywall itself. Procedures for developing interior air quality tests for the presence or impact of Chins drywall are reportedly being developed by a number of federal agenciesNew Orleans Times-Picayune reported on June 7, 2009 that Sen. Landrieu’s staff said that the federal tests could lay the groundwork for the Consumer Product Safety Commission to bring a civil action against the drywall manufacturers. Stephen Mysliwiec, a partner at the law firm DLA Piper, observed that it will not become clear who is liable for the defective product until consensus emerges on the precise cause of the problems. He noted that, one theory ventures that gypsum mined in China contains excessive sulfur, while another ventures that fly ash, a byproduct of the burning of coal, was used during the manufacturing process. "Until the science of what is causing the problem is settled, it is very difficult to know which party is going to be held liable for the cost of making repairs," Mysliwiec said. On June 15, 2009, a panel of federal judges ruled that lawsuits filed around the country against home builders, suppliers and manufacturers of Chinese drywall will be moved to New Orleans, where U.S. District Judge Eldon Fallon will preside over discovery and pre-trial hearings. By transferring all of the cases to federal court in New Orleans, the judicial panel is trying to ensure that lawyers for both the plaintiffs and the defense would not have to duplicate their efforts in multiple courts during discovery. Of equal importance, the panel seeks to prevent judges in different districts from handing down inconsistent rulings.
http://www.nola.com/news/index.ssf/2009/06/chinese_drywall_lawsuits_to_be.html.
A legal conference on Chinese drywall, closed to the public, took place in New Orleans on June 18, 2009. The conference presented by HB Litigation Conferences is designed for representatives of homeowners, builders, insurance companies and government agencies.
http://blog.nola.com/tpmoney/2009/06/new_orleans_hosts_legal_confer.html
U.S. Conference of Mayors 77th Annual Meeting Council for the New American City Session Summary
Council for the New American City "Responding to The Mortgage Foreclosure Crisis: Implementing Neighborhood Stabilization Programs" Session Summary
ModeratorMayor Brenda Lawrence, City of Southfield, MIPresenters
James Diffley, HIS Global Insight
Norman Jacknis, CISCO
Robert Grossinger, Bank of America
Ron Phipps, National Association of Realtors
John Courson, Mortgage Bankers Association
Robert Klein, Safeguard Properties
Mayors in attendance representing municipalities across the country included, but were not limited to:
Burnsville, MN
Bowling Green, KY
West Palm Beach, FL
Carmel, IN
Dallas, TX
Lauderhill, FL
Davenport, IA
North Miami, FL
Dublin, OH
Opening Remarks and Roundtable Introductions
Mayor Brenda Lawrence opened the session by strongly confirming that vacant properties have taken precedence among the Conference of Mayors and municipalities across the country. As foreclosures have expanded to include skilled workers, a division once thought more immune and untouchable to this crisis, municipalities must respond proactively. This session included a panel of leading business representatives contributing to and addressing various aspects of municipal based initiatives.
Mayor Antonio Villaraigosa of Los Angeles concurred with the increasing volume and shifting demographic trend of foreclosures. His City is “loosing ground” on the battle against vacant properties and affirms that the only viable option is to partner and collaborate with the proven efforts of other Mayors across the country.
Overall, Mayors are looking for the input from the business community regarding resources that are needed to meet demands and accomplish initiatives designed for economic improvement and advancement.
Feedback from multiple Mayors in attendance affirmed that when dealing with vacant properties and the foreclosures crisis, earlier intervention and an increased willingness to accommodate the needs of mortgagors, is critical. Mayor Kaplan shared Lauderhill’s (FL) creative application of National Stabilization Program (NSP) dollars to offer homebuyer assistance for the private acquisition of vacant REO properties.
HIS Global Insight
James Diffley offered a summary of the American Recovery Funds Report, including the Metro Summit Report. These reports include, but are not limited to, the following significant observations. The rate of decline is slowing, but not sufficiently enough to allow for growth. Job loss is expected to continue to decline with a national crest of 10.3% in 2010. Although consumer attitudes are improving, they remain stressed and these attitudes to not indicate consumer recovery. Banking will continue to deteriorate as housing values continue to spiral.
The distribution of NSP funding has short changed larger, metropolitan areas with an obvious disparity for transportation projects.
IBSG Public Sector, CISCO
Norman Jacknis shared an update of the assistance CISCO is providing to government leaders with broadband technological applications and empowerment to residents to build and improve the quality of life within cities across the country.
National and foreign examples were provided for cities including urban development, sustainability and mobility initiatives, work centers with support venues in central locations, smart energy models, and eco mapping.
Bank of America
Recognized by Mayor Lawrence for their support of the Dollar Wise program, Rob Grossinger offered an overview of how Bank of America is addressing and refining the process of REO disposition. These procedural improvements integrate more effective communication and streamlined measures.
The disposition process related to broker assignment, appraisals, and marketing strategies at the 30, 60, 90, 120 day milestones were reviewed. Although private homeowners are acquiring a majority of the properties at auction, investors still represent a significant buyer stream.
It is crucial to build partnerships with communities to assist with low valued acquisitions, donations, and demolitions; however there are potential arbitration measures to consider.
Little can be documented on the success of the NSP within the first 10 months of its implementation; this can be attributed, in part, to the fact that banks were omitted from participation at the table to offer technical assistance and expertise with program design.
National Association of Realtors
Ron Phipps, affirming that the Association is a committed participatory member of the housing industry, indicated that recent home closings have included an increased and unprecedented number of short sales and distressed property acquisitions.
Price stabilization is the key to housing recovery.
The lack of capacity for brokers to process the potentially large inventory of REO properties is a grave issue. As significant delays with closings are identified as liability, a source has been noted as the multiple implications associated with the transfer of distressed properties.
Mortgage Bankers Association
John Courson confirmed that MBA members have been directly affected and impacted by the economic crisis, yet are actively involved, responding, and participating in current and future programming.
A brief overview of the general updates regarding the focus of the MBA, specifically related to homebuyer programs, tax incentives, and an ongoing evaluation and review of recommendations and requests of qualifications for programs that are either proposed or already in place by various sectors of the housing industry was offered.
Safeguard Properties
Robert Klein offered an overview of the role and responsibilities of field service companies within communities on a national level.
As Chair of the Mortgage Bankers Association (MBA), Robert Klein confirmed that addressing the negative impacts of vacant properties is a priority among the housing industry. The MBA has initiated and maintained direct contact and collaboration with cities across the country. The MBA, has led the charge by partnering with Mortgage Electronic Registration System (MERS) to create a viable solution for municipalities to reach compliance with exterior property maintenance standards.
Code Enforcement officials documented that the much needed contact information for the responsible parties for a vacant property was not obtainable. In direct response, the Industry upgraded the existing MERS database to include the direct point of contact for both the servicer and field service company.
Over 65 Million loans are currently on MERS, and that number continues to rise through the Initiative. Loans are uploaded through the newly created iReg option upon determination that the property is vacant.
Due to the immense volume of enacted municipal Vacant Property Registration Ordinances, many of which include inconsistent and ineffective language and requirements, MERS has been identified as a viable alternative to hard copy registrations. Based on the overwhelming and documented success of the MERS Initiative within six Pilot Cities since January 2009, the program is now being expanded to over 200 additional cities to a broader, more national level. An invitation was offered to all municipalities to participate in MERS.
As it was announced that the MBA is in the process of drafting and endorsing a Model VPR Ordinance that can serve as a template for municipalities. Citing the shortfall of MERS as only including half of the mortgaged loans, Mayor Kaplan, Lauderhill, FL, indicated that he is also drafting a Model Ordinance with separate consideration to electronic registration.
Read original : http://www.safeguardproperties.com/content/view/2423/106/
ModeratorMayor Brenda Lawrence, City of Southfield, MIPresenters
James Diffley, HIS Global Insight
Norman Jacknis, CISCO
Robert Grossinger, Bank of America
Ron Phipps, National Association of Realtors
John Courson, Mortgage Bankers Association
Robert Klein, Safeguard Properties
Mayors in attendance representing municipalities across the country included, but were not limited to:
Burnsville, MN
Bowling Green, KY
West Palm Beach, FL
Carmel, IN
Dallas, TX
Lauderhill, FL
Davenport, IA
North Miami, FL
Dublin, OH
Opening Remarks and Roundtable Introductions
Mayor Brenda Lawrence opened the session by strongly confirming that vacant properties have taken precedence among the Conference of Mayors and municipalities across the country. As foreclosures have expanded to include skilled workers, a division once thought more immune and untouchable to this crisis, municipalities must respond proactively. This session included a panel of leading business representatives contributing to and addressing various aspects of municipal based initiatives.
Mayor Antonio Villaraigosa of Los Angeles concurred with the increasing volume and shifting demographic trend of foreclosures. His City is “loosing ground” on the battle against vacant properties and affirms that the only viable option is to partner and collaborate with the proven efforts of other Mayors across the country.
Overall, Mayors are looking for the input from the business community regarding resources that are needed to meet demands and accomplish initiatives designed for economic improvement and advancement.
Feedback from multiple Mayors in attendance affirmed that when dealing with vacant properties and the foreclosures crisis, earlier intervention and an increased willingness to accommodate the needs of mortgagors, is critical. Mayor Kaplan shared Lauderhill’s (FL) creative application of National Stabilization Program (NSP) dollars to offer homebuyer assistance for the private acquisition of vacant REO properties.
HIS Global Insight
James Diffley offered a summary of the American Recovery Funds Report, including the Metro Summit Report. These reports include, but are not limited to, the following significant observations. The rate of decline is slowing, but not sufficiently enough to allow for growth. Job loss is expected to continue to decline with a national crest of 10.3% in 2010. Although consumer attitudes are improving, they remain stressed and these attitudes to not indicate consumer recovery. Banking will continue to deteriorate as housing values continue to spiral.
The distribution of NSP funding has short changed larger, metropolitan areas with an obvious disparity for transportation projects.
IBSG Public Sector, CISCO
Norman Jacknis shared an update of the assistance CISCO is providing to government leaders with broadband technological applications and empowerment to residents to build and improve the quality of life within cities across the country.
National and foreign examples were provided for cities including urban development, sustainability and mobility initiatives, work centers with support venues in central locations, smart energy models, and eco mapping.
Bank of America
Recognized by Mayor Lawrence for their support of the Dollar Wise program, Rob Grossinger offered an overview of how Bank of America is addressing and refining the process of REO disposition. These procedural improvements integrate more effective communication and streamlined measures.
The disposition process related to broker assignment, appraisals, and marketing strategies at the 30, 60, 90, 120 day milestones were reviewed. Although private homeowners are acquiring a majority of the properties at auction, investors still represent a significant buyer stream.
It is crucial to build partnerships with communities to assist with low valued acquisitions, donations, and demolitions; however there are potential arbitration measures to consider.
Little can be documented on the success of the NSP within the first 10 months of its implementation; this can be attributed, in part, to the fact that banks were omitted from participation at the table to offer technical assistance and expertise with program design.
National Association of Realtors
Ron Phipps, affirming that the Association is a committed participatory member of the housing industry, indicated that recent home closings have included an increased and unprecedented number of short sales and distressed property acquisitions.
Price stabilization is the key to housing recovery.
The lack of capacity for brokers to process the potentially large inventory of REO properties is a grave issue. As significant delays with closings are identified as liability, a source has been noted as the multiple implications associated with the transfer of distressed properties.
Mortgage Bankers Association
John Courson confirmed that MBA members have been directly affected and impacted by the economic crisis, yet are actively involved, responding, and participating in current and future programming.
A brief overview of the general updates regarding the focus of the MBA, specifically related to homebuyer programs, tax incentives, and an ongoing evaluation and review of recommendations and requests of qualifications for programs that are either proposed or already in place by various sectors of the housing industry was offered.
Safeguard Properties
Robert Klein offered an overview of the role and responsibilities of field service companies within communities on a national level.
As Chair of the Mortgage Bankers Association (MBA), Robert Klein confirmed that addressing the negative impacts of vacant properties is a priority among the housing industry. The MBA has initiated and maintained direct contact and collaboration with cities across the country. The MBA, has led the charge by partnering with Mortgage Electronic Registration System (MERS) to create a viable solution for municipalities to reach compliance with exterior property maintenance standards.
Code Enforcement officials documented that the much needed contact information for the responsible parties for a vacant property was not obtainable. In direct response, the Industry upgraded the existing MERS database to include the direct point of contact for both the servicer and field service company.
Over 65 Million loans are currently on MERS, and that number continues to rise through the Initiative. Loans are uploaded through the newly created iReg option upon determination that the property is vacant.
Due to the immense volume of enacted municipal Vacant Property Registration Ordinances, many of which include inconsistent and ineffective language and requirements, MERS has been identified as a viable alternative to hard copy registrations. Based on the overwhelming and documented success of the MERS Initiative within six Pilot Cities since January 2009, the program is now being expanded to over 200 additional cities to a broader, more national level. An invitation was offered to all municipalities to participate in MERS.
As it was announced that the MBA is in the process of drafting and endorsing a Model VPR Ordinance that can serve as a template for municipalities. Citing the shortfall of MERS as only including half of the mortgaged loans, Mayor Kaplan, Lauderhill, FL, indicated that he is also drafting a Model Ordinance with separate consideration to electronic registration.
Read original : http://www.safeguardproperties.com/content/view/2423/106/
Yuba City named in US Conference of Mayors Vacant and Abadoned Properties Survey
Following the Sunday June 14th session the US Conference of Mayors (USCM) released their 2009 Vacant and Abandoned Properties Survey and Best Practices.This Survey is the third in a series of reports prepared by The U.S. Conference of Mayors on cities’ efforts to combat problems of vacant and abandoned property. It updates and expands upon reports published in 2006 and 2008 and focuses on the impact of the mortgage foreclosure crisis on the problems created by vacant and abandoned properties and on cities’ efforts to manage them. Sixty cities responded to a set of survey questions sent to mayors at the end of April; 24 cities submitted descriptions of one or more “best practices” that have been or are being implemented to address their problem properties, touching on the following subjects:
Increase in Vacant and Abandoned Properties
Impact of the Foreclosure Crisis on Vacant and Abandoned Property Efforts
Neighborhood Stabilization Program
Changes in Local Ordinances and Policies
Seriousness of the Mortgage Foreclosure Problem
Impact of the Current Economic Recession
Mortgage Foreclosure Problems in the Next Year
Read report in full:
http://usmayors.org/pressreleases/uploads/VACANTANDABANDPROP09.pdf
Increase in Vacant and Abandoned Properties
Impact of the Foreclosure Crisis on Vacant and Abandoned Property Efforts
Neighborhood Stabilization Program
Changes in Local Ordinances and Policies
Seriousness of the Mortgage Foreclosure Problem
Impact of the Current Economic Recession
Mortgage Foreclosure Problems in the Next Year
Read report in full:
http://usmayors.org/pressreleases/uploads/VACANTANDABANDPROP09.pdf
Wednesday, June 3, 2009
Market Update and How a 15 Year Mortage saves you $$P
Signs of more trouble ahead for housing marketSeveral recent market barometers, including declining housing inventory, increasing buyer competition, slowing price depreciation, and rising builder confidence all point to a real estate market rebound. However, other signs such as rising unemployment, lack of “move-up” buyers, stricter loan underwriting standards, and foreclosures also may impact the market’s recovery.Rising unemployment means that those who own a home, but are not currently employed, could lose their homes to foreclosure. While the first round of foreclosures mainly encompassed people who had difficulty affording their homes even when employed, a second wave may be brought on by those who lose their jobs and are not able to continue paying their mortgages. Numerous programs are in the works to help remedy this situation, including C.A.R.’s Mortgage Protection Program. Eligible first-time buyers who lose their job may be able to receive $1,500 for six months to help pay their mortgages. For more information on this program, please visit:
http://www.car.org/aboutus/hafmainpage/carhafmortgageprotection/While some housing analysts believe overall the state’s housing prices remain unaffordable; 69 percent of the state’s households could afford to purchase an entry-level home in California in the first quarter of this year, compared with 46 percent during the first quarter last year, according to C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI).A study conducted by the Comptroller of the Currency found that more than half of modified mortgages again were delinquent within months of the modification, often because the homeowners still were unable to make regular mortgage payments despite the modified terms. However, the study was conducted prior to the Obama administration’s mortgage modification plan. For more information about the Obama administration’s foreclosure-prevention efforts, please visit:
http://www.car.org/newsstand/newsreleases/fapsummary
Mortgage News: This week’s Mortgage Update contains information about refinancing and 15-year mortgages.A battle plan for refinancing your mortgageHomeowners seeking to refinance their mortgages may be surprised by the amount of paperwork required. During the “easy credit” years, some lenders did not require proof of income or documentation. Nowadays, most lenders require borrowers to provide pay stubs, banks statements, brokerage statements, and possibly tax returns. Self-employed individuals may be asked for a profit-and-loss statement. Those relying on bonus income should expect that most lenders will assume this year’s bonus will be a lot less than last year’s, which could make securing approval more difficult. Determining the amount of equity in the home is key to being approved for a new loan. Homeowners whose mortgage obligations are less than 80 percent of the home’s value are more likely to have refinancing options available to them. Other homeowners who are current on their mortgages, owe 80 percent to 105 percent of the home’s value, and have a loan owned by Fannie Mae or Freddie Mac may be able to refinance under the government’s “Making Home Affordable” program. Other factors to take into consideration when refinancing are the property’s appraised value, the homeowners’ credit score(s), whether or not the property has a second mortgage, and the length of the original loan.
MortgagesMore Takers for 15-Year Loans
THE 30-year fixed-rate mortgage has traditionally been the go-to loan for borrowers who want stability and lower payments. Adjustable-rate mortgages, by contrast, are often seen as more suitable for risk takers and those who expect to sell their homes in a short time.More recently, there has been increased activity in another loan alternative: a fixed-rate mortgage with a 15-year term. Debt shedding comes at a price. Those borrowing $400,000 on a 15-year loan, with a 4.375 percent interest rate, the average rate earlier this month, can expect to pay about $3,034 a month, compared with about $2,056 a month for a 30-year fixed-rate loan with a 4.625 percent average rate. (The payment excludes costs like property taxes and insurance.) Because a 15-year loan also has 180 fewer interest payments than a 30-year loan, the borrower with that 15-year loan would pay $194,000 less in interest over the life of the mortgage.
http://www.car.org/aboutus/hafmainpage/carhafmortgageprotection/While some housing analysts believe overall the state’s housing prices remain unaffordable; 69 percent of the state’s households could afford to purchase an entry-level home in California in the first quarter of this year, compared with 46 percent during the first quarter last year, according to C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI).A study conducted by the Comptroller of the Currency found that more than half of modified mortgages again were delinquent within months of the modification, often because the homeowners still were unable to make regular mortgage payments despite the modified terms. However, the study was conducted prior to the Obama administration’s mortgage modification plan. For more information about the Obama administration’s foreclosure-prevention efforts, please visit:
http://www.car.org/newsstand/newsreleases/fapsummary
Mortgage News: This week’s Mortgage Update contains information about refinancing and 15-year mortgages.A battle plan for refinancing your mortgageHomeowners seeking to refinance their mortgages may be surprised by the amount of paperwork required. During the “easy credit” years, some lenders did not require proof of income or documentation. Nowadays, most lenders require borrowers to provide pay stubs, banks statements, brokerage statements, and possibly tax returns. Self-employed individuals may be asked for a profit-and-loss statement. Those relying on bonus income should expect that most lenders will assume this year’s bonus will be a lot less than last year’s, which could make securing approval more difficult. Determining the amount of equity in the home is key to being approved for a new loan. Homeowners whose mortgage obligations are less than 80 percent of the home’s value are more likely to have refinancing options available to them. Other homeowners who are current on their mortgages, owe 80 percent to 105 percent of the home’s value, and have a loan owned by Fannie Mae or Freddie Mac may be able to refinance under the government’s “Making Home Affordable” program. Other factors to take into consideration when refinancing are the property’s appraised value, the homeowners’ credit score(s), whether or not the property has a second mortgage, and the length of the original loan.
MortgagesMore Takers for 15-Year Loans
THE 30-year fixed-rate mortgage has traditionally been the go-to loan for borrowers who want stability and lower payments. Adjustable-rate mortgages, by contrast, are often seen as more suitable for risk takers and those who expect to sell their homes in a short time.More recently, there has been increased activity in another loan alternative: a fixed-rate mortgage with a 15-year term. Debt shedding comes at a price. Those borrowing $400,000 on a 15-year loan, with a 4.375 percent interest rate, the average rate earlier this month, can expect to pay about $3,034 a month, compared with about $2,056 a month for a 30-year fixed-rate loan with a 4.625 percent average rate. (The payment excludes costs like property taxes and insurance.) Because a 15-year loan also has 180 fewer interest payments than a 30-year loan, the borrower with that 15-year loan would pay $194,000 less in interest over the life of the mortgage.
Thursday, May 28, 2009
Fannie Mae Upate on HAMP program and misc info
FHLMC Bulletin 2009-13
Wednesday, 27 May 2009
Freddie Mac has issued the following Single Family Seller/Servicer Guide Update regarding Bulletin 2009-13. With this Single-Family Advisory e-mail and today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-13, we are announcing multiple servicing updates, including:
Updates to Requirements for the Home Affordable Modification Program (HAMP)
Enhancements to Electronic Default Reporting (EDR) for all Mortgages that Have an Alternative to Foreclosure Being Pursued
Revisions to Servicer Performance Profile Default Management Weighting
Changes to Tier One Premium Awards
Revisions to Servicing Requirements
Information on Recent Treasury Announcements
Updates to Requirements for the Home Affordable Modification ProgramWith today’s Guide Bulletin, we are:
Requiring Servicers to solicit borrowers who are 31 days or more delinquent on or after July 1, 2009, by no later than the 50th day of delinquency; also providing additional guidance on borrower solicitation by phone or electronic means.
Permitting the collection of certain borrower loss mitigation information and documents electronically.
Providing additional guidance on the collection of Government Monitoring Data using the revised HAMP Hardship Affidavit that was posted on April 21, 2009.
Revising the requirements for reporting and remitting a payoff of a mortgage with a partial principal forbearance and revising the required monthly Spreadsheet for Reporting Mortgages with a Partial Principal Forbearance template.
Beginning June 1, 2009, Servicers may report a number of new EDR default action codes and a new default reason code that will become mandatory reporting as of October 1, 2009. Enhancements to Electronic Default Reporting for All Mortgages that Have an Alternative to Foreclosure Being PursuedWe are introducing new EDR default action codes in order for Servicers to provide us with information on mortgages they are pursuing an alternative to foreclosure. Some of the new EDR default action codes are specific to HAMP, while others apply to all mortgages, including current mortgages, for which the Servicer is pursuing an alternative to foreclosure. We are also adding the new default reason code “HMP” so Servicers can identify which loans that are in a Home Affordable Modification Trial Period. This new default reason code must be reported in conjunction with the “09-Forbearance” default action code. Servicers are required to use these new EDR codes beginning October 1, 2009. Guide Exhibit 82, Electronic Default Reporting Transmission Code List, has been updated to reflect these new codes and an updated version of the EDR Quick Reference Guide will be posted on the Learning Center by May 31, 2009.Revisions to Servicer Performance Profile Default Management WeightingUnprecedented market conditions and a crucial new role for Servicers in helping at-risk and delinquent borrowers through the Making Home Affordable program require changes to the Servicer Performance Profile. To maintain the Profile as a meaningful, accurate measurement and guide to continual improvement of servicing performance, we are adjusting the weighting of the Default Management metrics with your July 1, 2009, performance. The revised Default Management metrics will focus more on your loss mitigation, inventory management, and data integrity performance and less on collections management performance. Servicers will continue to be rated on the same Servicer Performance Profile weighting under Investor Reporting and Remitting.As the market continues to adjust this year, we will continue to evaluate the Servicer Performance Profile. If we find that the program warrants additional revisions, we’ll communicate those changes to you.Changes to Tier One Premium AwardsIn light of the current market conditions, with this Single-Family Advisory e-mail, we are discontinuing some of the incentives that correspond to the Tier One Premium Awards for all Servicers’ 2009 performance.
Effective immediately, we are no longer offering monetary performance incentives for Tier One Platinum, Tier One Gold, and Hall of Fame Servicers. In addition, both Tier One Platinum and Tier One Gold’s technology compensation will not be offered in 2009.
We will, however, continue to provide Tier One Platinum Servicers with a $10,000 non-monetary wavier to use toward EarlyIndicator® renewal fees or to acquire the tool and a $1,000 non-monetary waiver to use toward Freddie Mac training and events. Tier One Gold Servicers will also continue to receive a $500 non-monetary waiver to use toward Freddie Mac training classes and events. All Tier One waivers for transfer of servicing and database change fees will remain in effect.
We will not provide public promotion of the Tier One Premium Awards for 2008 and 2009 performance. We will, however, continue to notify you of your Tier One and Hall of Fame status through your servicing representative.
Our robust Workout Incentive Program, which is available to Servicers regardless of their Tier rating, remains available to help offset the costs of pursuing alternatives to foreclosure. Servicers will continue to receive monetary incentives, depending on the type of successful workout, in accordance to the Guide.
As we are with the Servicer Performance Profile, we will continue to evaluate the Tier One Premium Awards throughout the year. If the program requires updates, we’ll communicate those changes to you. Revisions to Servicing RequirementsWith today’s Guide Bulletin, we are also:
Updating the Loss Mitigation Transmittal Worksheet to include data elements specific to HAMP and incorporating it into the Guide as new Form 1128, which is now an interactive Microsoft® Excel spreadsheet.
Updating Guide Chapter B65 to reflect that a HAMP-eligible borrower must first be considered under Guide Chapter C65. Servicers must implement the requirements for HAMP and also directs them to consider borrowers who are in a 0 to 30 day delinquency status to first be considered for a Freddie Mac Relief Refinance MortgageSM under Guide Chapter 24. If the borrower is not eligible for a modification under HAMP, the Servicer must then consider the borrower for other alternative to foreclosure options outlined in Guide Chapter B65.
Announcing new, standardized form subordination agreements, which were developed by Freddie Mac and Fannie Mae in coordination with the American Land Title Association. These standard form agreements are designed for lenders and Servicers to use to resubordinate subordinate liens when working with borrowers on modifications or refinances, including loan modifications under HAMP and Freddie Mac Relief Refinance Mortgages. The new agreements will be available on our Uniform Instruments Web page by June 1. Information on Recent Treasury AnnouncementsThe U.S. Department of the Treasury recently announced that they are expanding HAMP to include requirements on the use of short sales and deeds-in-lieu of foreclosure in the event a borrower cannot complete the modification process. They also announced a second lien program to help struggling borrowers lower their monthly payments on their second mortgage. We are currently working through the policy and operational guidelines, and we will communicate any necessary changes to our requirements in a future Guide Bulletin.
Wednesday, 27 May 2009
Freddie Mac has issued the following Single Family Seller/Servicer Guide Update regarding Bulletin 2009-13. With this Single-Family Advisory e-mail and today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-13, we are announcing multiple servicing updates, including:
Updates to Requirements for the Home Affordable Modification Program (HAMP)
Enhancements to Electronic Default Reporting (EDR) for all Mortgages that Have an Alternative to Foreclosure Being Pursued
Revisions to Servicer Performance Profile Default Management Weighting
Changes to Tier One Premium Awards
Revisions to Servicing Requirements
Information on Recent Treasury Announcements
Updates to Requirements for the Home Affordable Modification ProgramWith today’s Guide Bulletin, we are:
Requiring Servicers to solicit borrowers who are 31 days or more delinquent on or after July 1, 2009, by no later than the 50th day of delinquency; also providing additional guidance on borrower solicitation by phone or electronic means.
Permitting the collection of certain borrower loss mitigation information and documents electronically.
Providing additional guidance on the collection of Government Monitoring Data using the revised HAMP Hardship Affidavit that was posted on April 21, 2009.
Revising the requirements for reporting and remitting a payoff of a mortgage with a partial principal forbearance and revising the required monthly Spreadsheet for Reporting Mortgages with a Partial Principal Forbearance template.
Beginning June 1, 2009, Servicers may report a number of new EDR default action codes and a new default reason code that will become mandatory reporting as of October 1, 2009. Enhancements to Electronic Default Reporting for All Mortgages that Have an Alternative to Foreclosure Being PursuedWe are introducing new EDR default action codes in order for Servicers to provide us with information on mortgages they are pursuing an alternative to foreclosure. Some of the new EDR default action codes are specific to HAMP, while others apply to all mortgages, including current mortgages, for which the Servicer is pursuing an alternative to foreclosure. We are also adding the new default reason code “HMP” so Servicers can identify which loans that are in a Home Affordable Modification Trial Period. This new default reason code must be reported in conjunction with the “09-Forbearance” default action code. Servicers are required to use these new EDR codes beginning October 1, 2009. Guide Exhibit 82, Electronic Default Reporting Transmission Code List, has been updated to reflect these new codes and an updated version of the EDR Quick Reference Guide will be posted on the Learning Center by May 31, 2009.Revisions to Servicer Performance Profile Default Management WeightingUnprecedented market conditions and a crucial new role for Servicers in helping at-risk and delinquent borrowers through the Making Home Affordable program require changes to the Servicer Performance Profile. To maintain the Profile as a meaningful, accurate measurement and guide to continual improvement of servicing performance, we are adjusting the weighting of the Default Management metrics with your July 1, 2009, performance. The revised Default Management metrics will focus more on your loss mitigation, inventory management, and data integrity performance and less on collections management performance. Servicers will continue to be rated on the same Servicer Performance Profile weighting under Investor Reporting and Remitting.As the market continues to adjust this year, we will continue to evaluate the Servicer Performance Profile. If we find that the program warrants additional revisions, we’ll communicate those changes to you.Changes to Tier One Premium AwardsIn light of the current market conditions, with this Single-Family Advisory e-mail, we are discontinuing some of the incentives that correspond to the Tier One Premium Awards for all Servicers’ 2009 performance.
Effective immediately, we are no longer offering monetary performance incentives for Tier One Platinum, Tier One Gold, and Hall of Fame Servicers. In addition, both Tier One Platinum and Tier One Gold’s technology compensation will not be offered in 2009.
We will, however, continue to provide Tier One Platinum Servicers with a $10,000 non-monetary wavier to use toward EarlyIndicator® renewal fees or to acquire the tool and a $1,000 non-monetary waiver to use toward Freddie Mac training and events. Tier One Gold Servicers will also continue to receive a $500 non-monetary waiver to use toward Freddie Mac training classes and events. All Tier One waivers for transfer of servicing and database change fees will remain in effect.
We will not provide public promotion of the Tier One Premium Awards for 2008 and 2009 performance. We will, however, continue to notify you of your Tier One and Hall of Fame status through your servicing representative.
Our robust Workout Incentive Program, which is available to Servicers regardless of their Tier rating, remains available to help offset the costs of pursuing alternatives to foreclosure. Servicers will continue to receive monetary incentives, depending on the type of successful workout, in accordance to the Guide.
As we are with the Servicer Performance Profile, we will continue to evaluate the Tier One Premium Awards throughout the year. If the program requires updates, we’ll communicate those changes to you. Revisions to Servicing RequirementsWith today’s Guide Bulletin, we are also:
Updating the Loss Mitigation Transmittal Worksheet to include data elements specific to HAMP and incorporating it into the Guide as new Form 1128, which is now an interactive Microsoft® Excel spreadsheet.
Updating Guide Chapter B65 to reflect that a HAMP-eligible borrower must first be considered under Guide Chapter C65. Servicers must implement the requirements for HAMP and also directs them to consider borrowers who are in a 0 to 30 day delinquency status to first be considered for a Freddie Mac Relief Refinance MortgageSM under Guide Chapter 24. If the borrower is not eligible for a modification under HAMP, the Servicer must then consider the borrower for other alternative to foreclosure options outlined in Guide Chapter B65.
Announcing new, standardized form subordination agreements, which were developed by Freddie Mac and Fannie Mae in coordination with the American Land Title Association. These standard form agreements are designed for lenders and Servicers to use to resubordinate subordinate liens when working with borrowers on modifications or refinances, including loan modifications under HAMP and Freddie Mac Relief Refinance Mortgages. The new agreements will be available on our Uniform Instruments Web page by June 1. Information on Recent Treasury AnnouncementsThe U.S. Department of the Treasury recently announced that they are expanding HAMP to include requirements on the use of short sales and deeds-in-lieu of foreclosure in the event a borrower cannot complete the modification process. They also announced a second lien program to help struggling borrowers lower their monthly payments on their second mortgage. We are currently working through the policy and operational guidelines, and we will communicate any necessary changes to our requirements in a future Guide Bulletin.
Wednesday, May 6, 2009
Final Score: $8,000 for Homebuyers
Les Christie, CNNMoney.com staff writer
There's a nice windfall for some homebuyers in the economic stimulus bill. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
“I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?”
The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:
Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll withholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll withholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
Lukewarm receptionThe housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
“[The Senate version] would have done a lot more to turn around the housing market,” said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). “We have a lot of reports of people who would be coming off the fence because of it.”
Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.
The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. “I think there are many homeowners who would be trading-up but they have had no buyers for their own homes,” Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the down payment. Then, when the buyers receive their tax credit from the IRS, they pay back the state. Other states may follow with similar programs, according to NAHB's Dietz.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.
Reprint courtesy of CNNMoney.com
There's a nice windfall for some homebuyers in the economic stimulus bill. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
“I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?”
The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:
Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll withholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll withholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
Lukewarm receptionThe housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
“[The Senate version] would have done a lot more to turn around the housing market,” said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). “We have a lot of reports of people who would be coming off the fence because of it.”
Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.
The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. “I think there are many homeowners who would be trading-up but they have had no buyers for their own homes,” Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the down payment. Then, when the buyers receive their tax credit from the IRS, they pay back the state. Other states may follow with similar programs, according to NAHB's Dietz.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.
Reprint courtesy of CNNMoney.com
Monday, May 4, 2009
Wachovia asks REALTORS to help with Short Sales
Distressed homeowners with Wachovia, formerly World Savings, as a lender are seeing a glimmer of home when it comes to saving their homes from foreclosure.
Unlike other banks, Wachovia has short sale managers in the field to talk to distressed homeowners and help them explore options before going to foreclosure. The process is simple and straight forward for the homeowner.
The Wachovia Short Sale manager meets with the homeowner to determine that there is truly a hardship. The seller may be asked to provide a financial statement as well as other information such as tax returns. The Short Sale Manager assess the situation, orders a Brokers Professional Opinion, and then is able to approve the hardship in just a matter of days. Of course if there is a chance that the seller may qualify for a loan modification, that is also an option.
This does several things for the distressed homeowner:
It gives them piece of mind knowing that they are dealing with their lender directly and not some third party collection team;
It gives them faith in their Realtor, and the industry, by seeing the two entities work together to provide help and assistance;
It stops the foreclosure process and takes away the burden and the embarrassment of a foreclosure;
It expedites the short sale process into a period of weeks, as opposed to months, allowing the homeowner to move on with their lives;
It allows the homeowner to reestablish credit faster than if they had to go to through the foreclosure process.
This also helps Wachovia:
Wachovia's short sale managers are a great public relations team for Wachovia to the industry, and to distressed homeowners;
It ultimately saves Wachovia time and money by properly pricing the home and determining the hardship from the start - as opposed to the extended process, which results in a greater loss, especially in a declining market.
Wachovia should be applauded for their efforts and held up as an example for other financial institutions. Working together only helps the distressed homeowner and our industry.
Currently have a World Savings, Wachovia, Golden West, Home Loan and your property is upside down. You would like to List your property than please contact me today.
Unlike other banks, Wachovia has short sale managers in the field to talk to distressed homeowners and help them explore options before going to foreclosure. The process is simple and straight forward for the homeowner.
The Wachovia Short Sale manager meets with the homeowner to determine that there is truly a hardship. The seller may be asked to provide a financial statement as well as other information such as tax returns. The Short Sale Manager assess the situation, orders a Brokers Professional Opinion, and then is able to approve the hardship in just a matter of days. Of course if there is a chance that the seller may qualify for a loan modification, that is also an option.
This does several things for the distressed homeowner:
It gives them piece of mind knowing that they are dealing with their lender directly and not some third party collection team;
It gives them faith in their Realtor, and the industry, by seeing the two entities work together to provide help and assistance;
It stops the foreclosure process and takes away the burden and the embarrassment of a foreclosure;
It expedites the short sale process into a period of weeks, as opposed to months, allowing the homeowner to move on with their lives;
It allows the homeowner to reestablish credit faster than if they had to go to through the foreclosure process.
This also helps Wachovia:
Wachovia's short sale managers are a great public relations team for Wachovia to the industry, and to distressed homeowners;
It ultimately saves Wachovia time and money by properly pricing the home and determining the hardship from the start - as opposed to the extended process, which results in a greater loss, especially in a declining market.
Wachovia should be applauded for their efforts and held up as an example for other financial institutions. Working together only helps the distressed homeowner and our industry.
Currently have a World Savings, Wachovia, Golden West, Home Loan and your property is upside down. You would like to List your property than please contact me today.
Friday, May 1, 2009
Sacramento Road Closures UPDATED TODAY
Click here to see if your effected by the current road closures in Sacramento, CA. http://www.msa.saccounty.net/Roads/default.asp
Multiple Locations (See Details for Street Names)
April 13 to June 227:30 AM to 4:30 PM
Lane ClosureThere will be multlple lane closures keeping at least one lane open in each direction at all times. Streets affected are: Dudley Blvd from Howard Street to Freedom Park; Watt Avenue to Price Avenue on James Street; Watt Avenue to Luce Avenue on Palm Avenue; Watt Avenue to Luce Avenue on Peacekeeper; Dudley Blvd./ James Way Intersection; Arnold Way from James Street to Howard Street; Dudley Blvd/Peacekeeper Way Intersection; Dudley Blvd/Palm Street Intersection. REASON FOR CLOSURES: ADA Ramp replacement, paving and Slurry seal. DISTRICT:1
For more road construction projects in your area or road clsures please click on the link above.
Multiple Locations (See Details for Street Names)
April 13 to June 227:30 AM to 4:30 PM
Lane ClosureThere will be multlple lane closures keeping at least one lane open in each direction at all times. Streets affected are: Dudley Blvd from Howard Street to Freedom Park; Watt Avenue to Price Avenue on James Street; Watt Avenue to Luce Avenue on Palm Avenue; Watt Avenue to Luce Avenue on Peacekeeper; Dudley Blvd./ James Way Intersection; Arnold Way from James Street to Howard Street; Dudley Blvd/Peacekeeper Way Intersection; Dudley Blvd/Palm Street Intersection. REASON FOR CLOSURES: ADA Ramp replacement, paving and Slurry seal. DISTRICT:1
For more road construction projects in your area or road clsures please click on the link above.
Wednesday, April 29, 2009
Sacramento Define Swine Flu?
Swine Flu
Inquire about the availability of documents in alternate formats.
Swine Flu is a respiratory disease typically found in pigs. However, human Swine Flu cases can and do happen. Swine Flu has been detected in the United States, and locally in Sacramento County.
Use the following information to learn the symptoms, treatment and prevention of Swine Flu, as well as news about it’s occurrence locally and nationally.
Swine Flu and You – Description of the Swine Flu symptoms, treatment, and prevention from the Center for Disease Control
Swine Flu Information – Comprehensive resource from the State of California about Swine Flu.
Swine Flu in Sacramento County – Update from the Public Health Division
Swine Flu Investigation – National and international information from the Center for Disease Control
The County and City of Sacramento recommend you call 2-1-1 for general information about the swine flu. If you believe you have flu symptoms, please call your doctor, or 9-1-1 for a life threatening emergency. By calling 2-1-1 (or 1-800-550-4931) your questions will be answered by a representative who will have the latest public health information.
Click on the following link to gather more information on the highlighted links above:
http://www.sacramentoready.org/SAC_Sacready_DF_SwineFlu
Inquire about the availability of documents in alternate formats.
Swine Flu is a respiratory disease typically found in pigs. However, human Swine Flu cases can and do happen. Swine Flu has been detected in the United States, and locally in Sacramento County.
Use the following information to learn the symptoms, treatment and prevention of Swine Flu, as well as news about it’s occurrence locally and nationally.
Swine Flu and You – Description of the Swine Flu symptoms, treatment, and prevention from the Center for Disease Control
Swine Flu Information – Comprehensive resource from the State of California about Swine Flu.
Swine Flu in Sacramento County – Update from the Public Health Division
Swine Flu Investigation – National and international information from the Center for Disease Control
The County and City of Sacramento recommend you call 2-1-1 for general information about the swine flu. If you believe you have flu symptoms, please call your doctor, or 9-1-1 for a life threatening emergency. By calling 2-1-1 (or 1-800-550-4931) your questions will be answered by a representative who will have the latest public health information.
Click on the following link to gather more information on the highlighted links above:
http://www.sacramentoready.org/SAC_Sacready_DF_SwineFlu
Are You Prepared For An Emergency? Sacramento County
Visit the following link to download any of the highlighted links below: http://www.sacramentoready.org/default.htm
Sacramento Ready is a regional partnership of local government working to provide emergency preparation and response information to people in the Sacramento area.
Swine Flu
Swine Flu cases have been confirmed in Sacramento County. Find out about the symptoms, treatments, and prevention of swine flu, as well as information about where cases have occurred. Get details on the Swine Flu information web page.
If you have specific questions not answered by our resources online, you can get more information by calling 2-1-1 in the Sacramento region. Twitter users can sign up to receive periodic messages from Sacramento County's Public Health Division at www.Twitter.com/SacPublicHealth.
Be Prepared as the Seasons Change
The Sacramento region is warming into springtime weather, but we may still see showers in April and May. Get information about preparing your home for the upcoming seasonal change.
Prepare an emergency kit
Make a communication plan for your family
Plan together with neighbor helping neighbor
Prepare in advance – information for seniors and people with disabilities
Learn more emergency preparation tips in the Are You Prepared Guide.
Sacramento County Emergency Operations and Evacuation Plans
The Emergency Operation Plan provides you with information about how local officials will respond in the event of an emergency. As emergencies often cross jurisdictional lines, this report takes into account the many agencies within the region charged with guiding our operations, and offers valuable insight into the multi-pronged approach we would take to provide for your health and safety. Read the Sacramento County Emergency Operations Plan. (6MB)
In the event of an emergency that requires the County to evacuate citizens from an impacted to a safe area, there are agreed-upon strategies already in place to ensure the process is handled as smoothly as possible. This plan also takes into account the many people with special needs who might need additional support in an evacuation. Read the Sacramento County Evacuation Plan.
Sacramento Ready is a regional partnership of local government working to provide emergency preparation and response information to people in the Sacramento area.
Swine Flu
Swine Flu cases have been confirmed in Sacramento County. Find out about the symptoms, treatments, and prevention of swine flu, as well as information about where cases have occurred. Get details on the Swine Flu information web page.
If you have specific questions not answered by our resources online, you can get more information by calling 2-1-1 in the Sacramento region. Twitter users can sign up to receive periodic messages from Sacramento County's Public Health Division at www.Twitter.com/SacPublicHealth.
Be Prepared as the Seasons Change
The Sacramento region is warming into springtime weather, but we may still see showers in April and May. Get information about preparing your home for the upcoming seasonal change.
Prepare an emergency kit
Make a communication plan for your family
Plan together with neighbor helping neighbor
Prepare in advance – information for seniors and people with disabilities
Learn more emergency preparation tips in the Are You Prepared Guide.
Sacramento County Emergency Operations and Evacuation Plans
The Emergency Operation Plan provides you with information about how local officials will respond in the event of an emergency. As emergencies often cross jurisdictional lines, this report takes into account the many agencies within the region charged with guiding our operations, and offers valuable insight into the multi-pronged approach we would take to provide for your health and safety. Read the Sacramento County Emergency Operations Plan. (6MB)
In the event of an emergency that requires the County to evacuate citizens from an impacted to a safe area, there are agreed-upon strategies already in place to ensure the process is handled as smoothly as possible. This plan also takes into account the many people with special needs who might need additional support in an evacuation. Read the Sacramento County Evacuation Plan.
Tuesday, April 28, 2009
Modifying Loans Under the Affordable Home Modification Plan
This will only apply to the first mortgage on your primary residence.
To qualify, you must:
Have originated your mortgage before Jan. 1, 2009.
Be an owner-occupant.
Have an unpaid balance that is equal to or less than $729,750 (for a single-family home).
Have trouble paying your mortgage due to financial hardship. That could be because you have had an increase in your mortgage payments, or because your income was reduced or you suffered a hardship (like medical problems) that increased your bills, or, you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship.
Your monthly mortgage payment must also be more than 31% of your gross (pre-tax) monthly income.To seal the deal, you must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.
What if I am About to be Foreclosed On?
The foreclosure process will stop while you’re being considered for the program (or for any alternative foreclosure prevention option).
What Will it Cost?
Under the program, the borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report.
Is There a Deadline?
New borrowers will be accepted until Dec. 31, 2012.
How Do I Start?
Gather these required loan modification documents and call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives, along with the fact that this could help millions avoid defaulting on their mortgage, will motivate them to participate.
Home Affordable Modification Program Guidelines
FULL DETAILS CLICK THE FOLLOWING LINK PRINT & REVIEW:
http://www.ustreas.gov/press/releases/reports/modification_program_guidelines.pdf
To qualify, you must:
Have originated your mortgage before Jan. 1, 2009.
Be an owner-occupant.
Have an unpaid balance that is equal to or less than $729,750 (for a single-family home).
Have trouble paying your mortgage due to financial hardship. That could be because you have had an increase in your mortgage payments, or because your income was reduced or you suffered a hardship (like medical problems) that increased your bills, or, you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship.
Your monthly mortgage payment must also be more than 31% of your gross (pre-tax) monthly income.To seal the deal, you must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.
What if I am About to be Foreclosed On?
The foreclosure process will stop while you’re being considered for the program (or for any alternative foreclosure prevention option).
What Will it Cost?
Under the program, the borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report.
Is There a Deadline?
New borrowers will be accepted until Dec. 31, 2012.
How Do I Start?
Gather these required loan modification documents and call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives, along with the fact that this could help millions avoid defaulting on their mortgage, will motivate them to participate.
Home Affordable Modification Program Guidelines
FULL DETAILS CLICK THE FOLLOWING LINK PRINT & REVIEW:
http://www.ustreas.gov/press/releases/reports/modification_program_guidelines.pdf
Wisconsin State Tenant Protection Act help foreclosed owners stay in Home 90 days
The Wisconsin Economic Recovery Act, Act 2 was recently enacted, with an effective date of March 7, 2009. Sections 847 through 850 of Act 2 contain the Tenant Protection Act.
The Act requires that the plaintiff in a foreclosure action provide notice to tenants three different times during the foreclosure.
The first notice must be provided to tenants within five (5) days of filing the foreclosure action. The next notice must be provided within five (5) days of the Judgment Entry showing the redemption expiration date. The third notice is sent once notice of confirmation of hearing is scheduled. This is notice of the hearing date and time. All notices must be sent by Registered Mail or personal service.
The Act also gives a tenant the right to remain in a foreclosed property for ninety (90) days after the foreclosure process has concluded. There is a $250.00 penalty, plus attorney fees for noncompliance.
http://www.legis.wi.gov/2009/data/acts/09Act2.pdf
Click the link above to learn more about this law.
The Act requires that the plaintiff in a foreclosure action provide notice to tenants three different times during the foreclosure.
The first notice must be provided to tenants within five (5) days of filing the foreclosure action. The next notice must be provided within five (5) days of the Judgment Entry showing the redemption expiration date. The third notice is sent once notice of confirmation of hearing is scheduled. This is notice of the hearing date and time. All notices must be sent by Registered Mail or personal service.
The Act also gives a tenant the right to remain in a foreclosed property for ninety (90) days after the foreclosure process has concluded. There is a $250.00 penalty, plus attorney fees for noncompliance.
http://www.legis.wi.gov/2009/data/acts/09Act2.pdf
Click the link above to learn more about this law.
Tuesday, April 21, 2009
Reissuance of the Introduction of the Home Affordable Modification
This Announcement (09-05R) is a reissuance of Announcement 09-05, which was originally
issued on March 4, 2009. This Announcement provides additional policy clarification and
instruction and supersedes Announcement 09-05 in its entirety. Policy clarifications and
new instructions that are incorporated into this Announcement are identified by bold type.
(Other minor editorial changes are included in this document but not identified in bold.)
Background
On February 18, 2009, President Obama announced the Homeowner Affordability and Stability
Plan to help up to 7 to 9 million families restructure or refinance their mortgage loans to avoid
foreclosure. As part of this plan, the Treasury Department (Treasury) announced a national
modification program aimed at helping 3 to 4 million at-risk homeowners – both those who are
in default and those who are at imminent risk of default – by reducing monthly payments to
sustainable levels. Treasury issued uniform guidance for loan modifications across the mortgage
industry in Supplemental Directive 09-01 on April 6, 2009. This Announcement provides
guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable
Modification Program (HMP) for Fannie Mae loans.
Under the HMP, servicers will use a uniform loan modification process to provide eligible
borrowers with sustainable monthly payments. The HMP implementation guidelines set forth in
this Announcement apply to all eligible one- to four-unit owner-occupied properties securing
Fannie Mae portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
The HMP will replace the Streamlined Modification Program introduced in Announcement 08-
33 and the Early Workout™ program announced in Announcement 08-31. The HMP will expire
on December 31, 2012.
All Fannie Mae-approved servicers must participate in the program for all eligible Fannie Mae
portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
Announcement 09-05R Page 2
Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:
are not subject to Fannie Mae’s credit loss guarantee, and
are held by servicers in their own portfolios or are serviced for other portfolios or
securitization trusts or investors.
These other qualifying mortgage loans are referred to as Non-GSE Mortgages in this
Announcement.
As announced in Supplemental Directive 09-01, in order for a servicer to participate in the HMP
with respect to Non-GSE Mortgages, the servicer must execute a servicer participation
agreement and related documents with Fannie Mae in its capacity as financial agent for the
United States (as designated by Treasury).
This Announcement also introduces a new HomeSaver Forbearance™ foreclosure prevention
option and a new Fannie Mae loan workout hierarchy. The HomeSaver Forbearance provides an
additional foreclosure prevention option for borrowers who are NOT eligible for the HMP.
This Announcement covers the following topics:
HMP Eligibility
Underwriting
Modification Process
Servicer Delegation, Duties and Responsibilities
Reporting Requirements
Fees and Compensation
FHA HOPE for Homeowners
Compliance
HomeSaver Forbearance
New Workout Hierarchy
Retirement of the Streamlined Modification Program (SMP) and the Early Workout Program
To read the entire document with detailed information please visit the link below:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0905.pdf
issued on March 4, 2009. This Announcement provides additional policy clarification and
instruction and supersedes Announcement 09-05 in its entirety. Policy clarifications and
new instructions that are incorporated into this Announcement are identified by bold type.
(Other minor editorial changes are included in this document but not identified in bold.)
Background
On February 18, 2009, President Obama announced the Homeowner Affordability and Stability
Plan to help up to 7 to 9 million families restructure or refinance their mortgage loans to avoid
foreclosure. As part of this plan, the Treasury Department (Treasury) announced a national
modification program aimed at helping 3 to 4 million at-risk homeowners – both those who are
in default and those who are at imminent risk of default – by reducing monthly payments to
sustainable levels. Treasury issued uniform guidance for loan modifications across the mortgage
industry in Supplemental Directive 09-01 on April 6, 2009. This Announcement provides
guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable
Modification Program (HMP) for Fannie Mae loans.
Under the HMP, servicers will use a uniform loan modification process to provide eligible
borrowers with sustainable monthly payments. The HMP implementation guidelines set forth in
this Announcement apply to all eligible one- to four-unit owner-occupied properties securing
Fannie Mae portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
The HMP will replace the Streamlined Modification Program introduced in Announcement 08-
33 and the Early Workout™ program announced in Announcement 08-31. The HMP will expire
on December 31, 2012.
All Fannie Mae-approved servicers must participate in the program for all eligible Fannie Mae
portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
Announcement 09-05R Page 2
Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:
are not subject to Fannie Mae’s credit loss guarantee, and
are held by servicers in their own portfolios or are serviced for other portfolios or
securitization trusts or investors.
These other qualifying mortgage loans are referred to as Non-GSE Mortgages in this
Announcement.
As announced in Supplemental Directive 09-01, in order for a servicer to participate in the HMP
with respect to Non-GSE Mortgages, the servicer must execute a servicer participation
agreement and related documents with Fannie Mae in its capacity as financial agent for the
United States (as designated by Treasury).
This Announcement also introduces a new HomeSaver Forbearance™ foreclosure prevention
option and a new Fannie Mae loan workout hierarchy. The HomeSaver Forbearance provides an
additional foreclosure prevention option for borrowers who are NOT eligible for the HMP.
This Announcement covers the following topics:
HMP Eligibility
Underwriting
Modification Process
Servicer Delegation, Duties and Responsibilities
Reporting Requirements
Fees and Compensation
FHA HOPE for Homeowners
Compliance
HomeSaver Forbearance
New Workout Hierarchy
Retirement of the Streamlined Modification Program (SMP) and the Early Workout Program
To read the entire document with detailed information please visit the link below:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0905.pdf
Freddie Mac Release a bulletin
Freddie Mac has issued the following Single Family Seller/Servicer Guide Update regarding Bulletin 2009-10
Today we issued Single-Family Seller/Servicer Guide Bulletin 2009-10, which announces important updates to requirements for the Home Affordable Modification program, including new criteria for determining whether a borrower is in imminent default, information and tools for Servicers to perform the required Net Present Value (NPV) test, and other changes to borrower eligibility and underwriting requirements.
Criteria for Determining Imminent Default
The Guide Bulletin provides criteria for determining whether a borrower who is current or less than 31days delinquent, and claims a hardship, is in imminent default. Using the process, requirements, and definitions outlined in our revised Guide Section C65.4, Servicers must consider the borrower for a modification under the Home Affordable Modification program if, after using the screening criteria outlined in this Guide section, the Servicer determines:
The borrower’s Debt Coverage Ratio is less than 1.20 and
The borrower’s cash reserves are less than three times the current monthly PITIA payment.
The Borrower Qualification Worksheet may be used to determine if a borrower, who is current or less than 31 days delinquent, is in imminent default. The updated Freddie Mac Borrower Qualification Worksheet will be available as a secure link on our Home Affordable Modification program Web page on Thursday, April 23. In addition, Freddie Mac is developing an automated solution to assist Servicers with the imminent default evaluation, and it will be available at a later date.
Net Present Value Calculations
All mortgages that meet Home Affordable Modification program criteria must be evaluated using the standardized NPV test that compares the NPV result for a modification to the NPV result for not modifying the mortgage. Today’s Bulletin and newly revised Guide Section C65.6 include detailed requirements for performing this test. These requirements include revisions for determining the amount of principal forbearance that may be permitted in order to achieve the Target Payment.
To assist Servicers, we are also introducing the Net Present Value (NPV) Calculator. The NPV Calculator is available on the Home Affordable Modification Servicer Web page. A user ID and password are required for access to the Servicer Web page. Servicers must complete and submit the HMP Registration Form to obtain a user ID and password.
Additional Updates
With today’s Bulletin, we are also announcing revisions and updates to these and other program requirements:
Revising requirements for verification of income when the Servicer uses stated income to create and send the borrower a Trial Period Plan, along with revising the income documentation requirements.
Revising the timeframe for when a borrower must respond to the Trial Period Plan offer package from 14 days to 30 days, and providing additional guidance if the borrower does not submit the required documents by the specified deadline.
Updating the definition of Interest Rate Cap.
Updating requirements for Servicers to continue to report “full-file” status reports to the four major credit repositories when borrowers enter the Trial Period, with criteria for borrowers who are current and borrowers who are delinquent when they enter the Trial Period.
Revising collateral valuation requirements used for the NPV test and for determining the mark-to-market LTV ratio.
Revising eligibility requirements to allow modifications of FHA, VA, and RHS mortgages, in accordance with guidance issued by the respective agency.
Revising documentation requirements for verifying that eligible mortgages are occupied primary residences.
Updating requirements for verifying installment debt and other expenses that must be included in the calculation of the borrower’s total monthly debt payment-to-income ratio.
Providing further guidance on the Servicer’s “Pay for Success” and Borrower’s “Pay for Performance” incentive fees.
Revising the Hardship Affidavit to now include a section for the collection of government monitoring data.
Adding requirements for reporting data to Fannie Mae in its capacity as Financial Agent.
Adding requirements provided by Freddie Mac, the Compliance Agent for the U.S Department of the Treasury.
Reminders
As a reminder, Servicers should continue to:
Suspend all foreclosure sales on owner-occupied properties for borrowers who may be or are eligible for a modification under the Home Affordable Modification program.
Report weekly Home Affordable Modification activity each Monday using the Program Performance Reporting Spreadsheet.
Please read the original bulletin: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0910.pdf
Today we issued Single-Family Seller/Servicer Guide Bulletin 2009-10, which announces important updates to requirements for the Home Affordable Modification program, including new criteria for determining whether a borrower is in imminent default, information and tools for Servicers to perform the required Net Present Value (NPV) test, and other changes to borrower eligibility and underwriting requirements.
Criteria for Determining Imminent Default
The Guide Bulletin provides criteria for determining whether a borrower who is current or less than 31days delinquent, and claims a hardship, is in imminent default. Using the process, requirements, and definitions outlined in our revised Guide Section C65.4, Servicers must consider the borrower for a modification under the Home Affordable Modification program if, after using the screening criteria outlined in this Guide section, the Servicer determines:
The borrower’s Debt Coverage Ratio is less than 1.20 and
The borrower’s cash reserves are less than three times the current monthly PITIA payment.
The Borrower Qualification Worksheet may be used to determine if a borrower, who is current or less than 31 days delinquent, is in imminent default. The updated Freddie Mac Borrower Qualification Worksheet will be available as a secure link on our Home Affordable Modification program Web page on Thursday, April 23. In addition, Freddie Mac is developing an automated solution to assist Servicers with the imminent default evaluation, and it will be available at a later date.
Net Present Value Calculations
All mortgages that meet Home Affordable Modification program criteria must be evaluated using the standardized NPV test that compares the NPV result for a modification to the NPV result for not modifying the mortgage. Today’s Bulletin and newly revised Guide Section C65.6 include detailed requirements for performing this test. These requirements include revisions for determining the amount of principal forbearance that may be permitted in order to achieve the Target Payment.
To assist Servicers, we are also introducing the Net Present Value (NPV) Calculator. The NPV Calculator is available on the Home Affordable Modification Servicer Web page. A user ID and password are required for access to the Servicer Web page. Servicers must complete and submit the HMP Registration Form to obtain a user ID and password.
Additional Updates
With today’s Bulletin, we are also announcing revisions and updates to these and other program requirements:
Revising requirements for verification of income when the Servicer uses stated income to create and send the borrower a Trial Period Plan, along with revising the income documentation requirements.
Revising the timeframe for when a borrower must respond to the Trial Period Plan offer package from 14 days to 30 days, and providing additional guidance if the borrower does not submit the required documents by the specified deadline.
Updating the definition of Interest Rate Cap.
Updating requirements for Servicers to continue to report “full-file” status reports to the four major credit repositories when borrowers enter the Trial Period, with criteria for borrowers who are current and borrowers who are delinquent when they enter the Trial Period.
Revising collateral valuation requirements used for the NPV test and for determining the mark-to-market LTV ratio.
Revising eligibility requirements to allow modifications of FHA, VA, and RHS mortgages, in accordance with guidance issued by the respective agency.
Revising documentation requirements for verifying that eligible mortgages are occupied primary residences.
Updating requirements for verifying installment debt and other expenses that must be included in the calculation of the borrower’s total monthly debt payment-to-income ratio.
Providing further guidance on the Servicer’s “Pay for Success” and Borrower’s “Pay for Performance” incentive fees.
Revising the Hardship Affidavit to now include a section for the collection of government monitoring data.
Adding requirements for reporting data to Fannie Mae in its capacity as Financial Agent.
Adding requirements provided by Freddie Mac, the Compliance Agent for the U.S Department of the Treasury.
Reminders
As a reminder, Servicers should continue to:
Suspend all foreclosure sales on owner-occupied properties for borrowers who may be or are eligible for a modification under the Home Affordable Modification program.
Report weekly Home Affordable Modification activity each Monday using the Program Performance Reporting Spreadsheet.
Please read the original bulletin: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0910.pdf
Monday, April 20, 2009
President Barack Obama's ambitious plan to rescue the housing market
At the heart of the President Barack Obama's ambitious plan to rescue the housing market is the conviction that restructuring distressed mortgages will keep struggling borrowers in their homes and help insert a floor beneath plummeting property values. With $75 billion dedicated to reworking troubled loans, that's a big bet—especially considering that a top banking regulator said last December that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. But supporters argue that mortgage modifications need to be properly engineered to work—and many early ones weren't. To that end, the Obama administration on Wednesday unveiled fresh details on its plan to restructure at-risk loans and help as many as four million home owners avoid foreclosure. Here are seven things you need to know about Obama's loan modification program.
1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments. Although not everyone agrees with this, billionaire investor Warren Buffett endorsed the philosophy in his most recent letter to shareholders. "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans)," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."
2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income. In lowering the payment, the servicer would first reduce the interest rate to as low as 2 percent. If that's not enough to hit the 31 percent threshold, they would then extend the terms of the loan to up to 40 years. If that's still not enough, the servicer would forebear loan principal at no interest. The plan does not, however, require servicers to reduce mortgage principal, which Richard Green, the director of the Lusk Center for Real Estate at USC, considers a shortcoming. "For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Green says. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."
3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments. Borrowers, meanwhile, can get up to $1,000 knocked off the principal of their loan each year for as many as five years if they make their payments on time. Neither party can receive the cash incentives until the modified loan payments have been made for at least three months.
4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents, such as the borrower's credit report. In addition, the program is designed to target homeowners who are undergoing "serious hardships"—such as a loss of income—which have put them at risk of default. To participate, borrowers will have to sign an affidavit of financial hardship and verify their income with documents. "If we would have had such stringent verification over the last four or five years, we probably wouldn't be in as bad a position as we are in," says Richard Moody, the chief economist at Mission Residential. But while Moody has no objection to such verification, obtaining documents from so many homeowners could be an onerous effort. "It's going to be a very time-consuming process," he says. Only loans originated on or before Jan. 1, 2009, are eligible, and modified payments will remain in place for five years. Now that the administration's plan is out, lenders are free to begin modifying loans.
5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan.
6. Second liensThe Obama plan also addresses the issue of second liens—such as home equity loans or home equity lines of credit—by offering incentives to extinguish them. But key details on this component of the plan remained unclear.
7. Will it work? Moody argues that while the plan may reduce foreclosures for primary residences, it could lead to a spike in defaults for another group of homeowners. Although he supports the administration's efforts to focus the initiative on primary residences, Moody notes that "it could be the case that a lot of [real estate speculators] have been just hanging on waiting to see exactly what the details are of this [plan]," Moody says. Now that it's clear the Obama plan leaves speculators out, "we could actually see a spike in foreclosures or at least mortgage defaults among this group."
1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments. Although not everyone agrees with this, billionaire investor Warren Buffett endorsed the philosophy in his most recent letter to shareholders. "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans)," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."
2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income. In lowering the payment, the servicer would first reduce the interest rate to as low as 2 percent. If that's not enough to hit the 31 percent threshold, they would then extend the terms of the loan to up to 40 years. If that's still not enough, the servicer would forebear loan principal at no interest. The plan does not, however, require servicers to reduce mortgage principal, which Richard Green, the director of the Lusk Center for Real Estate at USC, considers a shortcoming. "For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Green says. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."
3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments. Borrowers, meanwhile, can get up to $1,000 knocked off the principal of their loan each year for as many as five years if they make their payments on time. Neither party can receive the cash incentives until the modified loan payments have been made for at least three months.
4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents, such as the borrower's credit report. In addition, the program is designed to target homeowners who are undergoing "serious hardships"—such as a loss of income—which have put them at risk of default. To participate, borrowers will have to sign an affidavit of financial hardship and verify their income with documents. "If we would have had such stringent verification over the last four or five years, we probably wouldn't be in as bad a position as we are in," says Richard Moody, the chief economist at Mission Residential. But while Moody has no objection to such verification, obtaining documents from so many homeowners could be an onerous effort. "It's going to be a very time-consuming process," he says. Only loans originated on or before Jan. 1, 2009, are eligible, and modified payments will remain in place for five years. Now that the administration's plan is out, lenders are free to begin modifying loans.
5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan.
6. Second liensThe Obama plan also addresses the issue of second liens—such as home equity loans or home equity lines of credit—by offering incentives to extinguish them. But key details on this component of the plan remained unclear.
7. Will it work? Moody argues that while the plan may reduce foreclosures for primary residences, it could lead to a spike in defaults for another group of homeowners. Although he supports the administration's efforts to focus the initiative on primary residences, Moody notes that "it could be the case that a lot of [real estate speculators] have been just hanging on waiting to see exactly what the details are of this [plan]," Moody says. Now that it's clear the Obama plan leaves speculators out, "we could actually see a spike in foreclosures or at least mortgage defaults among this group."
Friday, April 17, 2009
Freddie Mac has issued the following Single Family Seller/Servicer Guide Update
Freddie Mac has issued the following Single Family Seller/Servicer Guide Update regarding Bulletin 2009-9.
Today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-9, expands eligibility for the Freddie Mac Relief Refinance MortgageSM, making it easier for qualified borrowers to take advantage of this offering. Relief Refinance Mortgages are a key component of the administration’s Making Home Affordable Program and we are committed to supporting this national mandate by making Relief Refinance Mortgages available to as many qualified borrowers as possible. Today’s expanded eligibility will allow you to help more borrowers refinance into mortgages that position them for a successful and long-term homeownership experience.
With today’s Guide Bulletin, we are incorporating into the Guide the recently announced increase to our maximum loan limits as permitted under the American Recovery and Reinvestment Act of 2009 (ARRA). We are also announcing revisions to our requirements for super conforming mortgages that include the changes we previewed in our April 10 Single-Family Advisory e-mail.
It is important that you review today’s Guide Bulletin for detailed information on these changes.
Expanded Eligibility for Relief Refinance Mortgages
Today’s Guide Bulletin provides detailed information on updates to our requirements for Relief Refinance Mortgages. The following changes are effective immediately and include:
Clarifying that accrued interest through the payoff date may be included when paying off the mortgage being refinanced.
Permitting up to $250 cash back to the borrower.
Enabling the amortization term of the Relief Refinance Mortgage to be longer than the amortization term of the existing mortgage. For example, a 15-year fixed-rate mortgage may be refinanced as a 30-year fixed-rate Relief Refinance Mortgage.
Allowing second home and investment property mortgages that are now owner-occupied primary residences to be refinanced under the Relief Refinance Mortgage offering.
Permitting the transfer of property insurance from the mortgage being refinanced to the Relief Refinance Mortgage, if permitted by the insurance carrier, to alleviate the need for the borrower to prepay property insurance at settlement.
Additionally, when using Home Value Explorer® to determine property value, we are not requiring you to complete the “Year Built” and “Number of Bedrooms” fields on Form 11, Mortgage Submission Schedule and Form 13SF, Mortgage Submission Voucher.
Finally, we are reminding you that Relief Refinance Mortgages may not be sold to Freddie Mac through the selling system’s servicing-released process.
To view the online Bulletin in its entirety, please http://www.freddiemac.com/sell/guide/bulletins/pdf/bll099.pdf
Today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-9, expands eligibility for the Freddie Mac Relief Refinance MortgageSM, making it easier for qualified borrowers to take advantage of this offering. Relief Refinance Mortgages are a key component of the administration’s Making Home Affordable Program and we are committed to supporting this national mandate by making Relief Refinance Mortgages available to as many qualified borrowers as possible. Today’s expanded eligibility will allow you to help more borrowers refinance into mortgages that position them for a successful and long-term homeownership experience.
With today’s Guide Bulletin, we are incorporating into the Guide the recently announced increase to our maximum loan limits as permitted under the American Recovery and Reinvestment Act of 2009 (ARRA). We are also announcing revisions to our requirements for super conforming mortgages that include the changes we previewed in our April 10 Single-Family Advisory e-mail.
It is important that you review today’s Guide Bulletin for detailed information on these changes.
Expanded Eligibility for Relief Refinance Mortgages
Today’s Guide Bulletin provides detailed information on updates to our requirements for Relief Refinance Mortgages. The following changes are effective immediately and include:
Clarifying that accrued interest through the payoff date may be included when paying off the mortgage being refinanced.
Permitting up to $250 cash back to the borrower.
Enabling the amortization term of the Relief Refinance Mortgage to be longer than the amortization term of the existing mortgage. For example, a 15-year fixed-rate mortgage may be refinanced as a 30-year fixed-rate Relief Refinance Mortgage.
Allowing second home and investment property mortgages that are now owner-occupied primary residences to be refinanced under the Relief Refinance Mortgage offering.
Permitting the transfer of property insurance from the mortgage being refinanced to the Relief Refinance Mortgage, if permitted by the insurance carrier, to alleviate the need for the borrower to prepay property insurance at settlement.
Additionally, when using Home Value Explorer® to determine property value, we are not requiring you to complete the “Year Built” and “Number of Bedrooms” fields on Form 11, Mortgage Submission Schedule and Form 13SF, Mortgage Submission Voucher.
Finally, we are reminding you that Relief Refinance Mortgages may not be sold to Freddie Mac through the selling system’s servicing-released process.
To view the online Bulletin in its entirety, please http://www.freddiemac.com/sell/guide/bulletins/pdf/bll099.pdf
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