HUD INDEFINITELY DEBARS FOUR INDIVIDUALS FOLLOWING REVERSE MORTGAGE SCAM THAT TARGETED SENIORS

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today announced the indefinite debarment of three South Florida mortgage loan officers and a Pittsburgh title agent following their criminal convictions on charges they defrauded elderly borrowers, mortgage lenders and the Federal Housing Administration (FHA). Marcos Echevarria, Louis Gendason, John Incandela and Kimberly Mackey pled guilty to charges of conspiracy to commit wire fraud for their part in a $2.5 million nation-wide reverse mortgage scam. All four individuals are currently serving prison terms.

U.S. ANNOUNCES SETTLEMENT AGAINST CHICAGO OWNERS AND MANAGEMENT COMPANIES

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) and the U.S. Environmental Protection Agency (EPA) today announced a settlement with Wilmette Real Estate and Management Company, LLC; WR Property Management, LLC; 14 affiliated limited liability companies and Mr. Cameel Halim in Chicago and Evanston, Illinois.

HUD Secretary Makes Case for Mortgage Write-Downs

Bloomberg News
HUD Secretary Shaun Donovan at a Senate hearing in February.

The regulator for Fannie Mae and Freddie Mac could have a “legal responsibility” to approve loan modifications for certain homeowners now that the U.S. Treasury has offered to share in the cost of mortgage write-downs, said Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development.

Mr. Donovan made the comments in an interview taped Friday for C-SPAN’s “Newsmakers” program. He said that he was increasingly worried that given the severity of the collapse in home prices and the slow pace of recovery in certain housing markets, that some homeowners who owe far more than their homes are worth would conclude “there is really no light at the end of the tunnel” and ultimately default on their mortgage.

In certain hard-hit markets, families struggling to make payments “will give up at some point. We think the data shows that.” The administration’s analysis of various housing markets makes a “compelling” case for principal write-downs, he added.

But at the same time, Mr. Donovan downplayed concerns that borrowers who are deeply underwater but able to pay their loans would similarly default in order to receive debt reduction. “The vast majority of homeowners don’t operate that way,” he said.

Edward DeMarco, the acting director of the Federal Housing Finance Agency, has so far resisted principal forgiveness, arguing that other means of reducing payments are just as successful with fewer costs for taxpayers that are backing the mortgage giants.

One concern for that regulator is whether debt forgiveness would encourage more borrowers who are current on their loans to stop paying. Right now, about three in four loans backed by Fannie and Freddie that are heavily underwater are still making regular payments. “These borrowers are demonstrating a continued willingness to meet their mortgage obligations. This should be recognized and encouraged, not dampened with incentives for people to not continue paying,” said Mr. DeMarco in a speech this past week.

Mr. Donovan said for those cases where borrowers might strategically default, there are ways to carefully design a program “to ensure that it doesn’t become a real issue.”

The Obama administration in January offered to subsidize the write-downs, undercutting the position of Mr. DeMarco, who has promised to give an answer to the administration later this month.

Mr. Donovan said that his experience with Mr. DeMarco suggested that the regulator would make an impartial decision. “What he is focused on, independent of whatever his personal views may be, is what is his legal responsibility and what does the analysis say.”

Mr. Donovan also said he wouldn’t “prejudge” what the administration would do if Mr. DeMarco chose not to allow the firms to participate. If that happens, “we’re going to have to look at that analysis and understand what his concerns are,” he said.

Several Democratic lawmakers and political groups have called on the Obama administration to fire Mr. DeMarco over his resistance to debt forgiveness, but Republicans say that write-downs amount to transfers of taxpayer wealth. Economists on both sides of the issue have offered research highlighting the benefits and drawbacks of debt forgiveness.

In the interview, Mr. Donovan said that the ultimate success of the Obama administration’s housing policies would be determined by the future path of home prices and “whether the average American once again has faith that buying a home is something that is a safe investment in the long term.”

The housing secretary pointed to recent signs of improved home sales during the winter months, but home prices have been falling during the winter months. “Ultimately, the final measure of whether we’ve broken through and we’re in full recovery is when housing prices across the board start rising in a consistent way,” he said.

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OBAMA ADMINISTRATION RELEASES MARCH HOUSING SCORECARD

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the March edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the March Housing Scorecard show some promising signs of stability, though the overall outlook remains mixed. Mortgage delinquencies continued a downward trend and were substantially below year ago levels, while sales of existing homes in January and February marked the strongest start to a year since 2007. However, data on home prices changed little from the previous month – marking a fifth month of seasonal lows. The full report is available online at www.hud.gov/scorecard.

HUD, CITY OF LONG BEACH SIGN $3.7 MILLION AGREEMENT THAT WILL CREATE JOBS, CONTRACTING OPPORTUNITIES

WASHINGTON – The U.S. Department of Housing and Urban Development announced today that it has signed a $3.7 million agreement with the city of Long Beach, CA, that will help to create job opportunities for low-income residents and contracting opportunities for the businesses that hire them. The agreement was reached after a HUD review determined that the city’s Section 3 implementation plan was inadequate.