MAURICE JONES SWORN IN AS HUD’S DEPUTY SECRETARY

WASHINGTON – The U.S. Department of Housing and Urban Development announced today that it has reached settlement agreements with Magna Bank in Nashville, TN, and Home Loan Center, Inc., in Irvine, CA, resolving allegations that the two lenders denied mortgage loans to women because they were pregnant and temporarily on maternity leave. HUD is announcing the discrimination settlements as part of its annual Fair Housing Month commemoration kick-off.

March Housing Starts Down 5.8%; Permits Up 4.5%

The U.S. Census Bureau and Department of Housing and Urban Development (HUD) reported this morning that permits for privately owned housing construction were issued at a seasonally adjusted annual rate of 747,000 units in March.  This is an increase of 4.5 percent from the revised February rate of 715,000 and a 30.1 percent jump from the 574,000 pace set in March 2011.  February’s permits were originally estimated at 717,000.

Permits were issued for single family homes at a rate of 462,000, down 3.5 percent from the upwardly revised (from 472,000) February figure of 479.000.  Construction was authorized for 262,000 units in buildings of five or more units, an increase of 24.2 percent from the previous month.  The multi-family permitting rate was originally thought to have surged in February to 233,000 units from 212,000 in January; instead the revised rate of 211,000 was a net loss from the previous month.

Housing starts in March were at a seasonally adjusted annual rate of 654,000, a 5.8 percent decrease from the revised February estimate of 694,000 but 10 percent above the March 2011 rate of 593,000.  The February number was revised down from an original estimate of 698,000.

The pace of single family starts was down 0.2 percent from February to 462,000 and the start rate for units in buildings with five units or more was 178,000 compared to 222,000 in February.  Single family starts for February, originally estimated at 457,000 were revised up to 463,000.

Housing units were completed at a rate of 600,000, 4.3 percent above the revised February figure of 576,000 and 0.5 percent higher than the rate of 597,000 one year earlier.  Single family completions were at a rate of 440,000, 1.4 percent higher than the February pace of 434,000.

At the end of the period there were 88,400 permits issued for which construction had not yet begun compared to 79,000 the month before.  Of this number 46,700 permits were for single family houses, up from 44,200.  An estimated 447,000 homes are under construction compared to 445,000 in February and 420,000 one year ago.

Here are the results on a regional basis.

 

Region

 

March Permits

% chg.

Feb -Mar

% chg. Mar ’11 – Mar. ’12

 

Mar. Starts

% chg.

Feb – Mar

% chg. Mar ’11 – Mar ’12

Northeast

79,000

-6.0

31.7

89,000

32.8

45.9

Midwest

121,000

1.7

28.7

102,000

1.0

25.9

South

368,000

0.3

24.3

334,000

-15.9

-0.9

West

179,000

23.4

44.4

129,000

0.0

13.2

…(read more)

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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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