HUD AWARDS $3.6 MILLION IN CHOICE NEIGHBORHOODS PLANNING GRANTS

WASHINGTON – U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan announced today that 13 communities across the U.S. will receive $3.6 million in Choice Neighborhoods Planning Grants. (See attached list (PDF)and project summary for this all of the grantees (PDF).)

OBAMA ADMINISTRATION RELEASES DECEMBER HOUSING SCORECARD

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the December edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the December Housing Scorecard show some subtle improvements in the market over the past year, but underscore fragility as the overall outlook remains mixed. For example, new and existing home sales rose compared to the prior month and remain higher than a year ago, and homes are more affordable than they have been since 1971. Median-income families today have nearly double the funds needed to cover the cost of the average home. However, home prices showed a slight dip from the prior month and remain below year ago levels. The full report is available online at www.hud.gov/scorecard.

Oregon Joins Servicer Settlement

The Attorney General of Oregon announced
today that he will join in the so-called 50-state Attorneys General settlement
with five major financial institutions that operate the large servicing
organizations.  The settlement arose out
of a multi-state investigation of alleged improprieties the servicers’
management of delinquent loans and foreclosures. 

Attorney General John Kroger said in a
prepared statement that “The Oregon Department of Justice is deeply committed
to protecting consumers.  In assessing
any potential consumer protection settlement I compare the benefits of the
settlement with potential benefits that might accrue in the future if we chose
to litigate rather than settle.  I have
made that assessment in this case, and I am confident that signing this
agreement is in the best interest of Oregon consumers.”

Several attorneys general have remained
in settlement talks while pursuing litigation on their own while at least one, California’s
Kamala Harris, withdrew from the settlement saying it provided inadequate
redress to the homeowners of her state. 

Kroger said that the settlement
agreement penalizes banks which engaged in wrongful practices and brings badly
needed relief for homeowners.  However,
because the release in the agreement is narrowly drafted, Oregon will be able
to pursue both multi-state and independent investigations of illegal
securitization and other practices.  “Simply
put,” he said, “I am not confident we could get a better agreement on this
limited set of issues if we litigated for several more years.”

The Attorney General said further
information on the agreement would be forthcoming but he released the following
highlights:

  • An estimated $30 million to the State of Oregon.
  • An estimated $100 to $200 million in relief to
    distressed Oregon homeowners including “underwater” borrowers
    and homeowners facing foreclosure.
  • Tough new servicing standards that protect all
    homeowners from unfair and unscrupulous servicing practices.

The agreement is not final and must
be submitted to a federal judge for approval.

…(read more)

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HUD AWARDS $20 MILLION IN TECHNICAL ASSISTANCE TO HELP LOCAL COMMUNITIES STABILIZE NEIGHBORHOODS HARD-HIT BY FORECLOSURE

WASHINGTON – The U.S. Department of Housing and Urban Development today awarded $20 million in technical assistance funding to 12 organizations that will, in turn, help local communities across this country stabilize neighborhoods hard-hit by foreclosure through HUD’s Neighborhood Stabilization Program (NSP).

HAMP Changes: Treasury Increases Incentives for Principal Reduction

The Federal Housing Finance Agency announced on Friday that it was extending
the Home Affordable Modification Program (HAMP) for another year – through December
13, 2013 – and that Freddie Mac and Fannie Mae would continue as financial
agents for Treasury in implementing the changes it then announced.  The press release also said the two GSEs
would “extend their use of HAMP Tier 1 as the first modification option through
2013” and that they were already in alignment with HAMP Tier 2 and no further
changes were necessary.

However, the Treasury Department, which jointly
administers HAMP, simultaneously announced what appear to be some significant
changes in the program.  Perhaps Timothy G. Massad, Assistant Treasury Secretary
for Financial Stability, was merely providing the English translation of
the FHFA press release or perhaps there is a division in the ranks.  In either case, here is the information he
provided in his blog posting.
 

The Treasury Department intends to triple the incentives offered to
investors holding distressed loans to encourage them to participate in reducing
the principal for those loans.  Under the
new guidelines, Treasury will pay from 18 to 63 cents on the dollar to
investors, depending on the degree of change in the loan-to-value ratio of the
individual loans.

While principal reduction has always been
available for modifying proprietary loans under the HAMP program (it even has
its own acronym, PRA) it has not been widely used.  Of over 900,000 permanent modifications
completed since the program began, only 38,300 are classified as utilizing principal
reduction

As we have previously reported,
FHFA has resisted all suggestions that the GSEs also include principal reduction
in their tools for dealing with distressed loans where borrowers are upside
down in their mortgages.  According to
Massad, Treasury has notified FHFA that it will pay principal reduction incentives
to Fannie Mae or Freddie Mac as well if they allow servicers to forgive principal
in conjunction with a HAMP modification. 

In its press release FHFA said of the
Treasury proposal

“FHFA has
been asked to consider the newly available HAMP incentives for principal
reduction. FHFA recently released analysis concluding that principal
forgiveness did not provide benefits that were greater than principal
forbearance as a loss mitigation tool. FHFA’s assessment of the investor
incentives now being offered will follow its previous analysis, including
consideration of the eligible universe, operational costs to implement such
changes, and potential borrower incentive effects.”

Again,
according to Treasury, HAMP will be expanding its eligibility to reach a
broader pool of borrowers.  An additional
evaluation process is being implemented that will allow servicers to recognize that
some borrowers who can afford their first mortgage payments still struggle because
of other debt.  Some analyses of HAMP
have found that many borrowers could not qualify for a modification solely because
their housing expenses were already below the 31 percent ceiling allowed by
HAMP guidelines.  This ceiling will now
be flexible enough to include secondary debt such as medical expenses or second
liens in the evaluation ratio. 

Eligibility
will also be expanded to include properties that are tenant-occupied as well as
vacant properties that the owner intends to rent.  According to Massad, this will serve to
further stabilize communities with high levels of vacant and foreclosed
properties as well as expanding the rental pool as has been suggested by the
Federal Reserve and others.

…(read more)

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