TOPIC: Federal Housing Administration

Name that loan modification program: government must do more to market mortgage aid

Four years after the housing bubble burst, all levels of government are getting their bearings in addressing the foreclosure crisis. A mix of programs are either being started or revived that might actually address specific payment problems homeowners face.

Illinois announced on Friday that it will use $100 million in federal money to start a Mortgage Resolution Fund, where a public-private partnership will buy “underwater mortgages” — those where delinquent payments are worth more than the mortgage itself — from homeowners in the Chicago area. (more…)

Wells Fargo and foreclosures: There really is no place like home

Underwater homeowners facing foreclosure despite promises of federal aid disrupted a  meeting of Wells Fargo Bank shareholders in San Francisco yesterday, reports Aaron Glantz of The Bay Citizen.

Demonstrators called on the firm, a recipient of emergency taxpayer aid during the financial crisis, to institute a foreclosure moratorium. Eight were eventually arrested after refusing to leave the building. (more…)

Michelle Bachmann might be right

Few politicians are as polarizing as Minnesota U.S. Rep. Michelle Bachmann. So it’s no surprise that Democrats are going after her vote to defund TARP’s Home Affordable Modification Program, reports Andy Birkey of the Minnesota Independent. But Bachmann is doing nothing different than her Republican colleagues who already voted to terminate a Federal Housing Administration foreclosure prevention measure and who have spoken in favor of eliminating all such Obama programs.

Another thing:  Bachmann has a point. Even progressives readily admit that HAMP is a failure that has yet to gain momentum. Democrats who support of foreclosure prevention programs should propose an alternative plan of action than defend the current menu of policies.

On Fannie and Freddie dividends, it’s hard to understand government

Let’s say I owe you $100.  I’ve agreed to pay you back $10 a month for ten months.  But I actually only have enough cash on hand to pay you $5 per month.  If I pay you back $10 per month, I’m going to end up in the red and won’t be able to pay you anything. So, in this situation, would you lend me $5 a month to enable me to pay you the full $10 per month?  Probably not, right?  You’d say “OK, pay me back $5 per month and we’ll extend the term, so you pay me back over 20 months.”  Either that, or you’d ask for a lien (say on my car).  Or you would charge me interest, so that my $5 per month ended up making you a little money even though I was taking longer to pay it back.  Or, time being money, you’d send a couple of guys over to explain your point of view in a way that I would understand.  And I would find the money to pay you back the $10 every month.

Now, take that story and imagine that you’re the government, and I’m Fannie Mae and Freddie Mac, the quasi-private home mortgage lenders.  (more…)

Monday wake-up call: Angelides commission finds regulatory agencies inert in face of bank fraud

Gretchen Morgenson of the New York Times brings a cohesive and pointed review of the Financial Crisis Inquiry Commission’s report issued last week (number 46 today on Amazon’s best-seller list).  Not to depress you on a Monday morning, but Morgenson says the 576-page behemoth

makes for compelling reading because so little has changed as a result of the debacle, in both banking and its regulation.

She’s alarmed that the Federal Reserve, “defiantly inert and uninterested in reining in the mortgage mania,” now has even more power to regulate banks and their often-risky practices.  (more…)

Principles lacking in a matter of principal

More than two years after the housing market began its epic collapse, plans to help homeowners left underwater by declining values and loans they can no longer afford are on the way . . . or are they?

Meant to bail out strapped homeowners, a federal-state program aimed at enticing bankers to forgive some of the principal owed on homes is proving a difficult sell to mortgage servicers. So far, only one major financial institution, Bank of America, has agreed in theory to participate in a key provision: reducing loan principal for mortgage holders. (more…)

Meanwhile, foreclosures skyrocket

In the same week that Cook County Sheriff Tom Dart put a freeze on Chicago region foreclosure evictions, new data shows that Chicago’s foreclosure crisis is worse than ever. The Chicago Tribune’s Mary Ellen Podmolik relays a Woodstock Institute study that there was a 44.9 percent increase in completed foreclosures in the Chicago region between the 3rd quarter of 2009 and 3rd quarter of 2010. In the six-county Chicagoland area, there was a 28 percent increase in new foreclosure filings the past year.

If that data is not upsetting enough, listen to this. (more…)

Federal-state tensions over energy efficiency loan program

The tangled web of federal financing that was lashed together to help fund homeowners’ energy efficiency projects has unraveled quite quickly.

Robert Selna of the San Francisco Chronicle reports that the California Energy Commission is pulling the plug on $30 million set aside for the now in-limbo Property Assessed Clean Energy program or PACE. This, after state officials, including Governor Arnold Schwarzenegger asked federal officials (more…)

All-nighters for California mortgage brokers

California mortgage brokers have a little over a week to pass criminal background and credit checks as well as a licensing exam as the state becomes one of the first to adopt new federal regulations, according to John Gittelsohn of Bloomberg.

California is one of the 20 or so U.S. states that currently lack any licensing program for mortgage brokers. (more…)