Sanford to take stimulus but adds strings to the deal
2009/04/06, 2:15 pm
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COLUMBIA — Gov. Mark Sanford said Friday he would accept the $700 million in federal stimulus money but would not release it unless the General Assembly agrees to pay down debt with state tax dollars.

He said he was accepting the money to stop other states from claiming the funds. Sanford has come under fire from both Republicans and Democrats, as well as from the public, for his stance against accepting the money. He had until midnight Friday to accept the funds.

House Speaker Bobby Harrell blasted Sanford on Thursday for refusing to accept the disputed funds, saying the Republican chief executive will have “shirked his responsibility to the taxpayers” if he fails to act.

“We are at the eleventh hour of this debate,” said Harrell, the Republican House leader. “It’s time for the nonsense to stop and for the governor to request the funds our citizens will have to pay back anyway.”

On Thursday, Sanford held another news conference with several state Senate allies, and they accused the governor’s critics of distorting the fiscal and employment impact of refusing the federal aid intended to help states through the recession.

Sanford continues to urge lawmakers to compromise and spend an equivalent amount of state-generated dollars to reduce debt if he agrees to accept the federal assistance. So far, legislators have refused such a deal.

Harrell has joined a chorus of Republicans calling for him to relent and take the money, including U.S. Sen. Lindsey Graham and Senate Finance Committee Chairman Hugh Leatherman. The Senate has resorted to drafting two alternative budgets, including one that includes draconian cuts in state workers and teachers.

Sanford spokesman Joel Sawyer said legislators — and specifically Leatherman — are using “scare tactics” to make the budget look worse than it might if the budget writers did not “leave money off the table.”

“The governor is willing to accept the stimulus money if an equal amount of state funds are spent to reduce debt,” Sawyer said.

The Wall Street Journal, in an article published Thursday, described Sanford and his position on this issue as “isolated” from Republicans who have supported him in the past. On Wednesday, hundreds of students, teachers and others rallied at the Statehouse in Columbia to protest the governor’s stance on taking the money, which they said could save hundreds of public employees’ jobs.

Harrell repeated his stance and that of others — that S.C. taxpayers will have to repay the money along with the taxpayers of the rest of the nation, so Sanford should take the money and use it to the state’s benefit.

“Because this plan became law, South Carolinians will have to repay this money whether we accept it or not,” Harrell said. “That is why it is so difficult to understand the governor’s rationale for requesting millions in energy efficiency money while rejecting money for teachers and law enforcement officers.

Harrell said the “most disturbing” part of Sanford’s news conference Thursday, however, came during discussion of jobs and unemployment.

Published April 6, 2009


NAR endorses Obama’s recovery plan
2009/02/25, 7:02 pm
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THE NATIONAL ASSOCIATION OF REALTORS® expressed support of President Obama’s broadened focus of the nation’s economic recovery that stresses housing stability and making health care an important component of his economic revitalization strategy, in addition to “restarting lending” and preventing foreclosures.

“We fully agree with President Obama’s emphasis that housing is the backbone of our national economy,” said NAR President Charles McMillan. “As he said, when a family buys a home, workers are hired to build it. Those workers spend money and open businesses. As a result, investors return. In short, housing is the key to revitalizing America and we pledge to work with him to help jumpstart our economy.”

Initial steps taken by the Obama administration and the 111th Congress to begin stabilizing the housing market meet many of NAR’s policy recommendations. NAR called for lowering interest rates, reducing preventable foreclosures and reinstating the higher loan limits for FHA, Fannie Mae and Freddie Mac. In addition, NAR was the leading advocate for increasing and improving the home buyer tax credit.

“All of these measures will help stabilize housing values and allow the housing market to begin to strengthen and the economy to begin to heal. This will improve communities and create jobs,” McMillan says.

NAR has long advocated providing health insurance to millions of Americans. “Health care for small businesses and the self employed has been a high priority for NAR and one that we hope will be fully addressed by the president and administration this year. Small businesses provide millions of jobs and are the engines behind the U.S. economy,” adds McMillan.

Although much of the President’s and the country’s focus is on the nation’s financial and housing markets, providing affordable health care to America’s working families should not be delayed any longer. Nearly 30 percent of NAR’s members are without health care insurance and the primary reason given is cost.

“We are eager to work with President Obama and the Congress to help rectify the health care situation while continuing to address the need to help people avoid foreclosures and stay in their homes,” McMillan said.


Play by Play of Obama’s stimulus speech
2009/02/19, 8:33 pm
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Here’s a play-by-play of the speech:
This is a “crisis unlike any we’ve ever known.” Families can’t afford to leave, but can’t afford to stay.

6 million homes in foreclosure or at risk of foreclosure across the US.
Study in Chicago found that a foreclosed home reduces the price of nearby homes by as much as 9%
Costs associated to local government for a foreclosure can be up to $20,000
Created a credit crisis – we all pay a price.
Plan will help between 7-9M families restructure&refinance their mortgages to avoid foreclosure. It helps them, and their neighbors by preserving neighborhood home prices.

Here’s how the plan will work:
1. Make it possible for 4-5M Freddie Mac&Fannie Mae loan holders to:

refinance at lower rates
changes the policy that Fannie and Freddie are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home’s worth
enable families with higher loan rates who may be underwater to refinance
Although Fannie & Freddie would take in less money from loans, they would lose less due to foreclosures
2. Create new incentives so that lenders can work with borrowers to modify the terms of sub-prime loans at risk of default and foreclosure

sub-prime loans are only 12% of all mortgages, but about 50% of all foreclosures.
establishes clear guidelines for mortgage industry that will encourage lenders to modify mortgages on primary residences
lenders wanting to receive financial assistance from the government and modify home mortgages must meet these guidelines, which will be in place by March 4
reduced payments must be no more than 31% of homeowner’s income
3. Take major steps to keep mortgage rates low for millions of middle-class families looking to secure new mortgages

Treasury and Federal Reserve will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to ensure stability and liquidity.
Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down
will also work with state housing finance authorities
4. Pursue wide range of reforms to help families stay in home

Continue support reforming our bankruptcy rules to allow judges to reduce home mortgages on primary residences to their fair market value, as long as borrowers pay their debts accordingly
As part of the stimulus plan, award $2 billion in competitive grants to communities bringing people together and testing new and innovative ways to prevent foreclosures.

Banks halt foreclosures
2009/02/16, 5:06 pm
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By Alan Zibel, AP Real Estate Writer
WASHINGTON — The biggest players in the mortgage industry are halting home foreclosures while the Obama administration develops its plan to help struggling homeowners.
The White House said Friday that President Barack Obama will outline his much-anticipated plan to spend at least $50 billion to prevent foreclosures in a speech Wednesday in Arizona, one of the states hardest hit by the foreclosure crisis.

“It’s not intended to be measured by one day’s market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on, and the millions more that are barely getting by, are protected,” White House press secretary Robert Gibbs said Friday without providing other details.

Treasury Secretary Timothy Geithner announced a revised effort to stabilize the financial system on Monday. It contained outlines of a foreclosure-relief effort, but few details.

Though lenders have beefed up their efforts to aid borrowers over the past year, their action hasn’t kept up with the worst housing recession in decades.

More than 2.3 million homeowners faced foreclosure proceedings last year, an 81% increase from 2007, and analysts say that number could soar as high as 10 million in the coming years, depending on the severity of the recession.

JPMorgan Chase, Morgan Stanley and Bank of America said Friday they are halting foreclosures through March 6. And Citigroup said its halt will extend until the administration has completed the details of the loan modification program or March 12, whichever is earlier. Citi’s action expands on a similar effort that it started in November.

The banks’ pledges apply to owner-occupied homes, not those owned by investors.

Fannie Mae said it was suspending all foreclosure sales and evictions for occupied properties, while Freddie Mac said its suspension would apply to properties with up to four units and noted that the ban would not apply to vacant properties.

Both Fannie and Freddie had suspended foreclosure sales during the winter holidays and halted evictions from foreclosed properties through the end of this month. Together, they own or guarantee around half of U.S. home loans.

Obama’s announcement next week is expected to include details about how the administration plans to prod the mortgage industry to do a better job of modifying the terms of home loans so borrowers have lower monthly payments.

Testifying before House lawmakers this week, Geithner said the government would provide incentives to “try to induce economically sensible restructuring of mortgages,” but offered no specifics. A Treasury spokeswoman declined further comment Friday.

A Democratic Senate aide said the plan is likely to include hefty payments designed to encourage the lending industry to lower mortgage rates or reduce the total principal amount owed by borrowers. The idea has become attractive to Obama officials, the aide said Friday, because it is expected to be far less expensive than having the government buy up loans out of mortgage-linked securities.

It was unclear whether those government subsidies would be paid to companies that collect payments for mortgage investors up front, or whether they would stretch out over several years.

Howard Glaser, a mortgage industry consultant who served in the Clinton administration, said if 2 million borrowers’ payments were lowered by $500 a month, it would cost the government and lenders $6 billion each per year — assuming lenders match half the cost.

Unlike previous loan modification plans, borrowers would not have to be in default to qualify, according to people briefed on the plan.

Still, figuring out who would qualify would be a challenge, especially as foreclosures continue to soar. More than 274,000 U.S. households received at least one foreclosure-related notice last month, according to RealtyTrac, a foreclosure listing service.

Government-controlled mortgage finance companies Fannie Mae and Freddie Mac have developed systems to analyze millions of loans and determine which ones need to be modified. But to qualify for those programs, borrowers have to be at least three months behind on their home loans.

At the White House, Gibbs cautioned about the dangers of erroneous information leaking out about the foreclosure plan because he did not want to see “an unreasonable series of expectations based on leaks from God knows where.”

Still, the administration is widely expected to back a push in Congress — but opposed by the mortgage industry — to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it “makes no sense” that judges are not allowed to do so.

The hope is that, rather than being dragged into bankruptcy court, lenders would prefer to modify loans. The mortgage industry argues that this prohibition allows lenders to charge lower rates.

The top executives of Bank of America, and Citi announced their intention to halt foreclosures under questioning from House lawmakers on Wednesday.

Jamie Dimon, JPMorgan’s chief executive, detailed his plans in a letter to Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, who released it on Friday.

“We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages,” Dimon wrote.

Gibbs said he thought the banks’ action was “consistent with what the president believes is at least part of something that would be likely seen in a housing policy that protects the American people.”

Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month. And earlier this week, John Reich, director of the Office of Thrift Supervision, urged the more than 800 thrift institutions nationwide to do the same.

Associated Press Writers Ben Feller, Christopher S. Rugaber and Madlen Read contributed to this report.

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The new rules of mortgage lending
2009/02/11, 11:09 am
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Shopping for a home loan? Things have changed – here’s what you need to consider.


* Stocks set to bounce up
* Wal-Mart to cut jobs at headquarters
* Bernanke grilled by Congress
* Military recruitment surges as jobs disappear
* Fewer job openings, more layoffs
What do you think of Obama’s crackdown on bank CEO pay?

It will force banks to act more responsibly
It’s unwarranted interference in business
It will make no difference

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NEW YORK ( — If you’re shopping for a mortgage these days, it’s a whole new world out there.

“There have been a huge number of changes over the past few years in mortgage borrowing,” said Gibran Nicholas, founder of the CMPS Institute, which trains and certifies mortgage advisors.

Of course, many of the subprime loans that helped fuel the housing boom – those that didn’t require borrowers to show any proof of income, or that let homeowners make minimum payments – are are simply no longer available.

But even buyers looking for a traditional mortgage are now faced with different factors to consider.

Here is what you need to know:

Paying up-front points. Borrowers can pay points – one-time, up-front fees – in order to reduce their mortgage’s interest rate over the life of the loan. One point represents 1% of the mortgage value.

But they often assume that they should never pay points, according to Alan Rosenbaum, founder of mortgage broker Guardhill Financial. That’s a mistake, in his opinion.

When interest rates were high, paying points didn’t make sense because borrowers were very likely to refinance after rates dropped. They wouldn’t hold their original loans long enough to recoup their up-front costs.

But now borrowers can get a lot more bang for their buck. The old rule of thumb was that paying one point at closing could lower their mortgage’s interest rate by a quarter percentage point or so.

“Today the spread is worth a half point to a full point on the rate,” said Rosenbaum.

It means paying $2,000 on a $200,000 mortgage at closing can shave as much as a whole percentage point off the loan’s interest rate, changing a 6% loan to 5%.

That would save $126 a month, and pay for itself in 16 months. Even if the rate were only lowered to 5.5%, that would still save $64 a month, paying for itself in 32 months.

Still, not everyone is convinced. Rosenbaum recently had a client who chose a 15-year fixed rate loan at 5.875% with zero up-front points on a $800,000 loan, instead of paying a point to get a 5.375% loan.

Had the borrower chosen to pay that point, he would have recouped that cost in about three years, and then gone on to save more than $200 a month for the remaining 12 years of the loan.

Of course, there are caveats. Buyers who are planning to refinance or sell within a few years shouldn’t pay points, since the strategy simply doesn’t pay in the short term.

Making more than the minimum down payment. If you can afford to put 25%, 30% or more down, should you do it?

Most lenders require a minimum down payment of 20%; anything less and borrowers will need to obtain private mortgage insurance.

And if a buyer could afford to put more than 20% down, it was generally assumed that they should.

The traditional thinking was, “If you have the capital to commit, why not?” said Keith Gumbinger of mortgage research firm HSH Associates. “It will give you a smaller balance to pay off. But now, in light of declining home markets, not everyone would agree with that.”

High down payments can be wiped out in severely declining markets.

Nicholas said he knows of a couple in Arizona who put a whopping $400,000 down on a million dollar house a couple of years ago. That gave them, they thought, a nice home equity cushion should they run into financial trouble.

“But prices are down so much, the couple still fell underwater,” he said. “It would have been better to conserve that cash in case home prices continue to decline.”

Locking in the mortgage rate. Many borrowers choose not to lock in when rates are falling, as they have been, since they assume that the deals will only get better.

But that’s often a mistake.

“We almost always recommend that if you have the numbers that make your deal work, then lock it in,” said Gumbinger.

His reason: Interest rates tend to jump up much faster than they inch down, meaning that buyers are much more likely to get stuck with a higher mortgage rate than they are to get lower one because they waited.

Besides, locking in at the currently very affordable rates can give borrowers peace of mind, which is no small matter when you’re trying to buy a house.

“You’ll sleep better at night,” said Gumbinger. To top of page

2 out of 3 Americans support the $15,000 tax credit, polls say
2009/02/10, 1:39 am
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(News Source: NAHB)

Washington, DC–Two-thirds of Americans support a $15,000 home buyer tax credit now being considered by Congress as part of its economic stimulus package and believe it will be effective in stimulating home sales, according to results from a new nationwide survey.

“This survey reinforces our view that the $15,000 home buyer tax credit in the Senate stimulus package will successfully tackle the housing and economic crisis head-on,” said David Crowe, chief economist of the National Association of Home Builders (NAHB).

The national telephone survey was conducted by Voter Roll Call of Verona, N.J. on Feb. 8.

The survey of more than 1,200 registered voters found that one-third of all respondents and 61 percent of renters would be more likely to buy a home if the $15,000 home buyer tax credit were to be enacted into law.

“This is extremely significant because normally in any one year only about 5 to 7 percent of households purchase a home,” said Crowe. “This is more evidence that this temporary, timely and targeted tax credit would trigger home sales, end the free-fall in the housing market, generate new jobs and help lead the economy back to higher ground.”

In addition, 64 percent of respondents said it was important that the $15,000 home buyer tax credit be included in the final package that is signed into law.

The $15,000 home buyer tax credit will push folks off the fence the day the bill is enacted, helping to stop house price declines and bring confidence back to the housing market, added Crowe. “Congress must make sure that the full $15,000 tax credit remains in the final stimulus package.”

Stimulus: Senate’s housing hopes
2009/02/03, 3:25 am
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Lower mortgage rates, a foreclosure moratorium and more attractive tax credits to spur home buying are among the contenders for amendments to recovery bill.

By Jeanne Sahadi, senior writer
February 1, 2009: 5:41 PM ET

NEW YORK ( — As the economic stimulus package moves to the Senate, the drumbeat is growing louder for new provisions that directly address the housing crisis.

Key senators from both parties said they will push for measures intended to spur sales and help homeowners at risk of foreclosure.

“We need to go right at the housing problem. That’s what started all of this,” Senate minority leader Mitch McConnell, R-Ky., told CNN.

The Senate floor debate is set to begin on Monday. Here are three ideas likely to show up in amendments:

Create a 4% mortgage: Senate Republicans are likely to introduce a provision that would encourage lenders to offer a 30-year fixed rate mortgage at 4% for a limited period of time. The loans would only be available to credit-worthy home buyers and homeowners seeking to refinance.

The government would guarantee the loan for a number of years, an aide to McConnell told

Senate Republican Conference Chairman Lamar Alexander, R-Tenn., said on the Senate floor Friday that the measure could involve not only a government guarantee but a subsidy as well.

“If today’s prevailing rate were 5.2 or 5.3 percent … the government would make up the difference.”

The cost of such a provision hasn’t been determined yet, but the aide said Senate Republicans would seek to structure the proposal in a fiscally responsible way, without specifying exactly what that meant.

Offering government-backed low-rate mortgages “could be very popular politically as it tries to fix the banks by fixing consumers,” financial services analyst Jaret Seiberg of the Stanford Group wrote in a research note.

But using government funds to force rates lower “could be very expensive,” Seiberg said.

And as mortgage rates rise, which they have in recent weeks, such a proposal could grow even more expensive.

Expand home buyer credit: Senate Budget Committee Chairman Kent Conrad, D-N.D., said last week he would propose an expansion of a temporary $7,500 first-time home buyer credit so that it applies to all purchases of primary residences.

Some Republican senators have called for an increase in the credit to $15,000.

On “Face the Nation,” Sen. Charles Schumer, D-N.Y., said Sunday that lawmakers “can do more for housing.” The proposal to increase the home buyer credit to $15,000 and make it available to all home buyers is “something that we look favorably upon,” he said.

The Senate recovery package as it stands now removes the requirement under current law that the credit be repaid by buyers over time, assuming they don’t sell their home for three years after claiming the credit.

The credit phases out for individuals making more than $75,000 ($150,000 for joint filers).

Hold off on foreclosures: Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters last week that he would like a provision in the stimulus package that would impose a 90-day moratorium on foreclosures. Dodd may consider other housing measures as well.

Postponing a foreclosure for three months might allow some troubled borrowers to keep their homes by buying them time to work out a new loan agreement with their mortgage servicer.

Obama housing proposals on deck

Advocacy in the Senate for more housing measures in the stimulus bill comes while President Obama is expected to release a comprehensive plan to fix the financial system within the next two weeks.

Obama has been promising for the past month that he would soon propose a foreclosure prevention program, and many believe that could be part of a plan he announces in the coming week. Indeed, he said Saturday that his plan will include a proposal to lower mortgage costs.

Last month, Obama’s economic team promised lawmakers they would use $50 billion to $100 billion of the remaining money from the Troubled Asset Relief Program to prevent foreclosures.

Whether the housing measures proposed by Republicans on the Senate floor are intended to be in addition to Obama’s proposals or as replacements isn’t clear yet.

One of the ideas likely to influence Obama’s plan is a loan modification program put forth by FDIC Chairman Sheila Bair that has garnered support from lawmakers. That plan would require that lenders reduce housing payments for delinquent borrowers to 31% of gross monthly income.

Lenders could achieve that by lowering mortgage rates to as low as 3% for five years, before increasing at an annual rate of 1 percentage point until they hit the prevailing market rate. Loan terms could be extended as long as 40 years.

In exchange, Bair proposed the government would share up to 50% of the losses if a borrower who gets a modified loan ends up defaulting anyway. And it would help foot some of the servicers’ loan modification costs. To top of page

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