Help for homeowners

The President’s strategy for economic recovery is a stool with several legs, as he’s said, and one of them is solving the foreclosure crisis.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," he said yesterday as he signed the American Recovery and Reinvestment Act into law.

Though communities across the country have been affected by the crisis, Arizona has been hit particularly hard -- in 2008, only two states had more foreclosures.

And President Obama is there today, in Phoenix, to unveil his "Homeowner Affordability and Stability Plan," which will help bring relief to homeowners and bring some order to the housing market.

The President will talk more about his plan a little later today. In the meantime, we’re sure you have a lot of questions, like, Am I eligible for assistance? Might I be able to modify my loan? When do I apply? We've put together an example sheet that will show you what options might be available to you, depending on the circumstances of your mortgage, as well as answers to some common questions (below).

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

• What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan.   Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

• I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property.   For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify.  The current value of your property will be determined after you apply to refinance.

• How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts.  The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history.  The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

• I have both a first and a second mortgage.  Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan.  Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage. 

• Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan.  Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments.  Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate.  These borrowers, however, could save a great deal over the life of the loan.  When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan.  Compare this to your current loan terms.  If it is not an improvement, a refinancing may not be right for you.

• What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment.  All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate.  The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender.  Interest rates may vary across lenders and over time as market rates adjust.  The refinanced loans will have no prepayment penalties or balloon notes.  

• Will refinancing reduce the amount that I owe on my loan?

No.  The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans.  Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe.  However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

• How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

• When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.   

• What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available.  This includes:

• information about the gross monthly income of all borrowers,  including your most recent pay stubs if you receive them or documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying balances from month to month, and
• payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

• What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current.  By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

• Do I need to be behind on my mortgage payments to be eligible for a modification? 

No.  Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default.  This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.   

• How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits.  Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

•  I do not live in the house that secures the mortgage I’d like to modify.  Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No.  For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible.  If you used to live in the home but you moved out, the mortgage is not eligible.  Only the mortgage on your primary residence is eligible.  The mortgage lender will check to see if the dwelling is your primary residence.

• I have a mortgage on a duplex.  I live in one unit and rent the other.  Will I still be eligible?

Yes.  Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

• I have two mortgages.   Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

• I owe more than my house is worth.  Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford.  Lenders are likely to lower payments mainly by reducing loan interest rates.  However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

• I heard the government was providing a financial incentive to borrowers.  Is that true?

Yes.  To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan.   The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt.  Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

• How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan.  If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee.  Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance. 

• Is my lender required to modify my loan?

No.  Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis.  But the government is offering substantial incentives and it is expected that most major lenders will participate.

• I'm already working with my lender / housing counselor on a loan workout.  Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

• How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time.  Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria.  After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks.   If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor.  Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

• What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available.  This includes

• information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying balances from month to month, and
• payments on other loans such as student loans and car loans.


• My loan is scheduled for foreclosure soon.  What should I do?

Contact your mortgage servicer or credit counselor.  Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility.  We support this effort.

        

Protecting Homeowners, Protecting the Economy

        

Change-sorting

Posted by David O. Washington, Ph.D, Associate Director, White House Office of Public Engagement

One part of our job in the Office of Public Engagement is to help the public, and the groups that represent their interests navigate and engage with the right areas of their government. We help them navigate the Administration and its branches in order to help find the folks here who can shine light on their questions, comments and suggestions.

Surprising to me, when I shared that's what I do with the Americans I’ve interacted with since I started in my new role here at the Office of Public Engagement, they seemed surprised. It’s almost as though they don’t realize that in addition to serving at the pleasure of the President, we also serve at the pleasure of the American people –or more accurately we *work for* the American people.

A good friend from junior high was trying to describe this function of our department to another friend and he said "…it’s kinda like those old school change-sorters from the 80’s. The ones you could dump in all your pennies, nickels, dimes, and quarters and the machine would sort them out into the right cylinder. It sounds like your office does that… but with requests and phone-calls and letters and more importantly the big issues facing everyday Americans… they ask you for help and you get ‘em to the right person." In some ways it’s perfectly right…

I guess that’s why I love it here so much. I’ve always loved being a dot connecter and here that’s part of my job as the public/private partnerships lead for our office: to help Americans from across the country not only connect the dots to their government, but also… and here is the best part… in the process, we help to shape the way our government works and do our best to make the lives of Americans, that much better.

Every day is a new adventure, a lesson learned, and a blessing to serve the President.

        

STATE & LOCAL GOVERNMENT

Most Americans have more daily contact with their state and local governments than with the federal government. Police departments, libraries, and schools — not to mention driver's licenses and parking tickets — usually fall under the oversight of state and local governments. Each state has its own written constitution, and these documents are often far more elaborate than their federal counterpart. The Alabama Constitution, for example, contains 310,296 words — more than 40 times as many as the U.S. Constitution.

State Government

Under the Tenth Amendment to the U.S. Constitution, all powers not granted to the federal government are reserved for the states and the people. All state governments are modeled after the federal government and consist of three branches: executive, legislative, and judicial. The U.S. Constitution mandates that all states uphold a "republican form" of government, although the three-branch structure is not required.

Executive Branch
In every state, the executive branch is headed by a governor who is directly elected by the people. In most states, the other leaders in the executive branch are also directly elected, including the lieutenant governor, the attorney general, the secretary of state, and auditors and commissioners. States reserve the right to organize in any way, so they often vary greatly with regard to executive structure. No two state executive organizations are identical.

Legislative Branch
All 50 states have legislatures made up of elected representatives, who consider matters brought forth by the governor or introduced by its members to create legislation that becomes law. The legislature also approves a state's budget and initiates tax legislation and articles of impeachment. The latter is part of a system of checks and balances among the three branches of government that mirrors the federal system and prevents any branch from abusing its power.

Except for one state, Nebraska, all states have a bicameral legislature made up of two chambers: a smaller upper house and a larger lower house. Together the two chambers make state laws and fulfill other governing responsibilities. (Nebraska is the lone state that has just one chamber in its legislature.) The smaller upper chamber is always called the Senate, and its members generally serve longer terms, usually four years. The larger lower chamber is most often called the House of Representatives, but some states call it the Assembly or the House of Delegates. Its members usually serve shorter terms, often two years.

Judicial Branch
State judicial branches are usually led by the state supreme court, which hears appeals from lower-level state courts. Court structures and judicial appointments/elections are determined either by legislation or the state constitution. The Supreme Court focuses on correcting errors made in lower courts and therefore holds no trials. Rulings made in state supreme courts are normally binding; however, when questions are raised regarding consistency with the U.S. Constitution, matters may be appealed directly to the United States Supreme Court.

Local Government

Local governments generally include two tiers: counties, also known as boroughs in Alaska and parishes in Louisiana, and municipalities, or cities/towns. In some states, counties are divided into townships. Municipalities can be structured in many ways, as defined by state constitutions, and are called, variously, townships, villages, boroughs, cities, or towns. Various kinds of districts also provide functions in local government outside county or municipal boundaries, such as school districts or fire protection districts.

Municipal governments — those defined as cities, towns, boroughs (except in Alaska), villages, and townships — are generally organized around a population center and in most cases correspond to the geographical designations used by the United States Census Bureau for reporting of housing and population statistics. Municipalities vary greatly in size, from the millions of residents of New York City and Los Angeles to the 287 people who live in Jenkins, Minnesota.

Municipalities generally take responsibility for parks and recreation services, police and fire departments, housing services, emergency medical services, municipal courts, transportation services (including public transportation), and public works (streets, sewers, snow removal, signage, and so forth).

Whereas the federal government and state governments share power in countless ways, a local government must be granted power by the state. In general, mayors, city councils, and other governing bodies are directly elected by the people.

        

The Bureau of Public Affairs carries out the Secretary's mandate to help Americans understand the importance of foreign affairs. The Bureau is led by Assistant Secretary Sean McCormack, who also serves as Department spokesman. Robert Wood serves as Deputy Spokesman. 

The PA Bureau vigorously pursues the State Department's mission to inform the American people and to feed their concerns and comments back to the policymakers. It accomplishes this in a variety of ways, which include:

• Strategic and tactical planning to advance the Administration's priority foreign policy goals;
• Conducting press briefings for domestic and foreign press corps;
• Pursuing media outreach, enabling Americans everywhere to hear directly from key Department officials through local, regional and national media interviews;
• Managing the State Department's web site at state.gov and developing web pages with up-to-date information about U.S. foreign policy;
• Answering questions from the public about current foreign policy issues by phone, email, or letter;
• Arranging town meetings and scheduling speakers to visit communities to discuss U.S. foreign policy and why it is important to all Americans;
• Producing and coordinating audio-visual products and services in the U.S. and abroad for the public, the press, the Secretary of State, and Department bureaus and offices;
• Preparing historical studies on U.S. diplomacy and foreign affairs matters.

        

Washington, D.C., Sept. 21, 2008 — The U.S. Securities and Exchange Commission today approved amendments to its emergency order of September 18 (Release No. 58591) requiring that certain institutional money managers report their new short sales of certain publicly traded securities.

In addition to making technical amendments, the revised order also provides that the information disclosed by investment managers on new Form SH will be nonpublic initially, but will be made available to the public via the Commission’s EDGAR website two weeks after it is electronically filed with the Commission.

The amended order will take effect at 12:01 a.m. EDT on Monday, Sept. 22, 2008.

Under the order, covered institutional money managers will be required to report any new short selling in all equity securities, except options, that are admitted for trading on a national securities exchange or quoted on the automated quotation system of a registered securities association. If any new short sales are effected on September 22 through September 27, the managers are required to submit a report on new Form SH to the Commission on Sept. 29, 2008. These managers are already required to report their long positions in these securities on Form 13F.

The Commission may extend the emergency order beyond its current effective period of 10 business days if it deems an extension necessary in the public interest and for the protection of investors, but will not extend the order for more than 30 calendar days in total duration.

 

http://www.sec.gov/news/press/2008/2008-217.htm

        

President Bush has outlined decisive government action to preserve and sustain America's financial system and economy. This is a pivotal moment for America's economy. Problems that originated in the credit markets – and first showed up in the area of subprime mortgages – have spread throughout our financial system. As a result, the government is acting now to protect our Nation's economic health from serious risk.



http://www.foundmoney.com/moneybank/giveaway.html?asid=51&linkname=

        

Washington, D.C., Oct. 15, 2008 — The Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) today announced that the second annual CCOutreach BD National Seminar will be held on March 10, 2009, in Washington, D.C. The seminar helps provide a forum for discussion on effective compliance practices and timely compliance issues in ever-changing markets.

Similar to the CCOutreach National Seminar for chief compliance officers (CCOs) of investment advisers and investment companies, which will be held on Nov. 13, 2008, the CCOutreach BD National Seminar will help broker-dealer CCOs effectively communicate compliance risks, maintain compliance controls, and foster robust compliance programs within their firms, all for the benefit of investors.

SEC Chairman Christopher Cox said, "The CCOutreach BD program has proven invaluable in helping the SEC understand the needs and concerns of compliance officers. This National Seminar is an outstanding opportunity for broker-dealer CCOs and their regulators to discuss how to strengthen compliance with the securities laws. This two-way communication is focused directly on real-world problems. And it's built on the shared conviction that empowering CCOs to implement strong compliance programs within their firms will prevent securities laws violations and better serve investors."

FINRA CEO Mary L. Schapiro said, "FINRA is pleased to be partnering with the SEC to provide this unique opportunity for broker-dealer compliance chiefs to discuss priority topics directly with regulators. Given the current turmoil and uncertainty about financial markets and institutions, face-to-face meetings of this kind are more valuable than ever."

The SEC's Office of Compliance Inspections and Examinations (OCIE), in coordination with the SEC's Division of Trading and Markets, sponsor the CCOutreach BD program together with FINRA. The National Seminar will be held at the SEC's Washington, D.C., headquarters. Five CCOutreach BD regional seminars will be held in spring 2009, with dates and locations to be announced at the National Seminar.

Panelists at the CCOutreach BD National Seminar will include SEC and FINRA staff and CCOs from broker-dealer firms, and will feature relevant topics for broker-dealer CCOs (or senior compliance staff if CCOs cannot attend). The SEC and FINRA staff are requesting input from CCOs on topics to discuss in order to make the National Seminar a practical and informative experience. A list of potential topics is available for CCOs to make selections by Nov. 10, 2008.

There is no cost to attend the National Seminar, but attendance is limited to 500 with priority given to broker-dealer CCOs on a first-come, first-serve basis. Additional details about the CCOutreach BD program and the National Seminar are available on the SEC Web site and the FINRA Web site.

        

SEC's mandate during current crisis.

While other federal and state agencies are legally responsible for regulating mortgage lending and the credit markets, the SEC has taken the following decisive actions to address the extraordinary challenges caused by the current credit crisis:

• Undertaken sweeping enforcement measures against market manipulation.
• Adopted a package of measures to strengthen investor protections against naked short selling, including rules requiring a hard T+3 close-out, eliminating the options market maker exception of Regulation SHO and expressly targeting fraud in short selling transactions.
• Issued an emergency order to enhance protections against naked short selling in the securities of primary dealers, Fannie Mae, and Freddie Mac.
• In close coordination with regulators around the world, took temporary emergency action to ban short selling in financial securities.
• Announced emergency plans for a rule to ensure public disclosure of short selling positions of hedge funds and other institutional money managers.
• Began a study on mark-to-market accounting standards.
• The Division of Corporation Finance has asked financial institutions to provide additional disclosure regarding off-balance sheet arrangements and the application of fair value to financial instruments.
• The Office of Chief Accountant in coordination with FASB staff issued additional guidance to clarify issues regarding fair value accounting.
• Provided guidance to banks about how to account for credit support of money market funds.
• Written rules to strengthen the regulation of credit rating agencies, and performed examinations that have led to new rules to reduce rating agency conflicts-of-interest.
• Enforcement Division announced what will be the largest settlements in the history of the SEC for investors who bought auction rate securities from Citigroup, UBS, Wachovia, Merrill Lynch, RBS Capital Markets Corp., and Bank of America.
• Brought a landmark enforcement action against a trader who spread false rumors designed to drive down the price of stock.
• Initiated exams of the effectiveness of broker-dealers' controls to prevent the spread of false information intended to manipulate securities prices.
• Entered into a Memorandum of Understanding with the Federal Reserve, to make sure key federal financial regulators share information and coordinate regulatory activities in important areas of common interest.
• Continues to look at lessons from the credit crisis and determine ways to give investors more transparent, useful, and timely information.
• SEC Chairman Christopher Cox has asked Congress to provide the statutory authority necessary for government oversight of the $58 trillion credit default swaps market.

 

http://www.sec.gov/news/press/sec-actions.htm

        

Investers were selling stocks if they thought had any risk and as such we saw the markets head into a tailspin. The downward spiral may have scared the indivdual investor to the point of them not returning to the market for some time. 

The small investors have seen the market decline for about a year now and are frustrated that everything they have been taught about the market has turned out wrong. It appears that diversification is not working and the buy-and-hold strategy has not been working as well.

Even in money-market funds, usually considered among the safest investments, after several funds suffered losses on short-term asset-backed securities, confidence has been shattered.

Investors who thought they were getting into stocks at cheap prices just a week or two ago are staring at the kind of double-digit losses that can make them think twice about buying again anytime soon.

After the worst week in the history of the Dow Jones Industrial Average, there could be more bad news and volatile markets ahead. The Chicago Board Options Exchange Volatility Index, or Vix, a measure of investor fear based on options trading, Friday hit its highest level since it was introduced more than 15 years ago.

Before the end of last week, traders had marveled that the stock market was posting big declines without signs of panic. That was replaced by wholesale dumping of shares late Thursday and Friday morning.

Still, there has been almost nowhere to hide in recent weeks. The average mutual fund in 68 of the 69 Morningstar Inc. stock and bond categories lost money in the past month. Even conservative strategies have taken a beating. Equity-income funds typically hold up better in a down market because they invest in dividend-paying stocks that should have stable finances.

The toll has been especially heavy on investors nearing retirement. Unlike the defined-benefit plans of previous generations, which were better equipped to weather downturns because new money continued to flow in, contributions to a 401(k) plan stop when an individual stops working, so losses can't be made up.

What is making matters worse, is that many advisors where telling their clients to hold a higher percentage of their investments in stocks as they approach age 65, because they could need their savings to last another 30 years. This lives millions of baby boomers vulnerable to big losses at a time when the economy could be in for a lengthy period of woes.