Christopher Shearer

Christopher Shearer

Rates on long-term home mortgages are lower than short-term home loans, according to Freddie Mac's weekly survey.

"Interest rates for one-year ARMs exceeded those for 30-year fixed-rate mortgages over the last two weeks; this is the first time this has happened since Freddie Mac began collecting data for ARMs in January 1984," said Frank Nothaft, Freddie Mac chief economist.

The 30-year fixed-rate mortgage averaged 4.80% for the week ended Thursday, down from 4.82% last week and 6.03% a year ago.

Fifteen-year fixed-rate mortgages averaged 4.48%, unchanged from last week's low, and down from 5.62% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.85%, down from 4.88% last week and 5.68% a year ago. One-year Treasury-indexed ARMs averaged 4.82%, down from 4.91% last week and 5.29% a year ago.

From Wall Street Jounral, April 24, 2009 page C-9

Chrisotpher Shearer

By JESSICA HOLZER

WASHINGTON -- The Obama administration on Tuesday will unveil a fresh set of incentives for mortgage servicers to help strapped homeowners, a senior administration official told Dow Jones Newswires.

Under a new program, the government will pay mortgage servicers $500 upfront and $250 a year for three years for successfully modifying a second mortgage, such as home equity loan.

Separately, the administration will unveil a schedule of incentives for holders of second mortgages to extinguish those liens voluntarily, the official said.

The administration will also announce a set of incentives for servicers and lenders participating in the Hope for Homeowners program, which aims to restore homeowners' lost equity by encouraging lenders to write down loan principal.

The announcements, which will come jointly from the Department of Housing and Urban Development and Treasury, are expected updates on the administration's plan to right the housing market. "We are tackling one of the challenges we recognized," the official said.

The issue of second mortgages has been dogging policymakers ever since the onset of the foreclosure crisis. A large share of troubled borrowers also have a second mortgage on their home, which is typically owned by a different investor than the first mortgage. Such borrowers may not be able to afford their monthly payments if only the first mortgage is modified.

The administration's effort on second mortgages is also aimed at soothing the concerns of investors, who have been crying foul over the Obama housing plan's incentives for servicers. They argue the first mortgage shouldn't be modified if the second one is left untouched. They also contend the banks that dominate mortgage servicing are conflicted because they own more than $400 billion of second mortgages. Such banks stand to gain from modifying the first mortgage because the second mortgage is more likely to be repaid once the homeowner is saved from foreclosure.

Some of the largest U.S. banks, including Bank of America, Wells Fargo and J.P. Morgan Chase, have already agreed to sign on to the program, the official said. The rest of the industry will be encouraged to participate.

Under the program, servicers must agree to modify all second mortgages where the first mortgage has already been modified. To qualify for payment, servicers must extend the term of the second mortgage and reduce the interest rate to match the first mortgage. Then, the government will share the cost with the servicer of reducing the rate down to 1% for amortizing loans and 2% for interest-only loans.

Borrowers will receive payments of up to $250 per year for as many as five years if they stay current on the loan. The payments will be applied to pay down principal on the first mortgage.

Changes to the Hope for Homeowners program are designed to place it in line with the taxpayer-assisted loan modifications. Launched last fall to help troubled borrowers refinance into more affordable government-backed loans, it has failed to gain traction due to onerous borrower requirements and the nagging problem of second liens.

The administration will announce Tuesday a $2,500 upfront payment to servicers that refinance borrowers into the program. Meanwhile, lenders that originate the new loans will receive $1,000 a year for three years, if the loans stays current.

Legislation to revamp the program is currently pending in Congress. Once those legislative fixes are made, HUD will work on creating a program to extinguish the second liens, the official said.

Christopher Shearer

Pursuant to the Home Valuation Code of Conduct (HVCC), on May 1, 2009 lenders will no longer accept appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any realtor, mortgage broker, customer or any other third party.

Lenders will only accept appraisal reports from a pre-approved list of appraisers or appraisal management companies.

Impact on Consumers

The HVCC negatively affects consumers by increasing the costs of an appraisal, reducing consumer choice and adversely impacting a consumer's ability to obtain a reliable and quality appraisal.

The HVCC increases the time to fund loans for consumers which necessitates longer rate locks or extensions of existing locks thereby increasing costs to consumers. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing the time to fund.

The HVCC creates a heightened risk for consumers by requiring the use of unregulated Appraisal Management Companies (AMCs) for appraisals. The original investigation that prompted the HVCC's creation was of an AMC and Washington Mutual Bank alleging that they engaged in practices of pressuring appraisers on behalf of Washington Mutual.

The exclusive use of AMCs limits competition in the marketplace, leaving the consumer at a disadvantage.

The AMC model is flawed and will produce poor quality work that will create a continuation of the declining housing market.

Regulation Z addresses Inflated Appraisals

In July 2008, the Federal Reserve Board issued a final rule through reforms to Regulation Z prohibiting all mortgage brokers, mortgage lenders and their affiliates "from coercing, influencing, or otherwise encouraging appraisers to misstate or misrepresent the value of a consumer's principal dwelling."

The final rule by the Federal Reserve, which addresses appraisals and appraisal guidelines set forth by the federal regulatory agencies, prohibits improper influence on appraisers and works to ensure appraisal independence.

The final Fed rule was subject to the Administrative Procedures Act (APA) and Regulatory Flexibility Act (RFA). The HVCC did not go through the Administrative Procedures Act (APA) or the Regulatory Flexibility Act (RFA) as required of rules issued by administrative agencies of the federal government.

The HVCC changes the standards of who may perform appraisals -- something the Federal Reserve decided against when reforming Regulation Z. During consideration of the appraisal standards set forth in the Regulation Z final rule, the Board addressed this issue and declined to find that "any particular procedure for ordering an appraisal necessarily promotes" fraudulent appraisals. Rather, the Board found that "coercion of appraisers" whether by lenders or brokers "is an unfair practice," and determined that the appraisal provisions in Regulation Z should apply equally to lenders and brokers alike.

The Federal Reserve's appraisal standard implementation date is October, 2009.

Considering the negative impact on consumers and the Federal Reserve's recent regulation on appraisals, the HVCC should either be repealed or delayed for 12 months. Contact your Florida Representatives in Congress today and ask them to sign Congressman Miller's letter! Help stop HVCC today!

Now is the time to contact your Representatives in Congress regarding HVCC!

Contact your Representatives and ask them to sign the letter to FHFA Director Lockhart requesting for FHFA to:

1) Repeal the HVCC in its entirety; or

2) Delay implementation of the Agreements by 12 months.

Please call your Florida Representative in Congress and ask them to sign Rep. Miller's letter re HVCC. If the Florida Member of Congress agrees, you can ask that the Florida Member of Congress call Miller's office at (202) 224-3121 to add their name to the letter. Please do not call Rep. Miller's office directly. Any questions regarding this process should be directed to FAMB at (800) 289-9983.

If you do not know the phone number for your Florida Representative in Congress, you can call the House operator at (202) 224-3121. The operator will connect you to your member. If you don't know who you Representative is, you can look it up at the following site: http://www.house.gov/. The "Find Your Representative" function is on the top left corner of the page. You will need the name of your Representative prior to calling the House operator.

Christopher Shearer

Beware of Foreclosure Rescue Scams - Help Is Free!

The free government website is: www.makinghomesaffordable.gov

• There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.
• Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay - walk away!
• Beware of anyone who says they can "save" your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
• Never submit your mortgage payments to anyone other than your mortgage company without their approval.

The Obama Administration has launched a coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times. Click here for more information.

The Obama Administration has introduced a comprehensive Financial Stability Plan to address the key problems at the heart of the current crisis and get our economy back on track. A critical piece of that effort is Making Home Affordable, a plan to stabilize our housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

The Home Affordable Refinance Program gives up to 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. The Home Affordable Modification Program commits $75 billion to keep up to 3 to 4 million Americans in their homes by preventing avoidable foreclosures.

Our consumer website, www.MakingHomeAffordable.gov, provides homeowners with detailed information about these programs along with self-assessment tools and calculators to empower borrowers with the resources they need to determine whether they might be eligible for a modification or a refinance under the Administration's program. Through this website, borrowers can also connect with free counseling resources to help with outstanding questions; locate homeowner events in their communities; find a handy checklist of key documents and materials to have ready when making that important call to their servicer as well as FAQs from borrowers in similar circumstances; and much more.

We hope that you will find this website informative and useful as we all work together to solve our nation's housing crisis and put our country on the path to a lasting economic recovery.

Helpful Links

• FinancialStability.gov
• Refinance Eligibility
• Modification Eligibility
• Find a Counselor
• Homeowner Events
• Frequently Asked Questions

Christopher Shearer

Talking Points:

Pursuant to the Home Valuation Code of Conduct (HVCC), on May 1, 2009 lenders will no longer accept appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any realtor, mortgage broker, customer or any other third party.

Lenders will only accept appraisal reports from a pre-approved list of appraisers or appraisal management companies.

Impact on Consumers

The HVCC negatively affects consumers by increasing the costs of an appraisal, reducing consumer choice and adversely impacting a consumer's ability to obtain a reliable and quality appraisal.

The HVCC increases the time to fund loans for consumers which necessitates longer rate locks or extensions of existing locks thereby increasing costs to consumers. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing the time to fund.

The HVCC creates a heightened risk for consumers by requiring the use of unregulated Appraisal Management Companies (AMCs) for appraisals. The original investigation that prompted the HVCC's creation was of an AMC and Washington Mutual Bank alleging that they engaged in practices of pressuring appraisers on behalf of Washington Mutual.

The exclusive use of AMCs limits competition in the marketplace, leaving the consumer at a disadvantage.

The AMC model is flawed and will produce poor quality work that will create a continuation of the declining housing market.

Regulation Z addresses Inflated Appraisals

In July 2008, the Federal Reserve Board issued a final rule through reforms to Regulation Z prohibiting all mortgage brokers, mortgage lenders and their affiliates "from coercing, influencing, or otherwise encouraging appraisers to misstate or misrepresent the value of a consumer's principal dwelling."

The final rule by the Federal Reserve, which addresses appraisals and appraisal guidelines set forth by the federal regulatory agencies, prohibits improper influence on appraisers and works to ensure appraisal independence.

The final Fed rule was subject to the Administrative Procedures Act (APA) and Regulatory Flexibility Act (RFA). The HVCC did not go through the Administrative Procedures Act (APA) or the Regulatory Flexibility Act (RFA) as required of rules issued by administrative agencies of the federal government.

The HVCC changes the standards of who may perform appraisals -- something the Federal Reserve decided against when reforming Regulation Z. During consideration of the appraisal standards set forth in the Regulation Z final rule, the Board addressed this issue and declined to find that "any particular procedure for ordering an appraisal necessarily promotes" fraudulent appraisals. Rather, the Board found that "coercion of appraisers" whether by lenders or brokers "is an unfair practice," and determined that the appraisal provisions in Regulation Z should apply equally to lenders and brokers alike.

The Federal Reserve's appraisal standard implementation date is October, 2009.

Considering the negative impact on consumers and the Federal Reserve's recent regulation on appraisals, the HVCC should either be repealed or delayed for 12 months. Contact your Florida Representatives in Congress today and ask them to sign Congressman Miller's letter! Help stop HVCC today!

Now is the time to contact your Representatives in Congress regarding HVCC!

Contact your Representatives and ask them to sign the letter to FHFA Director Lockhart requesting for FHFA to:

1) Repeal the HVCC in its entirety; or

2) Delay implementation of the Agreements by 12 months.

Please call your Florida Representative in Congress and ask them to sign Rep. Miller's letter re HVCC. If the Florida Member of Congress agrees, you can ask that the Florida Member of Congress call Miller's office at (202) 224-3121 to add their name to the letter. Please do not call Rep. Miller's office directly. Any questions regarding this process should be directed to FAMB at (800) 289-9983.

If you do not know the phone number for your Florida Representative in Congress, you can call the House operator at (202) 224-3121. The operator will connect you to your member. If you don't know who you Representative is, you can look it up at the following site: http://www.house.gov/. The "Find Your Representative" function is on the top left corner of the page. You will need the name of your Representative prior to calling the House operator.