Wednesday, October 17, 2007

Government National Mortgage Association (Ginnie Mae)

Ginnie Mae I Mortgage-Backed Securities

Expands affordable housing in America by linking global capital markets to the nation’s housing market.
Nature of Program: Ginnie Mae guarantees investors (security holders) the timely payment of principal and interest on securities issued by private lenders that are backed by pools of Federal Housing Administration (FHA), Veterans Affairs (VA), Rural Housing Service (RHS), and Public and Indian Housing (PIH) mortgage loans. The full faith and credit guarantee of the U.S. Government that Ginnie Mae places on mortgage-backedsecurities lowers the cost of, and maintains the supply of, mortgage financing for government-backed loans.
In the Ginnie Mae I program, all mortgages in a pool are fixed-rate, single-family mortgages with the same interest rate. The mortgage interest rates must all be the same, and the same lender must issue the securities. With the exception of Ginnie Mae I pools that are used as collateral for state or local bond financing programs (BFP) for which Ginnie Mae provides special consideration, Ginnie Mae I securities have a servicing and guarantee fee that totals 50 basis points, and the minimum pool size is $1 million.
To issue a Ginnie Mae I security, an approved lender applies for a commitment fromGinnie Mae for the guaranty of securities. The lender originates or acquires mortgage loans and assembles them into a pool of mortgages. The Ginnie Mae I program permits lenders to issue securities backed by pools of single family, multifamily, and manufactured housing loans where the interest rate is the same for each loan in the pool. The lender decides to whom to sell the security and then submits the documents to Ginnie Mae’s pool processing agent. The agent prepares and delivers the Ginnie Mae guaranteed security to the investors designated by the lender. The lender is responsible for selling the securities and servicing the underlying mortgages. Issuers of Ginnie Mae I securities are also responsible for paying security holders on the 15th day of each month.
Applicant Eligibility:A firm must be approved as an issuer based on capital requirements, staffing, experience criteria, and infrastructure. The firm must also be an FHA-approved lender in good standing.
Legal Authority: Section 306(g) of the National Housing Act (12 U.S.C. 1721(g)).

Administering Office: Ginnie Mae, U.S. Department of Housing and Urban Development, Washington, DC 20410-9000.
Information Sources: Administering office; Office of Mortgage-Backed Securities.
On the Web: www.ginniemae.gov

Fair Housing and Equal Opportunity

Fair Housing Act


Investigates, conciliates, and charges cases of housing discrimination prohibited under the Fair Housing Act of 1968 (Title VIII).
Nature of Program: The Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, or familial status (includes individuals or families with children under 18 years of age and pregnant women). The Fair Housing Act applies to almost all housing in the country.
The Fair Housing Act prohibits discrimination in residential real estate transactions and makes it illegal to coerce, intimidate, threaten, or interfere with people exercising their rights under the Act, or assisting others in exercising their rights.
To comply with the Fair Housing Act, a seller, landlord, lender, insurance agent, realtor, etc. may not:
• Deny housing, offer different terms and conditions to an applicant, or refuse to rent, sell, or negotiate with an applicant because of one or more of the prohibited bases cited above;
• Use discriminatory advertising or make discriminatory statements in connection with housing;
• Falsely deny that housing is available;
• Deny access to or membership in a multiple-listing service or real estate broker’s organization; or
• Discriminate in making loans for, or secured by, residential real estate.
In addition, landlords, condominium boards, homeowner associations, or other entities that exercise control over individual residences or common spaces within a development may not:
• Refuse permission for residents with disabilities or their families to make reasonable modifications to housing, at their own expense, if the changes are necessary for a resident to fully enjoy his or her premises. However, in someinstances, the resident may be required to restore the property to its original condition before moving out;

Refuse to make reasonable accommodations in rules, policies, practices, and services to provide equal opportunity to residents with disabilities to use and enjoy their homes, so long as it does not interfere with the rights of others to use and enjoy their homes.
Communities should not adopt and enforce discriminatory zoning and land use ordinances.
Familial status protections do not apply to certain housing for older people. Such housing is exempt under the law if it is intended for, and solely occupied by, residents 62 years of age or older, or if 80 percent of the units are occupied by at least one person 55 years of age or older, and the housing facility or community publishes and adheres to policies and procedures that demonstrate this intent to be housing for older persons.
Since March 13, 1991, most multifamily dwellings of four or more units have been required to be designed and built so that the units are accessible to people with disabilities.
In addition to nondiscrimination, the Fair Housing Act also provides that HUD mustadminister all of its programs and activities in a manner that affirmatively furthers the policies of the Act.
Anyone who believes that he or she has been discriminated against can file a complaint with any HUD office in person, by mail, or by telephone within one year after the alleged discrimination has occurred. HUD or an equivalent state or local agency will investigate and attempt to conciliate the complaint. If it is not conciliated and it appears that discrimination has occurred, then HUD will issue a charge. A HUD administrative law judge (ALJ) will hold a hearing unless either party chooses to take a case to federal district court.
If proceeding before a HUD ALJ, the complainant may receive access to the housing that was denied and may be awarded compensatory damages and attorneys’ fees as well. In such cases, the discriminating party may also be assessed a civil penalty of up to $11,000 for a first offense. If a federal district court hears the case, the complainant may be awarded punitive damages, but civil penalties are not available.
When HUD finds that a complaint has merit and requires prompt court action, as when an eviction is threatened or when a unit is about to be sold or rented to another person, HUD may direct the Department of Justice to file an action holding the unit off the market until the matter is resolved.
Applicant Eligibility:Any individual experiencing housing discrimination may file a complaint with any HUD office, in person, by mail, or by telephone, not later than one year after the alleged discriminatory act has occurred or terminated. An aggrieved person may also file suit in a federal court whether or not a complaint has been filed with HUD.
HUD has established a national toll-free housing discrimination hotline at: (800) 669-9777 (voice) or (800)-927-9275 (TTY).

PROTECTING CONSUMERS FROM FRAUD IN THE SALE OR LEASING OF LAND

Protects consumers from fraud and abuse in the sale or lease of land.

HUD is responsible for administering the laws governing land sales registration. The Interstate Land Sales Full Disclosure Act prohibits developers and their agents from selling or leasing, by mail or by means of interstate commerce, any lot in any subdivision of 100 or more nonexempt lots unless two conditions are met:
(1) A Statement of Record must be filed with HUD that discloses and documents current information about the ownership of the land; the state of title; physical characteristics; planned availability of roads, services and utilities; and other matters.
(2) A printed Property Report, the disclosure instrument provided for by the Act that describes the items mentioned in (1) above, must be delivered to each purchaser or lessee in advance of signing the contract or agreement.
The antifraud provisions of the Act apply to subdivisions containing 25 or more lots. The Act also contains antifraud provisions that prohibit developers from engaging in misleading sales practices. Any willful violation of the Act is subject to criminal penalties of imprisonment for not more than 5 years or a fine of not more than $10,000, or both. A suit for damages may be brought by a purchaser in any state or federal court for the district in which the defendant may be found or in which the transaction took place. HUD may seek an injunction against any developer that it can show is violating or about to violate the law and may obtain restitution for aggrieved purchasers. HUD may also impose civil money penalties for violations and suspend the registration of a developer whose Statement of Record or Property Report includes an untrue statement of material fact oromits material facts.
Applicant Eligibility:Interstate Land Sales is a regulatory program; the Act applies to all developers and agents who sell or lease or offer to sell or lease lots in subdivisions using the mail or means of interstate commerce, unless the offering is exempt.
Legal Authority: Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq.). Regulations are at 24 CFR parts 1710-1720 and 3800.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: Administering office.
On the Web: www.hud.gov/offices/hsg/sfh/ils/ilshome.cfm
Current Status: Active.

Real Estate Settlement Procedures Act (RESPA)

RESPA seeks to reduce unnecessarily high settlement costs by requiring disclosures to homebuyers and sellers, and by prohibiting abusive practices in the real estate settlement process.

RESPA requires that lenders give all borrowers of federally related purchase mortgage loans a HUD-prepared booklet with information about real estate transactions, settlement services, and relevant consumer protection laws. When applying for a loan, a borrower must receive a good faith estimate of the settlement costs likely to be incurred. One day before settlement, the borrower may request that the person conducting the settlement provide information on the actual settlement costs. At settlement, both the borrower and the seller, if there is one, are entitled to a settlement statement that itemizes the costs they paid in connection with the transaction.
RESPA prohibits certain abusive practices. Kickbacks, referral fees, and unearned fees are outlawed, sellers may not require borrowers to purchase title insurance from specific companies, and excessively large escrow accounts cannot be required by the loan servicer.
RESPA requires disclosure of the possibility of mortgage servicing being transferred. The statute also provides certain borrower rights if the loan servicer makes errors in paying escrow account expenditures. Finally, RESPA mandates that the servicer provide initial and annual escrow account statements to each borrower.
Applicant Eligibility:RESPA is a regulatory program. It covers virtually all single family loan transactions.
Legal Authority: Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 etseq.). Regulations are at 24 CFR parts 3500 and 3800.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: Administering office.
On the Web: www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
Current Status: Active.

Good Neighbor Next Door

Provides law enforcement officers, teachers, firefighters, and emergency medical technicians with the opportunity to purchase homes located in revitalization areas at significant discount.

The Department wants to make American communities stronger and build a safer nation. The Good Neighbor Next Door program promotes these goals by encouraging persons whose daily professional responsibilities represent a nexus to the needs of the community to purchase and live in homes in these communities. This program makes homes in revitalization areas available to law enforcement officers, teachers, firefighters, and emergency medical technicians. Each year, HUD sells a limited number of properties from its inventory at a 50 percent discount from the list price to eligible persons in the above professions. To make these homes even more affordable, eligible program participants may apply for an FHA-insured mortgage with a downpayment of only $100. Because homes sold through this program are located inrevitalization areas, there may be additional assistance from state or local government sources. If the home needs repairs, the purchaser may also use FHA’s Section 203(k) mortgage program. The Section 203(k) program provides financing for both the purchase of the home and cost of needed repairs.
Applicant Eligibility:Purchasers must be employed as a full-time law enforcement officer, teacher, firefighter, or emergency medical technician, and must certify that they intend to continue such employment for at least one year following the date of closing. The eligible purchaser does not need to be a first-time homebuyer. However, the purchaser (or spouse) cannot have owned another home for one year prior to the time a bid for purchase is submitted, and the purchaser must agree to live in the HUD home as the principal residence for 3 years after move-in.
Legal Authority: Section 204(g) of the National Housing Act (12 U.S.C. 1710(g)). Regulations are at 24 CFR part 291, subpart F.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD Homeownership Centers (Atlanta, Philadelphia, Denver, Santa Ana).
On the Web: www.hud.gov/offices/hsg/sfh/reo/reohome.cfm
Current Status: Active.

FEDERAL Adjustable Rate Mortgages (ARMs)

Federal mortgage insurance for adjustable rate mortgages (ARMs).

Under this HUD-insured mortgage, the interest rate and monthly payment may change during the life of the loan. The initial interest rate, discount points, and the margin are negotiated by the buyer and lender.
The one-year Treasury Constant Maturities Index is used for determining the interest rate changes. FHA lenders may offer ARMs that have interest rates that are fixed for the first one, 3, 5, 7, or 10 years of the mortgage. The interest rate for one-year and 3-year insured ARMs may not be increased or decreased by more than one percentage point per year after the fixed-payment period is over, with a maximum change of 5 percentage points over the life of the loan. For 5-year, 7-year, and 10-year ARMs, the interest rate may change a maximum of 2 percentage points annually and 6 percentage points over the life of the loan.
Lenders are required to disclose to borrowers the nature of the ARM loan at the time ofloan application. In addition, borrowers must be informed at least 25 days in advance of any adjustment to the monthly payment.
Applicant Eligibility:All FHA-approved lenders may make adjustable rate mortgages; creditworthy applicants who will be owner-occupants may qualify for such loans.
Legal Authority: Section 251 of the National Housing Act (12 U.S.C. 1715z-16). Regulations are at 24 CFR 203.49.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/251--df.cfm
Current Status: Active.

FHA Graduated Payment Mortgage (GPM)

Enables a household with a limited income that is expected to rise to buy a home sooner by making mortgage payments that start small and increase gradually over time.

Both programs target early homeownership by helping first-timehomebuyers and others with limited incomes, particularly young families who expect their income to rise, but may not yet be able to handle all of the upfront and monthly costs involved in buying and owning a home.
The Graduated Payment Mortgage (GPM) works in times of high interest rates when first-time homebuyers cannot meet the standard mortgage payment, but expect their incomes to increase substantially in the next 5 to 10 years. The GPM accrues negative amortization so that the borrower’s initial mortgage payments are made at a nominally discounted interest rate from the standard prevailing rate. The difference is then added to the principal balance. The GPM program offers five different plans varying in length of time and rate of increase of nominal interest rate. It is anticipated that when the interest rate, and thus the mortgage payment, increases with time the borrower’s income also will have increased to accommodate the higher payments. Larger than usual downpayments are required to prevent the total amount of the loan from exceeding the statutory loan-to-value ratios.Downpayments required for GPMs vary in proportion to interest rates on the loans. In all other ways, the GPM is subject to the rules governing ordinary HUD-insured home loans.
Applicant Eligibility:All FHA-approved lenders may make GPMs available to persons who intend to use the mortgage property as their primary residence and who expect to see their income rise appreciably in the future.
Legal Authority: Section 245(a) of the National Housing Act (12 U.S.C. 1715z-10(a)). Regulations are at 24 CFR 203.45.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/245a--df.cfm
Current Status: Active.

FHA Mortgage Insurance for Older, Declining Areas

Mortgage insurance to purchase or rehabilitate housing in older, declining urban areas.

In consideration of the need for adequate housing for low- and moderate-income families, HUD insures lenders against loss on mortgage loans to finance the purchase, rehabilitation, or construction of housing in older, declining, but still viable urban areas where conditions are such that normal requirements for mortgage insurance cannot be met. Properties must be in a reasonably viable neighborhood and acceptable risk under the mortgage insurance regulations. The terms of the loans vary according to the HUD/FHA program under which the mortgages are insured. HUD determines if the loan should be insured pursuant to Section 223(e) and become an obligation of the Special Risk Insurance Fund. This allows HUD to more effectively manage the greater expected risk in these loans. The insurance premium is 0.5 percent per year on the outstanding loan balance.
Applicant Eligibility:Home or project owners ineligible for FHA mortgage insurance because property is located in an older, declining urban area.
Legal Authority: Section 223(e) of the National Housing Act (12 U.S.C. 1715n(e)). Regulations are at 24 CFR 203.43a.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office andHUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/223e--df.cfm
Current Status: Active.

FHA Loss Mitigation

Helps homeowners with FHA-insured loans to effectively work with lenders to find creative solutions to avoid foreclosure.


FHA Loss Mitigation delegates to mortgagees both the authority and the responsibility to utilize certain actions and strategies to assist delinquent borrowers in retaining their homes, and/or in reducing losses to the insurance fund that result frommortgage foreclosures. Mortgagees may utilize any of several loss mitigation options that lead to home retention, including: long-termspecial forbearance, mortgage modification, and partial claim (an option exclusive to HUD wherein the Department makes a no-interest loan to the borrower in an amount sufficient to reinstate the mortgage). If the borrower is unable or unwilling to support the mortgage debt, servicers must consider use of other loss mitigation tools, including a pre-foreclosure sale or a deed in lieu of foreclosure, before initiating legal action to foreclose the mortgage.
HUD encourages mortgagees to utilize loss mitigation by reimbursing administrative costs (title reports, recording fees) involved in these actions and by paying financial incentives. Though mortgagees have great latitude in selecting the loss mitigation strategy appropriate for each borrower, participation in the loss mitigation program is not optional. Prior to initiation of foreclosure, mortgagees are required to informborrowers of available loss mitigation options and the availability of housing counseling, to consider all reasonable means to assist the borrower in addressing the delinquency, and retain written documentation of compliance with loss mitigation requirements. Failure to comply may result in the loss of incentive compensation, interest curtailment, and other financial and administrative sanctions, including withdrawal of HUD’s approval of a mortgagee.
Mortgagor Eligibility: Any FHA-insured borrower who is in default for at least 90 days (120 days for partial claim) and who occupies the mortgaged property as a primary residence is eligible for home retention loss mitigation. Pre-foreclosure sale and deed-in-lieu options are available immediately upon default, if the cause of the default is incurable.
Legal Authority: Sections 204(a) and 230 of the National Housing Act. Regulations are at 24 CFR part 203.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Source: HUD’s National Servicing Center.
On the Web: www.hud.gov/foreclosure/index.cfm
Current Status: Active.

Single Family Property Disposition Program

Disposes of one- to four-family FHA properties in a manner targeted to expanding homeownership opportunities

The purpose of this program is to dispose of properties acquired by the Federal Housing Administration (FHA) through foreclosure of an insured or Secretary-held mortgage or loan under the National Housing Act. Foreclosed properties generally contain one to four units. Listings of properties in inventory are available on the Internet. Individual parties may submit an offer through a real estate broker over the Internet. Awarded bids are announced through Internet posting and notification to the selected bidder. Nonprofit and government entities may purchase properties at a discount through a lottery system without a real estate broker.
Applicant Eligibility:Individual bidders are eligible if they can finance their home purchase and provide an earnest money deposit with their bids. Nonprofit and government entities have special eligibility requirements, as detailed on HUD’s website.
Legal Authority: Section 204(g) of the National Housing Act (12 U.S.C. 1710(g)). Regulations are at 24 CFR part 291.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD Homeownership Centers (Atlanta, Philadelphia, Denver, Santa Ana).
On the Web: www.hud.gov/offices/hsg/sfh/reo/reohome.cfm
Current Status: Active.

Rehabilitation Loan Insurance

Insures loans to finance the rehabilitation or purchase and rehabilitation of one- to four-family properties.

HUD insures rehabilitation loans up to approximately 98 percent of the lesser of appraised value before rehabilitation plus rehabilitation costs or 110 percent of appraised value after rehabilitation. A loan can be used to (1) finance rehabilitation of an existing property; (2) finance rehabilitation and refinancing of the outstanding indebtedness of a property; and (3) finance purchase and rehabilitation of a property. An eligible rehabilitation loan must involve a principal obligation not exceeding the amount allowed under Section 203(b) home mortgage insurance.
Applicant Eligibility:Any person able to make the cash investment and the mortgage payments.
Legal Authority: Section 203(k) of the National Housing Act (12 U.S.C. 1709(k)). Regulations are in 24 CFR 203.50.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/203k/203k--df.cfm
Current Status: Active.

Mortgage Insurance for Disaster Victims

Federal mortgage insurance for victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home

This program helps victims in presidentially designated disaster areas recover by making it easier for them to obtain mortgage loans and becomehomeowners or reestablish themselves as homeowners. The program provides mortgage insurance to protect lenders against the risk of default on loans to qualified disaster victims. Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured loans may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. This program resembles the Section 203(b) program(Mortgage Insurance for One- to Four-Family Homes), FHA’s basic mortgage insurance program.
Section 203(h) offers features that make homeownership easier. For example, no downpayment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing by the seller, subject to a 6 percent limitation on seller concessions. Mortgagees collect from the borrowers an up-front insurance premium (which may be financed) at the time of purchase, as well as monthly premiumsthat are not financed, but instead are added to the regular mortgage payment.
Applicant Eligibility:Any person whose home has been destroyed or severely damaged in a presidentially declared disaster area is eligible to apply for mortgage insurance under this program, even if they were renting the property. The borrower’s application for mortgage insurance must be submitted to an FHA-approved lending institution within one year of the President’s declaration of the disaster.
Legal Authority: Section 203(h) of the National Housing Act (12 U.S.C. 1709(h)). Regulations are at 24 CFR part 203.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/203h-dft.cfm
Current Status: Active.

FHA Home Mortgage Insurance

Federal mortgage insurance to finance homeownership and the construction and financing of housing.

Homebuyers may obtain FHA mortgages from HUD-approved lenders to purchase houses with low downpayments. By insuring commercial lenders against loss, HUD encourages them to invest capital in the home mortgage market. HUD insures loans made by private financial institutions for up to 97 percent of the sales price with terms for up to 30 years. The loan may finance homes in both urban and rural areas. The maximum mortgage amounts are at least $200,160 in all areas, with higher limits in areas with higher median house prices up to a maximum of $362,790 for one-unit homes during 2006. Higher limits also exist for two- to four-family properties. The loan limits change annually, based on home price estimates. The limits are benchmarked to the loan limits of the Government-Sponsored Enterprises, Fannie Mae and Freddie Mac. The mortgagee collects from the borrower an up-front mortgage insurance premium payment, which may be financed, at the time of loan closing, as well as monthly premiums that are not financed, but included in the regular mortgage payment.
Applicant Eligibility:Any person able to meet the cash investment, mortgage payment, and credit requirements. The program is generally limited to owner-occupants.
Legal Authority: Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)). Regulations are at 24 CFR part 203, subpart A.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Information Sources: Administering office and HUD field offices.
On the Web: www.hud.gov/offices/hsg/sfh/ins/203b--df.cfm
To locate a HUD-approved lender on the Web: www.hud.gov/ll/code/llslcrit.html
Current Status: Active.

Housing/Federal Housing Administration (FHA)

Regulation of Fannie Mae and Freddie Mac

The Secretary has general regulatory authority over the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (Government-Sponsored Enterprises or GSEs) with the authority to make necessary rules and regulations to ensure that the GSEs accomplish their public purposes in accordance with the GSEs’ Charter Acts and the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (FHEFSSA). The Secretary also carries out specific regulatory authorities over the GSEs under FHEFSSA.
The Department’s specific GSE regulatory oversight responsibilities under Subtitle A, Part 2 of FHEFSSA include establishing, monitoring, and enforcing housing goals for the GSEs’ purchase of mortgages on housing for low- and moderate-income families, housing located in central cities, rural areas, and other underserved areas, and housing meeting the needs of, and affordable to, low-income families in low-income areas and very low-incomefamilies; reviewing new programs; reviewing GSE activities for Charter compliance; implementing Fair Housing requirements applicable to the GSEs and directing the GSEs to take appropriate remedial action against lenders that have engaged in discriminatory lending practices in violation of the Fair Housing Act or Equal Opportunity Credit Act; establishing and maintaining a public use database concerning GSE activities; and performing other regulatory functions.
The GSEs are stockholder-owned, privately managed corporations chartered by Congress to fulfill various public purposes by providing a secondary market for home mortgages. They receive significant public benefits to carry out their purposes. The Secretary’s regulatory powers over the GSEs are distinct from the authority of the Director of HUD’s Office of Federal Housing Enterprise Oversight (OFHEO) -- OFHEO regulates the financial safety and soundness of the GSEs.
Applicant Eligibility:Not applicable.
Legal Authority: Federal National Mortgage Association Charter Act, Title III of the National Housing Act (12 U.S.C 1716 et seq.); Federal Home Loan Mortgage Corporation Act, Title III of the Emergency Home Finance Act of 1970 (12 U.S.C. 1451 et seq.); and the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, Title XIII of the Housing and Community Development Act of 1992 (12 U.S.C. 4501 et seq.). Regulations are at 24 CFR part 81.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development, Washington, DC 20410-8000. (The Assistant Secretary for Housing administers the Secretary’s delegated authority for GSE oversight in cooperation with HUD’s Offices of General Counsel, Policy Development and Research, and Fair Housing and Equal Opportunity (FHEO).

PROGRAMS OF HUD

Major Mortgage, Grant, Assistance, and Regulatory Programs

the Department of Housing and Urban Development has expanded homeownership, increased access to affordable housing, strengthened communities through economic development, fought housing discrimination, and tackled chronic homelessness. HUD has implemented innovative solutions to address our nation’s housing needs and has achieved great results.
Despite its many accomplishments, HUD recognizes that challenges remain to be addressed. Despite achieving the highest homeownership rate in American history, minorities are still less likely than non-Hispanic whites to own their homes. Opening doors to homeownership is a core aspect of HUD’s mission. The most significant barriers to homeownership are downpayment and closing costs. To overcome this barrier, HUD’s American Dream Downpayment Initiative (ADDI) provides low- and moderate-income individuals with funds needed to purchase their first home. In this respect, since its inception in Fiscal Year 2004, ADDI has already helped thousands of Americans, nearly half of whom were minority families.
While increasing homeownership is a top priority, HUD knows it is not a viable option for everyone. Therefore, providing decent affordable rental housing is a central part of HUD’s mission. HUD’s largest program, the Housing Choice Voucher program, promotes affordable rental housing for families and individuals. The program currently provides rental assistance to more than four million households through public and assisted housing programs.
The mission of HUD also includes strengthening communities. The Community Development Block Grant (CDBG) program is HUD’s most important community development program and it is one of the most flexible programs provided to localities by the federal government. A significant portion of CDBG funds supports improving conditions in lower income and distressed communities.
Programs of HUD describes the major mortgage, grant, other assistance, and regulatory programs of the Department. It is through these programs that HUD works to fulfill its mission of increasing homeownership opportunities, promoting access to decent affordable housing, strengthening communities through economic development, ensuring equal opportunity in housing and promoting participation of faith-based and community organizations.
Programs of HUD is designed to be an informative resource for HUD’s congressional partners, participants in HUD programs, and interested members of the public.


Community Planning and Development
6 Community Development Block Grants (CDBG) (Entitlement)
8 Community Development Block Grants (Non-Entitlement) for States and Small Cities
10 Community Development Block Grants (Section 108 Loan Guarantee)
11 Community Development Block Grants (Disaster Recovery Assistance)
13 Community Development Block Grants (Section 107)
15Community Development Block Grants (CDBG) for Insular Areas
16 The HOME Program: HOME Investment Partnerships
18 Shelter Plus Care (S+C)
19 Emergency Shelter Grants (ESG) Program
20 Surplus Property for Use to Assist the Homeless (Title V)
21 Supportive Housing Program
22 Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) Program
23 Brownfields Economic Development Initiative (BEDI)
24 Economic Development Initiative ("Competitive EDI") Grants
25 Renewal Communities
26 Empowerment Zones
28 Youthbuild
29 Rural Housing and Economic Development Program
30 Self-Help Homeownership Opportunity Program (SHOP)
31 Capacity Building for Community Development and Affordable Housing
32 Housing Opportunities for Persons With AIDS (HOPWA)
34 Loan Guarantee Recovery Fund for Church Arson and Other Acts of Terrorism(Section 4)
Housing/Federal Housing Administration (FHA)
35Secretary’s Regulation of Fannie Mae and Freddie Mac
Single Family Housing Programs
37 One- to Four-Family Home Mortgage Insurance (Section 203(b))
38 Mortgage Insurance for Disaster Victims (Section 203(h))
39 Rehabilitation Loan Insurance (Section 203(k))
40 Single Family Property Disposition Program (204(g))
41 Loss Mitigation
42 Mortgage Insurance for Older, Declining Areas (Section 223(e))
43 Mortgage Insurance for Condominium Units (Section 234(c))
44 Graduated Payment Mortgage (GPM) (Section 245(a))
45 Adjustable Rate Mortgages (ARMs) (Section 251)
46 Home Equity Conversion Mortgage (HECM) Program (Section 255)
47 Manufactured Homes Loan Insurance (Title I)
48 Property Improvement Loan Insurance (Title 1)

49 Counseling for Homebuyers, Homeowners, and Tenants (Section 106)
50 Good Neighbor Next Door
51 Energy Efficient Mortgage Insurance
52 Insured Mortgages on Hawaiian Home Lands (Section 247)
53 Insured Mortgages on Indian Land (Section 248)
Regulatory Affairs and Manufactured Housing
54 Real Estate Settlement Procedures Act (RESPA)
55 Manufactured Home Construction and Safety Standards
56 Interstate Land Sales
Multifamily Housing Programs
57 Supportive Housing for the Elderly (Section 202)
58 Assisted-Living Conversion Program (ALCP)
59 Emergency Capital Repairs Program
60 Multifamily Housing Service Coordinators
61 Manufactured Home Parks (Section 207)
62 Cooperative Housing (Section 213)
63 Mortgage and Major Home Improvement Loan Insurance for Urban Renewal
Areas (Section 220)
64 Multifamily Rental Housing for Moderate-Income Families
(Section 221(d)(3) and (4))
65 Existing Multifamily Rental Housing (Section 207/223(f))
66 Mortgage Insurance for Housing for the Elderly (Section 231)
67 New Construction or Substantial Rehabilitation of Nursing Homes, Intermediate
Care Facilities, Board and Care Homes, and Assisted-Living Facilities
(Section 232); Purchase or Refinancing of Existing Facilities (Sections 232/223(f))
68 Supplemental Loans for Multifamily Projects (Section 241)
69 Hospitals (Section 242)
70 Supportive Housing for Persons with Disabilities (Section 811)
71 Multifamily Mortgage Risk-Sharing Program (Sections 542(b) and 542(c))
72 Mark-to-Market Program
73 Self-Help Housing Property Disposition
74 Renewal of Section 8 Project-Based Rental Assistance
Public and Indian Housing
75 Housing Choice Voucher Program
78 Homeownership Voucher Assistance
79 Project-Based Voucher Program
80 Public Housing Operating Fund
81 Public Housing Capital Fund
82 Public Housing Neighborhood Networks (NN) Program

83 Revitalization of Severely Distressed Public Housing (HOPE VI)
84 Public Housing Homeownership (Section 32)
85 Resident Opportunity and Self-Sufficiency (ROSS) Program
86 Family Self-Sufficiency Program
87 Indian Community Development Block Grant (ICDBG) Program
88 Indian Housing Block Grant (IHBG) Program
89 Federal Guarantees for Financing for Tribal Housing Activities (Title VI)
90 Loan Guarantees for Indian Housing (Section 184)
91 Native Hawaiian Housing Block Grant (NHHBG) Program
92 Loan Guarantees for Native Hawaiian Housing (Section 184A)
Fair Housing and Equal Opportunity
93 Fair Housing (Title VIII)
96 Fair Housing Assistance Program (FHAP) (State and Local Agencies Program)
97 Certification of Substantially Equivalent Agencies
98 Fair Housing Initiatives Program (FHIP)
99 Equal Opportunity in HUD-Assisted Programs (Title VI, Section 504, Americans
with Disabilities Act, Section 109, Age Discrimination Act, and Title IX)
101 Section 3 Program
102 Voluntary Compliance
Policy Development and Research
103 Policy Development and Research Initiatives
104 American Housing Survey
105 Partnership for Advancing Technologies in Housing Initiative (PATH)
Government National Mortgage Association (Ginnie Mae)
106 Ginnie Mae I Mortgage-Backed Securities
108 Ginnie Mae II Mortgage-Backed Securities
109 Ginnie Mae Multiclass Securities Program
111 Ginnie Mae Platinum Securities Program
Healthy Homes and Lead Hazard Control
112 Healthy Homes and Lead Hazard Control

114Office of Federal Housing Enterprise Oversight
115 U.S.Interagency Council on Homelessness

Thursday, October 11, 2007

THE IMPACT OF THE SUB-PRIME/MORTGAGE CRISIS ON GLOBAL MARKETS

The fall out from the sub-prime lending market in the United States has had ramifications not only in the United States but across the global financial system. How long this crisis will last is yet to be seen and the wider outcome is yet to be known. However don’t be fooled into thinking this is not going to have an impact upon those outside the financial markets, it will.
To those who don’t know the current market turmoil has been created by a problem in the United States sub-prime mortgage market. The sub-prime mortgage market is where banks lend to people with a poor credit rating at a higher interest rate – in the hope of higher returns. However, the market became too loose and too overstretched. As base interest rates rose in the United States and the economy slowed, borrowers saw mortgage payments rise at a point when jobs were being cut and wage growth slowing. As a result defaults on mortgages increased rapidly.
So why didn’t the problem stop with the mortgage lenders? The problem has had wider consequences because those banks that lent in the sub-prime market packaged up some of this debt as a financial product and sold it to willing buyers in the international financial market. This was done as an insurance measure against widespread defaults. However, the selling of sub-prime mortgages went too far and rather than acting as an insurance against the risk, international financial markets have been pulled into the crisis.
The result is that financial markets have seen billions of dollars wiped off them in August. Several hedge funds have been closed and many of the major banks have suffered huge losses. This crisis has also led to a steep drop in confidence. Banks are no-longer willing to take the risk and lend to one another. As a result this has created a credit crunch where investors have not been able to borrow credit and as a result of a falling credit supply the cost of borrowing has risen rapidly. The Fed, the European Central Bank and other major banks have reacted strongly by cutting interest rates and by pumping credit into the markets. This has helped to temporarily stabilise markets but volatility remains high and no-one is yet saying things are in the clear.
Looking forward to the rest of the year and into 2008 it seems likely that the impact of the sub-prime market will run on and on in a number of different forms. Businesses are likely to find it increasingly difficult to find credit, especially the cheap credit they’ve been used to in recent years. This will reduce the ability of businesses to expand and capitalise on opportunities as and when they arise. Consequently business activity will be reduced, which will hit GDP growth.
The reduction in business activity will also hit employees. The first people hit are likely to be the City Boys who are not going to see the same bonus payments they have become used to. It has already been estimated that city bonuses may be reduced by up to 20 per cent in 2007. Jobs in financial services are also likely to suffer, with slowing headcount additions and even with a net loss of jobs.
However, with slowing business activity and reduced consumer demand from those working in financial services, the impact will be felt by every sector of the economy. There are few that will not be affected by the current financial crisis; jobs will be lost in all sectors. Those businesses which are not able to grow will not be able to increase the amount they spend on suppliers.
Those thinking that the sub-prime mortgage crisis is something that only those working in finance need worry about should think twice. Get ready for higher unemployment, slower wage growth and ultimately a difficult couple of years.

Checking YOUR Credit Report and FICO Score

When potential lenders want to know whether or not to lend you money, give you a credit card, or finance that new car, they turn to your credit report and FICO score to see what to do. Your FICO score and credit report provide a detailed history of your financial activities, allowing banks and lenders to better judge your likelihood of paying them back. If you take care of your credit and check it regularly, you will have no problem getting better interest rates and loan with favorable terms that suit your needs.
A credit report contains very detailed information on all of your current and previous credit cards, loans, and bills. More importantly, it show exactly how good of a job you have done and are doing when it comes to making all of your payments to these accounts. If you always pay your bills on time and are not over your head in debt, your credit report will be applauded by potential lenders.
A FICO score is a numerical representation of your financial standing, calculated by using a complexed formula containing your previous and current financial activities. This score ranges from 300 to 850, with 850 being the best possible score, and 300 being the worst. Your FICO score factors in your balances and payments to credit cards, utility bills, mortgages, car leases, and other loans. The higher your FICO score, the higher you will be held in the minds of potential lenders.
Keep Track of Your Credit Report and FICO Score
It is very important to frequently monitor your FICO score and credit report, particularly important due to the rise in identity theft and online fraud. Thousands of Americans are victims of identity theft and fraud ever month, many of which never even find out. Identity theft and fraud can drastically damage your credit report and FICO score, unless you detect the fraud yourself and report it to a credit reporting agency. By frequently checking up on your credit you will maintain a higher score and avoid any unwanted surprises.
Maintaining good financial status can be difficult and takes a lot of discipline and planning. However, it can be very difficult to gage whether or not your actions are actually improving your credit score as you have intended. When you check your credit report and FICO score, you will be able to see exactly how your financial actions are affecting your credit, allowing you to make any necessary adjustments and maximize your efforts.
How Do I Check My FICO Score and Credit Report?
Now that you are aware of how your FICO score impacts your finances, you may be wondering "How do I get a free online credit check?" Easy, To learn more about obtaining a free online credit report, visit http://freeonlinecreditcheck.googlepages.com/, an excellent resource on credit reports and your credit score. There are dozens of websites that offer totally free credit reports. There are so many, in fact, that it can be a little bit overwhelming when trying to decide which company to choose. Some things to look for when choosing a credit reporting service are: ease of use, customer service and assistance, detail of reports, accuracy of reports, and whether they offer to assist in repairing your credit score.

FICO RULES HAVE CHANGED

New FICO rules are raising havoc with married couples as well as with partners and live-ins.. For years it has been common practice to include one’s spouse as an authorized signatory on the other spouse’s credit cards.
At first blush, it seemed so romantic - signifying the oneness of our union. Then it became a practical matter. Put the spouse on the gasoline credit card so each could purchase fuel for his/her car at one’s leisure. Then it was extended to department credit cards so clothing and other household purchases can be made by the one who usually shops for those items. After all doesn’t that spouse has more time for that sort of thing. Besides it is so much more convenient to write just one check every month
Now with many department stores doing away with their own individual credit card (Target being the latest), why not put the spouse on the VISA or MASTERCARD, since they are more universally accepted whenever and where ever one shops. In that way the number of cards being carried can be reduced hereby reducing the risk of being lost or stolen. Good sound thinking and practice. After all - we are one union
At this point enter FICO and the rules change.
With the advent of the Credit Society, it became necessary to have a central source to determine the creditworthiness of an individual applying for credit. What is that applicant’s credit history? The 3 big credit reporting agencies entered the scene and fulfilled stop gap measure. But who has the time to examine a lengthy though accurate report when the needs of the customer who is in front of me must be served before he decides to take his business elsewhere. Now if there were some simple mathematical figure that could represent the financial history of a potential customer and consequently the financial risk to a lender, instant decisions could be made which were reliable. The Fair Isaac Co grasped the opportunity and FICO enters the scene.
But as always, someone is bound and determined to beat the system. Part of the American Dream is owning your own home. But how sell a home to someone who has a low credit score. To deprive that someone of the American Dream is un-American.
I’ll build houses but only if you can buy So there arose a new market - those with excellent credit (for a fee, of course) could rent their account to one with a low credit score - make them an authorized signatory. The one with the low score realized the American Dream. The person renting his account received a fee, the housing market boomed, the economy flourished, unemployment was reduced. Everyone was happy. It appeared to be a WIN - WIN situation. Then the bubble burst and foreclosures became common.
FICO changed its rules again and tightened up on renting out one’s account (known in the trade as piggybacking...) Well intended but the innocent also suffer. Remember that spouse who thought it was romantic to put their spouse on their account. Suddenly the spouse put on another’s credit card has no individual credit despite a history of timely payments, etc. And in a time of financial crisis, credit is only granted on one’s individual credit history. No credit history - no credit. What’s a spouse to do????

Thursday, October 4, 2007

FALLOUT FROM THE MORTGAGE/ REAL ESTATE CRISIS

The fallout from the real estate bust is getting worse by the day.
With hundreds of mortgage lenders hanging by a thread, battered daily by skyrocketing loan defaults and soaring inventories of repossessed homes they can’t sell ...
The National Association of Realtors just said its Pending Home Sales Index has fallen a staggering 22% in six months to the lowest reading since they began keeping records.
Plus, this week’s manufacturing report was worse than expected: Ford announced its sales crashed 21% in September ... and retailers are warning that this will be the worst holiday season in recent memory.
And that means ...
The Fed will have no choice but to cut rates again ...Devalue the dollar even more ...And send these foreign currencies through the roof!

There’s absolutely no way the Fed can sit on the sidelines as the real estate market continues to collapse and as the mortgage market goes from bad to worse.
And now, with this crisis beginning to spread like wildfire through the automotive sector and the rest of the economy, the Fed must ...
Cut interest rates — again ...
Flood the world with unbacked paper dollars — again ...
Drive the U.S. dollar to new lows — again ...
And light a rocket under foreign currencies — again ...
... just to keep the economy from slipping into recession!
The simple fact is, every new dollar the Fed creates — whether through interest rate cuts or by directly increasing the money supply — inevitably decreases the value and the buying power of every other dollar in circulation.
The euro, the British pound, the Canadian and Australian dollars, the Swiss franc and the Japanese yen will continue to soar.
Plus, with the dollar sinking and other currencies soaring — and with so many other stock markets leaving ours in the dust — the world’s investors have every reason to dump dollars for stronger currencies and invest in stronger stock markets.
While the Dow rose slightly less than 1.4% on Monday, ours is still one of the worst performing stock markets in the world. Many foreign markets are routinely jumping 2% ... 3% ... 4% or even more in a single day ...

Hong Kong’s Hang Seng Index jumped 3.98% ...
India ’s BSE Index jumped 4.15% ...
Brazil ’s Bovespa Index jumped 4.28% and ...
The UK ’s FTSE Index jumped 4.48%.
Bottom line: No foreign investor in his right mind would invest in our lackluster stock market with dollars that are declining in value when he could invest in one of these red-hot world stock markets in a currency that’s also soaring!
That means even lower demand and lower values for the U.S. dollar ahead — and by definition, that means the world’s major currencies are now set to take off like a rocket!

Tuesday, October 2, 2007

EXPLAINING MORTGAGE REFINANCING

Lots of homeowners are now deciding to go for a mortgage refinancing to get a lower mortgage rate; shorten their mortgage term; or get extra cash. When mortgage refinancing you should always shop around and speak to more than one lender. One way to get a better deal which will allow you to pay less each month is to tell the loans officer that you are shopping around for the lowest rate or best deal because you want to reduce your monthly payment. This openness at the start will let them know they need to give you their best offer to get your custom. This should result in you getting a great deal and slash you monthly costs.Mortgage refinancing does cost money in the short term. It may cost as much as a few thousand dollars. Borrowers should expect to have to pay closing costs. Mortgage refinancing has the result of the existing loan being closed and a new loan being opened. Closing costs are therefore inevitable. Additionally, mortgage refinancing requires the same procure to be followed as was followed when the mortgage was taken out. Borrowers will need to have a good credit score to be able to get a good deal when mortgage refinancing. Therefore, only those who have an accurate idea of their monetary situation and who can afford to spend the necessary amount should consider mortgage refinancing. A better credit score will mean you are more likely to get a better deal when mortgage refinancing. The key to credit scoring is verification. If information cannot be verified it should be deleted from the file. The great news is, if you do clean up your credit score, you are more likely to get a lower interest rate when you mortgage refinancing, applying for home equity loans or equity credit lines.Mortgage refinancing loans can be fixed rate or variable rate and can be used for different purposes. Remember if you are just looking to cut your monthly bills then mortgage refinancing is not the only way of doing it; there are other ways.Homeowners with bad credit may decide not to apply for a mortgage refinance. The majority of people assume that their application for a loan will be turned down due to a bad credit rating. However, many homeowners have succeeded in refinancing their mortgage despite having a low credit rating. In many cases refinancing your mortgage may improve your bad credit rate. The fact that a loan has been accepted is good for your credit score and if you use the loan to pay off debts such as unsecured loans and credit cards then you may recover from bad credit. Refinancing tips and advice can be obtained online.

FINDING MORTGAGE BROKERS/ADVISORS

When you want mortgage advice, where do you look for it?You could of course discuss it with your colleagues at work or your friends at the pub. Informal mortgage advice certainly has its place. And if somebody has been through the process recently, they may know what they’re talking about. But you can’t really sue them if it all goes wrong!If you are looking for mortgage advice that’s a little more formal, your local bank almost certainly employs someone called a “Mortgage Adviser”. If you ask to see this individual, he or she will be very pleasant and friendly, and only too keen to sit down and discuss a mortgage with you. The thing you have to bear in mind is that this person is employed by the bank to sell you THAT BANK’S products – not to advise you about what’s best for YOU. What’s more, the best mortgage for your purposes may be on sale at Better Bank down the road. But the mortgage adviser at Bigger Bank isn’t going to tell you about it. This means that even if the bank where you go for mortgage advice doesn’t happen to stock the most suitable product for you, they will still try to sell you one of their products. They aren’t going to say “Well actually, none of our products is exactly right for you – try Better Bank down the road. They’ve got just the thing!” Their mortgage adviser’s job might be on the line for saying this as he/she is employed to sell that bank’s products!So where should you look for your mortgage advice? You need to be looking for someone who:• deals with the whole product range;• has nothing to gain or lose by recommending a specific product or steering you away from another product;• has the experience and knowledge to give you the right kind of mortgage advice.You can often find somebody with these qualifications by looking for an Independent Mortgage Broker or Independent Mortgage Advisors. But before dealing with anyone, check that he/she has the necessary experience and qualifications.As you are often reminded, buying a home is probably the biggest transaction of your life. You can’t afford to take chances with your mortgage advice – make sure you find the person best qualified to provide it.

BAD CREDIT LEADS TO BIG PROBLEMS

Bad credit. Two little words. One BIG problem. Today, with companies downsizing and the increasingly high cost of living, most Americans are one paycheck away from financial disaster. An unexpected hospital bill, or the car breaks down, and many people are scrambling to figure out how to pay the mortgage or put food on the table. Then, begins the economic shuffle. One month the rent is paid, the next only a partial payment to keep from being evicted. The next month, the rent is caught up, but the car payment slides. The downhill spiral begins. Like an airplane, economic recovery is possible; unfortunately many people crash and burn, not knowing how to survive money troubles.For a fortunate few, a financial crisis does not lead to bad credit. Should the car break down, unexpected medical bills threaten the budget, or innumerable other reasons for financial stress, most companies are willing to work with the consumer. Payment plans can be arranged, until the bills are caught up. Companies generally hate resorting to bill collections, repossessions or disconnections. The process is actually an added expenditure for them. Therefore, if the customer calls and explains the situation, most businesses are more than willing to come up with a feasible plan for easing financial woes.Similar to a pilot unable to pull up and stabilize a flight in a downward spin, if an individual fails to make payment arrangements with creditors, the end of economic freedom is near. An individual labeled by bad credit will first experience the frustration of having the utilities disconnected. After a letter of notice, a service provider can even turn off the source of heat, as long as the city is not suffering a life-threatening freeze. In addition, reestablishing service is very costly. The consumer will likely be required to pay the previous bill in full, pay any applicable fees related to the disruption of service, and he/she will generally have to pay a generous deposit, to ensure payment in the future.Essentially, the consumer will be out even more money, eliciting even further financial stress. Chances are, a cosigner will be necessary to guarantee payment, and the individual will have to find a good friend or family member to loan the funds necessary to satisfy the bad credit debt.Oftentimes, if an individual is suffering an economic crisis severe enough to require cessation of services, he/she also experiences repossession proceedings. If bills go unpaid for items bought on credit, like an automobile, the lender can come collect the purchase, and try reselling the item to recover the amount owed and the subsequent costs incurred. One of the first items to be repossessed is often the family vehicle. Without transportation, an individual has even further difficulties establishing resources to get back into financial good standing. Also, a person may be required to sell off personal property to cover the cost of a bad credit debt.Economically speaking, the crash is bad and the financial plane is burning out of control. Not only has the car been taken away and the utilities been shut off, the stores have black balled an individual with bad credit. Yes, the person may still purchase items, but on a cash only basis. If credit cards have been used in the past, the plastic money has been cut up into little pieces. Checks are now simply a piece of paper. With bad credit, a business cannot be sure the amount will be honored, when the check is deposited. Even out-of-town creditors will request a money order, to ensure payment. Unfortunately, getting a money order can be difficult, especially with no car. Plus, a person will have to pay for the privilege of obtaining the money order. So the financial aircraft is burning out of control. Not having money is actually costing additional dollars, and there seems to be no light at the end of the tunnel. As a way out, many people opt to file for bankruptcy, due to bad credit. However, bankruptcy should only be a LAST resort. The decision to file means at least seven years of bad credit. Meaning, getting loans for a vehicle, a house, or any other necessity is practically impossible, even if financial hardship is in the distant past. Also, if the economic woes continue, the one way out cannot be used a second time. Two bankruptcies at one time are not possible.Seven years of financial hardship is a long time; so, filing bankruptcy, to alleviate bad credit, should be the final recourse. If services have been discontinued, or items been repossessed, further financials dealings will be on a cash only basis. Therefore, before financial flying goes into an unrecoverable tailspin, contact creditors in an emergency. During times of hardships most companies are willing to work with the consumer, and help him/her pull out of financial despair, and avoid the crash of bad debt.

WHAT MOTIVATES SUB-PRIME LENDING?

So what motivates mortgage loan officers toward sub-prime lenders? Money of course! Typical capital formula: the greater the risk the greater the return.Mortgage lenders weigh risk, return, and value. They risk loaning money that may or may not get repaid. They risk loaning money at a rate that falls well below fluctuating interest rates over 30 years. They risk loaning money on real estate properties that lose value.High risk loans recommend high rewards. Commissions are issued and the home buyer or refinance candidate gets or keeps their home.Suspicious lending practices put the buyer at risk. The loan document may bury the facts. "Just sign here. You can move into your new house next Monday." No reason to heed "truth-in-lending"; get the sale, "seal the deal" because the borrower pays no matter what.Predatory lending practices bring further harm to families hoping to fulfill their dream of home ownership. Families with poor credit histories suffer further economic and social stigma. Maybe they should know better, but who will tell them?According to "Inside Mortgage Finance", sub-prime mortgage originations have increased 10 fold since 1997. During 2006 & 2007, 25% of all mortgage originations were sub-prime.Subprime usually means that a loan is approved for borrowers with "tarnished credit profiles".As you know from "Have you checked your credit score" advertisements, FICO (credit scoring system developed by Fair Isaac & Co.)scores guide loan officers when assessing a borrowers creditworthiness. Like the Scholastic Aptitude Test, the higher the score, the better (850 tops; 300 not so good). Subprime loans are approved for borrowers with FICO scores at or below 600.Families lacking financial resources wanting a home are easily enticed by the sub prime lender. It all starts with a phone call by savvy telemarketers promising loan approvals on a $400,000 house in East Flatbush (Brooklyn, NY) to a bus driver. A non-profit organization study indicates that just about 50% of the loans in East Flatbush are sub-prime.Karl Dorismund said, "From the beginning they (the lender) tell me the mortgage will be $2,000 or 2,100 a month. Can you believe how much it is? $2,900!"Mr. Dorismund signed a high-interest mortgage with no-money down. In my town, 10% to 20% is necessary before a loan is approved.Cathy Mickens, an advisor to first time home buyers says, "On any one block, we might see...three or four for sale signs....we didn't see this last year at this time."A study by a New York non-profit reveals that the loan patterns for poor and minority neighborhoods. has the highest concentration of sub-prime loans with the highest level of defaults. Borrowers bailout.Sub prime lenders don't like moral solutions. It is immoral to entice borrowers with light burdens at first only to break their backs later. It's all in the small print, and the details seldom are mentioned to the sub prime borrower.Subprime lenders made $587 billion in new mortgages in 2004, up from $390 billion in 2003, according to National Mortgage News.Mortgage marketing by sub prime lenders reminds capital markets that the less-educated city dweller gets trapped by socio-ecocnomic limitations. Less fortunate people need helping hands. This does not mean setting them up for failure; this means creating opportunity.Habitat For Humanity affiliates provide volunteer labor, money and building materials to construct "decent houses" for the sub prime borrower. Homeowner's make a small downpayment, and must pay a reasonable mortgage. "Habitat houses are sold to partner families at no profit and financed with affordable loans."Every Habitat For Humanity home-owner is a sub-prime borrower. In fact, many would not qualify for loans from a bank or mortgage company.* Habitat for Humanity works to eliminate substandard housing* Habitat works to provide homes for families living in sub-standard apartments.* Habitat has provided homes for more than 1 million people in 3,000 communitiesHabitat for Humanity (and organizations like it) offers a key to one family at a time. Your donation to Habitat for Humanity gives hope to qualified and committed sub prime borrowers.

THINGS THAT HOMEOWNERS SHOULD KNOW

Foreclosure means basically that you were unable to pay your monthly mortgage payments so the mortgage company decides to repossess your home. It is just like with a vehicle or anything else where you are bound by some form of a contract or agreement, if you do not hold up on your part of the deal somebody will come and take your car from you or your furniture. Most people have probably experienced a time in their life where they found they were going to have to put off paying one or more payments within the month because of one thing or another coming up unexpectedly. If you ever feel like foreclosure could be just right around the corner for you, then you should most definitely make all attempts to contact your mortgage company and let them know what is going on with you and that there is a possibility that your mortgage payment will not be made on time. Usually if you are honest with them and not trying to avoid them, they will generally allow you the opportunity to explain your situation upon deciding what needs to be done in order to get your account current. Things that are unfortunate do happen sometimes throughout life and it is normally whenever we least expect it, but as I mentioned, if you do suspect that something could prevent you from getting your payments in on time, be sure that you take the time out to call your mortgage company, just to let them know what is happening with you and when they could possibly expect your payment. Foreclosure is a very terrifying word for many individuals and many times the reason that it is so terrifying is because most people are just simply not aware of the fact that most of the times, something can be done to prevent this from happening to you. Losing your home that you have called home for so long now is something very tragic and can cause many people to feel as though their lives are literally falling to pieces. Do not let this put you into any sort of deep slum because no matter what happens, you are strong enough to get through almost anything that life has in store for you, including this. There are many things that you can do to try and fight this type of action against you and typically if you atleast give it a real good try, things will just seem to work out for you. Not always but most of the time it is possible for anybody to tell their side of the story, no matter what it may be, and have the mortgage company change their minds about serving you with any foreclosure notice. If you do lose your home to foreclosure, it is very unfortunate and will definitely have a negative affect on your credit rating for many years to come. You will have to put it in your head that you are tough enough to rebuild or move on and get your finances back in order, the way that they should be, so that you are never faced with having to deal with this type of situation again

Earn $$ with WidgetBucks

Earn $$ with WidgetBucks!
Enter your Email


Preview | Powered by FeedBlitz

CLICK MY AD