A loan workout is an agreement that is negotiated with your current lender that changes the terms of your current loan. Lenders are willing to negotiate when borrowers are facing financial difficulties and can’t obtain other financing alternatives. You must show the lender why it would be in the lender’s best interest to agree to a workout arrangement. If convinced, a lender may be willing to reduce the loan interest rate, reduce monthly payment amounts or change other loan terms.

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A loan modification generally occurs where the parties to a problem loan mutually agree to workout the problem by creating new and better loan terms. The hope is that the new loan will enable to the borrower to meet their obligations.

When applying for a loan modification, make a game plan on how exactly you are going to approach them. These people are trained in minimizing loss for their company and they get paid to by getting the most amount of money out of you as possible or declare that your case is un workable and foreclose on you. That is how they mitigate loss. If you understand this, then you’ll know that you have to approach them and all conversations very carefully. Everything can and will be used against you.

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Items You Will Need When Applying For a Loan Modification:
Document income and expenses. Keep all correspondence (even the envelopes) Before negotiating a deal, gather all the information you need, starting with any correspondence from your lender. That includes anything that you have unopened from the lender. Don’t throw away envelopes from the servicer — postmarks sometimes can make the difference between being eligible or ineligible for relief.

Collect everything that relates to income and expenses. Find your last four pay stubs. They want to see at least one month of income. If your income is very sporadic, the support your story by showing how you’re getting paid so we can calculate an average over time. Gather at least three years worth of W2s and tax returns, plus three to six months of bank statements. Find all the mortgage paperwork and add that to the file. Pull together all bills, paid or not, from the times you were falling behind on the house payments until now. Include utilities, auto payments, credit cards, student loans, child support, medical bills. Find the winter and summer heating and cooling bills. You need to also include everything that documents why you fell behind. An employer’s notification of reduced hours or a layoff, an invoice for an auto repair or a furnace replacement, a shutoff notice from a utility.

What to Do When You Call Your Lender:
Your lender has two platoons of employees who talk with delinquent borrowers. The first is the collections department, which consists of people who try to pry money out of you and get you current on the payments. The second group consists of the loss mitigation specialists. These departments go by different names, depending on the servicer, including foreclosure prevention, loan resolution and delinquency customer service. We’ll use the most common name for the department: loss mitigation, or loss mit. It can be difficult to get through to the loss mitigation department if collection agents are discouraged from transferring calls. This is one of the benefits of having a helper, such as an attorney or a housing counselor. The first will intimidate bill collectors and the second might have contacts within the loss mitigation department.

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The trick with any bank and getting a work out done is learning to navigate their phone system so as to increase your chances of getting a live person. Over the years I’ve learned some tricks that help, sometimes you hear options that you know will lead to a person like when it says “to speak to a representative press ___” but sometimes they don’t give you these options. So, you have to think, what options WOULD get a live person. For example often anything that involves new clients signing up will get a live representative…because they always want new business. You have to be a little savvy though; you can’t just tell the sales guy you called them so you could get a warm body to answer the phone!

Once you get a live person, you want to be working your way up to a decision maker. This is sometimes harder to do for a homeowner than a 3rd party. Often with the homeowner they get stonewalled at the first level, and sadly the first tier in Loss Mitigation is really a glorified collections department. They are paid hourly employee’s who have very little if not zero motivation to go the extra mile and help you get some needed comfort and relief while resolving your problem. Often they just compound the problem by being rude and demanding, telling people things like “just pay your bills”. So it’s essential that you get beyond these people and to a specialist.

Sometimes to get to this point you have to put up with the hourly employee’s through a process of filling out their forms and information. Providing them with items such as pay stubs, tax returns and a whole host of financial information. Once everything is provided, then some lenders will assign the file to someone higher up in the loss mitigation department.

The MOST crucial element to this whole process is your Budget and if you have done your due diligence, you’ll be ready . They will ask you for a detailed list of your monthly expenses. If it’s too tight, you may not get approved, if you have too much extra income you are going to have an outrageous payment plan. Don’t agree to it!

The 2nd MOST important thing you can do is DO NOT SPEND YOUR HOUSE PAYMENTS. Often people stop making their payment because they are falling behind on other bills, or they can’t quite make the whole house payment. Over the years more often than not, the people I met with still have an income coming in each month, they just can’t meet all their obligations, so while the house is falling behind they take advantage of the fact that they aren’t paying the house payment in order to catch up on other debts. THIS IS NOT WISE AT ALL. Sock away as much of that money each month as you can. Its crucial, here’s why;

If you don’t pay your mortgage for 3-4 months and your lender decides to negotiate a repayment plan or a loan modification, then they will want what is called “good faith” money for you to come to the table with. Typically this is from 30-75% and sometimes 100% of what you owe in delinquent fees and attorney fees. Often I speak with homeowners who spend all their money and have nothing to work with. If that is the case, then don’t expect them to work with you or you better have a REAAAALLLY good explanation and proof as to why you have no money to bring to the table.

We all know life throws curve balls at us, it’s the nature of the game, and you’d better just expect it, because it’s coming in one form or another. Whether it be a car breaking down, an illness, injury or death. An accident in a car, you just don’t ever know and it’s ALWAYS a good idea to have a rainy day fund. The crazy thing about going into foreclosure is that you can actually come out of it better off than you went in sometimes.

Is it Better to Just Walk Away and Start Over?

Many homeowners are just in over their heads. Many they love their home and their family does too. But what good is it when you are so stressed out that you cannot enjoy your home. You’re maxed out and you don’t have a dime to take the kids for an ice cream or the movies. That’s no way to live. This is a serious time to really sit down and see if it’s all really worth the stress and heart ache. If it’s not then maybe it’s time to just throw in the towel and down size. Get something you can afford and enjoy. Just close the door on this time in your life and move on. Sure, it will affect you for years, but place your health and well being before making a house payment. If this is you, you’re not alone. Think about it. Is it all really worth the pain and stress? You’re already down, maybe it’s time to just move on and take that money and get a nice little place to rent and regroup.

By saving up your payment for 2-3 months or more depending on the foreclosure time line in your state, you can not only have enough to put together a really nice plan with your lender, but also have some in the bank for a rainy day or worse case scenario, a rental. Often payment plans with the bank can be pricey and very short terms, like 6 months total to repay what you fell behind on. The people if have worked with who took my advice to save up and keep some funds in the bank, were successful 100% of the time at keeping their home. Because they were prepared for life’s curve balls. Even though they had fallen behind in the past, if they had an expense one month, they just pulled a little from the slush fund in the bank to help supplement their house payment that month.

The Lender Has Made You a Deal, What Now?

Respond to your lender, but don’t be rushed into making a promise that you can’t keep. Before making a deal with your lender, describe your situation to an attorney, accountant or a knowledgeable mortgage person. You need to make sure that it is reasonable and not an agreement that will stop foreclosure for a month or two.

Many lenders are likely to offer forbearance. Theses are only good for a short term band aid and not for the long term. Most commonly, this entails adding a set amount to each month’s payment. A forbearance plan can go as long as 36 months. But many are set to fail and are completely unreasonable for borrowers to pay back. Usually this will require placing the delinquent amount on top of your monthly mortgage payment. If you had trouble making your mortgage payment before, good luck paying your new larger more unaffordable payment.

If all else fails, seek out a third party to handle this for you. There are many non-profit housing counselors, attorneys and for profits that are very experienced in loan modifications and loan workouts.

Plan to arrive at an agreement, but prepare for the unwelcome news that you’ll have to move out. If you turn over the deed in lieu of foreclosure, or agree to a short sale (in which the lender lets you sell the house for less than the mortgage balance), or are forced out in a foreclosure action, you’ll need to consult a lawyer and maybe an accountant.

Don’t give up and fight to stop foreclosure and save your home! If all efforts fail, it’s not the end of the world. Just make sure that you mitigate loss to you and do your best to save what little credit you have left.

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WASHINGTON — Today, the Obama Administration released the latest monthly report for the Making Home Affordable (MHA) loan modification program. As part of an ongoing commitment to transparency, the report includes for the first time the number of modifications that have transitioned from the trial to permanent phase as well as a break-out of the 15 metropolitan areas with the highest program activity. With more than 728,000 modifications under way across the country, the program is on track to meet its goals over the next several years. Modifications are providing real benefits to homeowners – borrowers in modifications are saving an average of over $550 per month. However, the report shows that servicers have only converted 31,382 modifications to the permanent phase. According to servicer reports, most borrowers in modifications are meeting their responsibilities to make their payments. Servicers need to do their part to help borrowers complete the process and get to the finish line. Top Administration officials met with servicers in Washington DC this week to urge a faster pace in converting borrowers to permanent modifications.

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“As this report illustrates, struggling homeowners across the country continue to receive immediate relief in the form of reduced monthly payments and a second chance to stay in their homes,” said Chief of Treasury’s Homeownership Preservation Office (HPO) Phyllis Caldwell. “Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications.”

“Our challenge now is to keep the pressure on,” said HUD Senior Advisor for Mortgage Finance William Apgar. “HUD approved counselors are working with borrowers to ensure they are doing their part to transition into sustainable permanent modifications and we will ensure that servicers convert as many of those modifications by the end of the year as scheduled as they are scheduled to.”

The Monthly Report is available here: http://www.financialstability.gov/docs/MHA%20Public%20121009%20Final.pdf

Related posts:

1. Obama Adminstration Releases New Data on Making Home Affordable Program, Incldues State-Specific Modifications to Date WASHINGTON – Today, the Obama Administration released the next monthly report for the Making Home Affordable (MHA) loan modification program....
2. Obama Administration Kicks Off Mortgage Modification Conversion Drive WASHINGTON – The U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) today kick off a...

WASHINGTON – The U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) today kick off a nationwide campaign to help borrowers who are currently in the trial phase of their modified mortgages under the Obama Administration’s Home Affordable Modification Program (HAMP) convert to permanent modifications. The modification program, which has helped over 650,000 borrowers, is part of the Administration’s broader commitment to stabilize housing markets and to provide relief to struggling homeowners and is a primary focus of financial stability efforts moving forward. Roughly 375,000 of the borrowers who have begun trial modifications since the start of the program are scheduled to convert to permanent modifications by the end of the year. Through the efforts being announced today, Treasury and HUD will implement new outreach tools and borrower resources to help convert as many trial modifications as possible to permanent ones.

“We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowners,” said the new Chief of Treasury’s Homeownership Preservation Office (HPO), Phyllis Caldwell. “We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.” In her new role, Caldwell will lead HPO’s conversion drive efforts.

“Encouraging borrowers to move through the process of converting trial modifications to permanent modifications remains a top priority for HUD,” said HUD Assistant Secretary for Housing and FHA Commissioner David Stevens. “As a part of our continuing efforts to improve the execution of the HAMP program, HUD is committed to working with servicers, borrowers, housing counselors and others dedicated to homeownership preservation to improve the transition of distressed homeowners into affordable and sustainable mortgages.”

With tens of thousands of trial modifications being made each week, the Administration is now working to ensure that eligible borrowers have the information and the assistance needed to move from the trial to the permanent modification phase. (All mortgage modifications begin with a trial phase to allow borrowers to submit the necessary documentation and determine whether the modified monthly payment is sustainable for them.) As the first round of modifications convert from the trial to permanent phase, the Administration has identified several strategies for addressing the challenges that borrowers confront in receiving permanent modifications.

In addition to the conversion drive that kicks off today, the Obama Administration has already taken several steps to make the transition from trial to permanent modification easier and more transparent by:

Extending the period for trial modifications started on or before September 1st to give homeowners more time to submit required information;
Streamlining the application process to minimize paperwork and simplify the submission process; meeting regularly with servicers to identify necessary improvement to borrower outreach and responsiveness;

Developing operational metrics to hold servicers accountable for their performance, which will soon be reported publicly;
Enhancing borrower resources on the MakingHomeAffordable.gov website and the Homeowner’s HOPETM Hotline (888-995-HOPE) to provide direct access to tools and housing counselors.

The Mortgage Modification Conversion Drive will include the following:

Servicer Accountability. As part of the Administration’s ongoing efforts to hold servicers accountable for their commitment to the program and responsibility to borrowers, the following measures will be added:

Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers. Treasury/Fannie Mae “account liaisons” are being assigned to these servicers and will follow up daily as necessary to monitor progress against the servicer’s plan. Daily progress will be aggregated by the end of each business day and reported to the Administration.

Servicers failing to meet performance obligations under the Servicer Participation Agreement will be subject to consequences which could include monetary penalties and sanctions.

The December MHA Servicer Performance Report will include the data on permanent modifications as well as the number of active trial period modifications that may convert by the end of the year if all borrower documents are successfully submitted, sorted by servicer and date.
Servicers will be required to report to the Administration the status of each modification to provide additional transparency about situations where borrowers face obstacles to moving to the permanent phase.

Web tools for borrowers. Because the document submission process can be a challenge for many borrowers, the Administration has created new resources on www.MakingHomeAffordable.gov to simplify and streamline this step. New resources include:

Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps;
Comprehensive information about how the trial phase works, what borrower responsibilities are to convert to a permanent modification, and a new instructional video which provides step by step instruction for borrowers;

A toolkit for partner organizations to directly assist their constituents;

New web banners and tools for outreach partners to drive more borrowers to the site and Homeowner’s HOPETM Hotline (888-995-HOPE).
Engagement of state, local and community stakeholders. Through the conversion drive, the Administration is engaging all levels of government – state, local and county – to both increase awareness of the program and expand the resources available to borrowers as they navigate the modification process.

HUD will engage staff in its 81 field offices to distribute outreach tools. HUD will also encourage its 2700 HUD-Approved Counseling Organizations to distribute outreach information to participating borrowers.

By engaging the National Governors Association (NGA), National League of Cities (NLC) and National Association of Counties (NACo) the Administration is connecting with the thousands of state, local, and county offices on the frontlines in large and small communities across the country who are hardest hit by the foreclosure crisis. These offices will now have the tools to increase awareness of the program, connect with and educate borrowers and grassroots organizations on how to request a modification and take the additional steps to ensure they are converted to permanent status; and serve as an additional trusted resource for borrowers who are facing challenges with the program.

In partnering with the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, state regulators will now have enhanced tools to assist borrowers who are facing challenges in converting to a permanent modification and to report to the Administration on the progress and challenges borrowers and servicers are facing on the ground. Regulators will also be empowered to work directly with escalation and compliance teams to ensure that HAMP guidelines are consistently applied.

Related posts:

1. Obama Administration Releases New Data On Modification Program WASHINGTON — Today, the Obama Administration released the latest monthly report for the Making Home Affordable (MHA) loan modification program....

WASHINGTON – Today, the Obama Administration released the next monthly report for the Making Home Affordable (MHA) loan modification program. As part of an ongoing commitment to transparency, the report includes for the first time state-specific trial modification numbers. With more than 650,000 modifications under way across the country, the program is on track to meet its goals over the next several years.

“As this report demonstrates, struggling homeowners in every state now benefit from reduced monthly mortgage payments and have an opportunity to stay in their homes,” said Treasury Assistant Secretary Michael S. Barr.  “The program is having a pronounced impact in areas particularly hard hit by the housing crisis. We’re reaching borrowers at a larger scale than any other modification program to date, but there is still much more work to be done.”

[youtube]http://www.youtube.com/watch?v=8a_xz9pu8K0[/youtube]

The Monthly MHA Report is available here

Related posts:

1. Obama Administration Releases New Data On Modification Program WASHINGTON — Today, the Obama Administration released the latest monthly report for the Making Home Affordable (MHA) loan modification program....

WASHINGTON, DC – Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan called on Congress to approve three important measures to improve housing and the housing market for Americans: extension of the First Time Homebuyers Tax Credit for a limited period, extension of higher loan limits for home mortgages, and secure funding for the Housing Trust Fund.

“We welcome efforts taken by Congress to extend the First Time Homebuyers Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide”, said Secretaries Geithner and Donovan.“ In extending the credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners. We also urge Congress to act swiftly to extend the loan limits that currently apply to most mortgages, helping make rates more affordable for middle-class families. Finally, we will work with Congress to identify a financing source for the Housing Trust Fund, which will help provide decent housing for families hardest hit by the current economic downturn. ”

“These three measures will help support our efforts to stabilize the housing market by providing support for the recovery in housing prices, keeping mortgage rates low, and helping people who can afford their homes to avoid foreclosure ”, said Secretary Geithner.

HUD Secretary Shaun Donovan said, “These three measures provide comprehensive support to our recovering housing market and continued access to affordable housing.“ While extending the tax credit and higher loan limits will help promote homeownership, funding the Housing Trust Fund will provide assistance to renter households impacted by the economic crisis.”

Fact Sheet

Secretary Geithner and Secretary Donovan today announced their support for three key housing measures:

1. Extend the First Time Homebuyer Credit, with strong anti-fraud measures. The Administration supports a limited extension of the First Time Homebuyers Tax Credit, which is currently set to expire on December 1. This credit has made the difference in bringing new families into the housing market. Those buyers, in turn, have reduced the inventory of unsold homes and contributed to three months in a row of increases in home prices nationwide. A stronger housing market benefits homeowners and strengthens the financial system. In order to reinforce the progress already made this year, the Administration urges Congress to extend the Credit for a limited period. In doing so, we urge the Congress to include effective measures to combat tax fraud, including setting a minimum age for home purchase and requiring documentary proof of the purchase in order to receive the credit.
2. Extend Loan Limits for Mortgage Loans. The Administration supports a one-year extension of the current loan limits for the Federal Housing Administration, Fannie Mae, and Freddie Mac. This extension is vital in helping support the continued availability of affordable mortgages for many working families and aiding the recovery in the housing markets. Under present law, the current loan limits will expire on December 31. Families are already applying for mortgages that are being turned down or priced higher due to this impending deadline. The extension of the loan limits is being considered in the upcoming Continuing Resolution, and we urge Congress to enact the extensions immediately in order to assure the smooth supply of capital to the housing market.
3. Secure Financing for the Housing Trust Fund. The Administration is committed to working with the Congress to fund the Housing Trust Fund. This Fund is an important source of support for extremely low income families who otherwise cannot afford decent housing. The Fund was created in the 2008 HERA legislation, but has not had an effective funding source and so has not been able to fulfill its important mission. While the President′ s Budget proposed to fund the Housing Trust Fund for $1 billion, and fully offset it within the Budget, today the Administration is announcing that it will actively work with Congress to identify a specific offset to assure that level of financing for the Fund.

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WASHINGTON — The Internal Revenue Service today issued a new form to aid the processing of mortgage applications under the Home Affordable Modification Program (HAMP) as part of the Making Home Affordable Program. The new form will make it simpler for people, especially homeowners trying to modify or refinance their mortgages, to order copies of their tax return transcripts.

Taxpayers often need copies of their tax return information, especially when they are obtaining a new mortgage or when they are refinancing or modifying an existing mortgage. Taxpayers can use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a Form 1040 series tax return transcript free of charge.

A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income.

Form 4506T-EZ is a streamlined version of the Form 4506T, Request for Transcript of Tax Return. The Form 4506T-EZ is only for individuals who filed a Form 1040 series. Businesses, partnerships and individuals who need transcript information from other forms must still use the Form 4506T.

Transcripts ordered through the Form 4506T-EZ can be mailed to a third party, such as a financial institution. The IRS cautions taxpayers that they should complete all required fields, especially the requested years, before signing and dating the form.

Taxpayers can obtain Form 4506T-EZ at IRS.gov. It is a fillable form so people can complete the form online and print a copy. They can mail it or fax it to the addresses and numbers listed in the instructions. It generally takes 10 days to process the request.

The IRS also recommends that people retain copies of their original tax returns in a safe, secure place. Exact copies of tax returns are available by filing Form 4506, Request for Copy of Tax Return, but each copy costs $57 and can take 60 days to process.

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WASHINGTON – As part of its comprehensive plan to stabilize the U.S. housing market, the Obama Administration today announced a new initiative for state and local housing finance agencies (HFAs) that will help support low mortgage rates and expand resources for low and middle income borrowers to purchase or rent homes that are affordable over the long term. Following up on the intent to support HFAs first outlined in February under the Homeowner Affordability and Stability Plan, the Administration’s initiative has two parts: a new bond purchase program to support new lending by HFAs and a temporary credit and liquidity program to improve the access of HFAs to liquidity for outstanding HFA bonds.

The HFA Initiative using authority provided to Treasury by the Housing and Economic Recovery Act of 2008 (HERA) will provide hundreds of thousands of affordable mortgages for working families and enable the development and rehabilitation of tens of thousands of affordable rental properties. It will do this at little or no cost to the taxpayer because it is paid for by the HFAs themselves and, as a temporary program, it incentivizes HFAs to transition back to market sources of capital as quickly as possible.

“This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times,” said Treasury Secretary Tim Geithner. “Through the years, many low and moderate income Americans have been well served by state and local HFAs, but the housing downturn has hit these organizations too. Through this initiative, the Administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs – key components in stabilizing the housing market overall.”

“Housing Finance Agencies are critical partners to helping American families through this tough economic time,” Department of Housing and Urban Development (HUD) Secretary Shaun Donovan said. “Today’s announcement makes clear this Administration’s commitment to providing responsible homeownership opportunities, affordable rental homes and getting our housing market back on track.”

“FHFA supports this initiative and the important role Fannie Mae and Freddie Mac will play in implementing it,” said Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco. “The HFA program has been structured to be on commercially reasonable terms for the Enterprises, to be carried out by the Enterprises in a safe and sound manner, and to support market liquidity, stability, and affordable housing. I wish to thank FHFA, HUD, Enterprise and Treasury staff for their hard work and leadership in developing this program.”

The Department of the Treasury and HUD, together with the FHFA, Fannie Mae, and Freddie Mac, have developed this initiative to maintain the viability of HFA lending programs and infrastructure. The key parts of the new initiative are:

• New Issue Bond Program (NIBP). The NIBP will provide temporary financing for HFAs to issue new mortgage revenue bonds. Using authority under the Housing and Economic Recovery Act of 2008 (HERA), Treasury will purchase securities of Fannie Mae and Freddie Mac backed by these new mortgage revenue bonds. The program can support several hundred thousand new mortgages to first-time homebuyers this coming year, as well as refinancing opportunities to put at-risk but responsible and performing borrowers into more sustainable mortgages. The new bond issuance will also support development of tens of thousands of new rental housing units for working families.

• Temporary Credit and Liquidity Program (TCLP). Fannie Mae and Freddie Mac will provide replacement credit and liquidity facilities available to HFAs that will help reduce the costs of maintaining existing financing for the HFAs. The agreements will serve to help relieve financial strains experienced by HFAs and enable them to continue their important work. Treasury will backstop the GSE replacement credit and liquidity facilities for the HFAs by purchasing an interest in them using HERA authority.

HFAs will pay a fee to have access to both programs under the HFA Initiative. These fees have been designed to cover expected costs to the Treasury Department and the taxpayer. The fee for the TCLP will also increase over time to encourage HFAs to find private alternatives as quickly as possible. The HFA Initiative has also been designed to include other features that minimize risk to the taxpayer, such as requiring HFAs that issue new bonds under this program to also prove their ability to issue bonds to private investors.

The initiative is designed to be temporary in nature and will be available for only a short window to help bridge the transition period as the HFAs resume their activities after experiencing a number of challenges in the course of the housing downturn. After today, each HFA that desires to participate will be asked to develop a program participation request in consultation with Treasury, Fannie Mae, and Freddie Mac, indicating its desired level of participation in either the new bond or liquidity program. These requests for new issuance should generally not exceed what the HFA would have received in allocation from Congress for a similar period through 2010 and will generally follow the allocation formula established for 2008 by HERA. If program demand is smaller than these guidelines would allow, the total program size will be capped at a lower amount. This bottom-up review is being used to prudently shepherd taxpayer resources, and the program will not be sized any larger than needed to meet specific demand.

Pricing under the program will reflect both the cost of any financing required by Treasury as well as a fee designed to cover any risk posed by the HFA. While there is risk that losses could exceed estimates, the fee schedule Treasury has adopted is designed to cover net losses under most stressed conditions and thus would minimize risk to the taxpayer.

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WHAT STATE AND LOCAL OFFICIALS ARE SAYING ABOUT THE INITIATIVE

“I am so pleased that the Treasury Department has responded to calls for assistance from Governors and Housing Finance Agencies across the country. This initiative is critical to helping struggling Vermonters access affordable and sustainable housing. It is also a welcome investment in the long-term viability of the Vermont Housing Finance Agency (VHFA). My wife Dorothy and I had our first mortgage through VHFA, so we know first-hand what an invaluable resource it is for working Vermonters, especially in a recovering economy.” - Republican Governor Jim Douglas of Vermont

“We are pleased that the federal government recognizes the critical role that HFAs play in the housing and economic recovery. HFAs have a proven track record of making prudent loans with sound underwriting standards. However, recent conditions in the capital markets have hindered the ability of HFAs to provide their customary loan products. This proposal allows HFAs to continue offering below-market rate financing to first-time homebuyers, and we are ready and well-positioned to immediately begin implementing these critical programs. In Virginia, this proposal allows VHDA to continue assisting first-time homebuyers, who we believe are the foundation for the housing and economic recovery.” - Susan Dewey, Executive Director of the Virginia Housing Development Authority and National Council of State Housing Agencies (NCSHA) President

“This plan will help revive CalHFA lending programs and give California first time homebuyers a chance to take advantage of the highest affordability levels that have been seen in almost two decades.” - Steve Spears, Acting Executive Director of California Housing Finance Agency

“This announcement is huge! We truly appreciate the time the Administration committed to learning the HFA business over the last few months. It is clear they understand the importance of our products to both the rental and homeownership markets. We are eager to access these liquidity and bond investment opportunities, as they will allow us to use Colorado’s HERA bond cap to create a mortgage refinance program for borrowers who are having trouble with their current mortgages and also to finance rental developments serving low-income families, both of which will contribute to the Colorado’s ongoing economic recovery.” - Roy Alexander, Executive Director of the Colorado Housing and Finance Authority

“The Administration’s Housing Bond purchase plan will allow us to serve thousands of additional families in Florida by offering much lower interest rates on mortgage loans. Combined with our state-funded down payment assistance, qualified first time homebuyers will be able to take advantage of historically low sales prices on homes in Florida. The addition of these new, qualified homebuyers will help reduce the huge inventory of homes that are on the market due to the foreclosure crisis and help to stabilize declining home values throughout the state. The current lack of liquidity in Florida alone jeopardizes the financial integrity of that state’s housing Guarantee Fund, putting at risk 94 multifamily rental developments with 24,000 affordable units that have $740M of bonds outstanding. Over the last 19 months, the lack of liquidity has cost the FHFC Guarantee Fund $16M in increased bond interest expense. The Administration’s plan to provide liquidity will provide significant help by offering a lower cost alternative.” - Steve Auger, Florida Housing Finance Corporation

“The National Association of Local Housing Finance Agency (NALHFA) leaders and staff have been working with officials at the Treasury, Federal Housing Finance Agency, Fannie Mae, Freddie Mac and the Department of Housing and Urban Development for many months on the details of the housing bond purchase program and liquidity facility, providing expertise and draft documents. We are pleased that the program being announced today reflects NALHFA’s fundamental principle that it accommodate the unique needs of local housing finance agencies (HFAs) across the country, such as delayed delivery of, and a premium bond structure for, single-family bonds. By Treasury’s purchase of multifamily bonds local HFAs can respond to the critical need for affordable housing for the nation’s renters, while the liquidity facility will provide needed credit support for existing variable rate bonds. Local HFAs have a strong track record in responsibly administering bond-funded ownership and rental housing programs that respond to local needs and are safe investments.” - Patricia Braynon, Executive Director of Miami-Dade County, FL Housing Finance Authority

“Our HFA’s inability to access the tax-exempt and liquidity markets during this last year for home financing capital has undercut a traditional segment of Idaho’s home buying market. In a time of significant market stress, the Treasury program will assist in bringing private investors back to this market. This is not a problem we have created – our financial condition remains strong and our borrowers are making their mortgage payments. The Treasury program is a much needed response to the dislocation of capital markets for first-time home buyers that our citizens have relied upon for years.” - Gerald Hunter, President and Executive Director of Idaho Housing and Finance Association

“We commend the Administration and the Treasury Department. Today’s announcement recognizes the needs of low- and moderate-income first time homebuyers and the ability of housing finance agencies (HFAs) to meet those needs. With Treasury’s support, we’ll be able to issue bonds and get back into the business of providing affordable, fixed rate mortgages to first time homebuyers who are qualified and ready. Our families will now be able to take advantage of historically low interest rates and home prices to stabilize their own households and, ultimately, the national housing market. Treasury’s program will also allow us to raise money to finance multi-family housing for low-income families, a market desperately in need of a boost. The program enhances our bond business, and we’re thrilled to be able to continue to serve Montgomery County’s low and middle income families.” - Annie B. Alston, Executive Director of Housing Opportunities Commission of Montgomery County, MD

“We’ve reached that critical economic juncture where it’s not enough just to have no bad news. We need more affirmative good news. The Administration has provided that today in this vote of confidence in the nation’s HFAs, which provide a vital link to sustainable homeownership opportunity for people throughout the country.” - Thomas R. Gleason, Executive Director of MassHousing

“We are highly impressed with the leadership shown by our federal partners on this very important initiative. This announcement paves the way for housing finance agencies around the country to help thousands of homebuyers unlock the door to their first home. This financing combined with other local resources will enable us to serve lower-income families who are presently shut-out of the homeownership market. We applaud the federal government’s commitment to this much needed boost to the economy. It has been over two years since market conditions permitted local housing finance agencies (HFAs) to be able to access capital for the purpose of providing low-interest financing for homebuyers. It is our intention to hit the ground running and get resources on the streets for homebuyers to use in the very near future.” - Mark Ulfers, Executive Director of Dakota County, MN Community Development Agency

“Housing Bond purchase and liquidity support means that we will be able to provide the much needed and highly demanded first-time homebuyer mortgage at a reasonable rate to our borrowers. In addition, this liquidity support gives us the ability to provide rate locks for our multi-family development projects, that, to date have been difficult, if not impossible to provide. This translates directly in the development of more housing for renters as well as providing the opportunity for NJ residents to reach the dream of homeownership, with an affordable, fixed rate, predictable mortgage!” - Marge Della Vecchia, Executive Director of New Jersey Housing and Mortgage Finance Agency

“In New York City, the New York City Housing Development Corporation (”HDC”) is focused upon developing and preserving affordable multi-family housing. To succeed in this effort, we need robust participation from the financial services industry. During a time of economic volatility, a constrained lending environment has made our task even more challenging. This new initiative helps address some of the serious obstacles we’ve encountered in our efforts to finance affordable housing developments. As a result, we’re deeply appreciative of the efforts of the Department of Treasury, the Federal Housing Finance Agency, Fannie Mae and Freddie Mac as well as the Department of Housing and Urban Development, to structure a program that supports the ability of housing finance agencies (HFAs), state-wide and local, to address the substantial need for affordable single and multi-family mortgage financing. We look forward to working with our federal and state partners across the country on this program that is good for New York City and great for the nation.” - Marc Jahr, President of New York City Housing Development Corporation

“With the market upheaval, we’ve been unable to sell new mortgage bonds for a year. Despite all the ingenuity we can muster, we’re now helping only about a quarter as many first-time buyers as normal. Treasury’s help with liquidity support at this juncture will make a huge difference in our ability to continue to deliver safe, predictable, low cost mortgages to first-time buyers.” - Bob Kucab, Executive Director of the North Carolina Housing Finance Agency

“The Administration’s Plan will restore the economic advantage of tax-exempt financing, which will be passed on to our first-time homebuyers. We will have the ability to help more borrowers and impact the lives of thousands of Ohio families by offering a product that provides flexibility, fits the economic circumstances of our customers, and promotes sustainable homeownership.” - Doug Garver, Executive Director of Ohio Housing Finance Agency

“We are truly excited about the Treasury plan and partnering with the GSEs to carry it out. This partnership will allow HFAs to provide affordable housing to many more people who need it, while supporting economic recovery. In Pennsylvania, we expect this initiative to allow PHFA to provide the American Dream to approximately 12,000 to 15,000 Pennsylvanians who otherwise could not access the market.” - Brian Hudson, Executive Director of the Pennsylvania Housing Finance Agency

“HFAs offer more than just extra financial assistance to homebuyers, they bring a commitment that the new homeowner will be able to live in their home for the life of the loan. Market conditions have hindered HFA ability to achieve this mission. The Administration’s program will open this assistance and determination to tens of thousands of Rhode Island families.” - Richard Godfrey, Executive Director of Rhode Island Housing

“In Tennessee, we still have a lot of potential first-time buyers sitting on the fence. If we can get those buyers into the market, and this plan will help us do that, we could jump start our entire housing market. Even with conventional rates as low as they have been, it’s still not enough for many working families to achieve sustainable homeownership. This will go a long way towards changing that.” - Ted Fellman, Executive Director of Tennessee Housing Development Agency

“While we still need to see many details, the Treasury Department’s plan has the potential to get Fannie Mae, Freddie Mac, and the Federal Home Loan Banks back in the game and to help state and local housing finance agencies do what we do best, which is make the dream of homeownership happen for millions of Americans.” - Michael Gerber, Executive Director of Texas Department of Housing & Community Affairs

“We are excited by the Treasury Department announcement. The bond purchase program and the liquidity facility are both needed to enable local and state housing finance agencies (HFAs) to continue to provide sustainable homeownership opportunities for American families as well as continuing our role in the financing and development of quality multi-family housing. This program reflects the efforts of NALHFA and others over many months and we are pleased this program addresses the unique needs of local HFAs presented during our discussions.” - Jim Shaw, Executive Director of Capital Area Housing Finance Corporation, Austin, TX

“The Administration’s plan to help our agency sell housing bonds will allow our Commission to serve twice as many first-time home buyers next year. This will add another $100 million to the state’s economy and support a significant number of new jobs to help our recovery. It will be a great boost to our programs.” -Kim Herman, Executive Director of Washington State Housing Finance Commission

“We are encouraged by the news of a Treasury Announcement. In Wisconsin, WHEDA’s contribution to the housing market has been significant. Prior to last year when we suspended lending, WHEDA was lending as much as $10 million a week to first time homebuyers – homebuyers who were well-prepared, well-educated and who were getting a low interest, fixed rate. In working with WHEDA, many homeowners had access to thousands of dollars of down payment grants and loans. Finally, mortgages from Housing Finance Agencies perform very well. We’re proud at WHEDA of a foreclosure rate that’s less than one percent.” -Antonio Riley, Executive Director of Wisconsin Housing and Economic Development Authority

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1. Administration Calls On Congress To Approve Key Housing Measures WASHINGTON, DC – Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan called on Congress to approve three important measures...

WASHINGTON – This morning, Treasury Secretary Tim Geithner hosted Attorney General Eric Holder, Housing and Urban Development (HUD) Secretary Shaun Donovan, Federal Trade Commission (FTC) Chairman Jon Leibowitz, Financial Crimes Enforcement Network (FinCEN) Director Jim Freis and attorneys general from 12 states to discuss emerging trends and proactive strategies to combat fraud against consumers in the housing markets as well as best practices to bolster coordination across state and federal agencies. This meeting follows up on an announcement by the Obama Administration in April of a multi-agency crackdown on foreclosure rescue scams and loan modification fraud designed to protect homeowners from predatory financial practices.

“A clear lesson of this financial crisis is that American consumers need better protection against fraud,” said Treasury Secretary Tim Geithner. “And while we will prosecute anyone who violated the law, going forward we will not wait for problems to peak before we respond. The Obama Administration is acting preemptively, across federal agencies and alongside state governments, to stop consumer fraud.”

[youtube]http://www.youtube.com/watch?v=3QhmTHaOpYc&feature=related[/youtube]

Treasury, FinCEN, and DOJ, HUD, and FTC have committed to taking proactive measures to curb abuse by coordinating information and resources across agencies to maximize targeting and efficiency in fraud investigations. This includes alerting financial institutions to emerging schemes, stepping up enforcement actions and educating consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

“Our efforts to attack mortgage fraud must be, and are, concerted and coordinated,” said Attorney General Holder. “Working together, we can send a clear and straightforward message: Those who prey on vulnerable American homeowners cannot hide from the hand of the law. If you perpetrate mortgage fraud, we will find you and we will bring you to justice.”

“At HUD, we firmly believe that the first line of defense is an informed consumer, and that’s why we’re working with our state and local partners on the ground, particularly housing counselors, to increase consumer awareness and give homeowners and homebuyers a trusted place to turn for assistance,” said Secretary Donovan. “HUD has also requested $37 million in our FY2010 budget to combat fraud by training industry partners and giving FHA access to state-of-the-art fraud detection tools, as well as to help curb discrimination through increases in HUD’s fair housing activities.”

The FTC today announced two new law enforcement actions in a continuing crackdown on mortgage foreclosure rescue and loan modification scams, bringing to 22 the number of these cases the Commission has filed since the housing crisis began.  The FTC also announced developments in similar pending mortgage-related actions, several of which have involved coordinated case work from FinCEN.

“Today’s challenging economy presents an opportunity for con artists who prey upon financially distressed consumers.  The Federal Trade Commission and our state and federal partners will continue to bring law enforcement actions to stop this insidious fraud,” FTC Chairman Leibowitz said.  “If you’re worried about keeping your home, avoid any company that asks for a large fee in advance, guarantees that they’ll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead.”

Illegal and predatory practices in the mortgage market are rampant in the wake of the recent financial crisis, including many fraudulent television ads that run on prominent networks promising simple solutions to complex financial problems. Federal and state officials discussed patterns of fraud in today’s meeting and best practices for addressing them early, before American families suffer further financial harm.

Participating in today’s meeting were attorneys general Dustin McDaniel, Arkansas; Terry Goddard, Arizona; Richard Blumenthal, Connecticut; Lisa Madigan, Illinois; Tom Miller, Iowa; Doug Gansler, Maryland; Chris Koster, Missouri; Catherine Cortez Masto, Nevada; Roy Cooper, North Carolina; Richard Cordray, Ohio (by phone); Patrick Lynch, Rhode Island; Rob McKenna, Washington (by phone). Collectively, these offices have taken action on scores of fraud cases in the housing markets and opened hundreds of investigations to date.

Statements from these attorneys general follow:

“Mortgage rescue schemes are becoming an epidemic — preying on families facing foreclosure in exploding numbers. These mortgage rescue scams raise false hopes and then cruelly exploit them, which is why my office is fighting them and welcomes the federal government as a strong ally. Connecticut has adopted a landmark ban on upfront fees for mortgage repair schemes — a model for national action in the battle against exploitation of consumers seeking to save their homes. I proposed and fought for it, and will enforce it vigorously. Today’s meeting is an historic step toward a powerful alliance of state and federal law enforcers battling scammers who profit on homeowners facing foreclosure.” - Connecticut Attorney General Richard Blumenthal

“Homeowners should never pay an upfront fee for help with negotiating a loan modification. If you’re asked to pay an upfront fee, that’s a sure sign you’re dealing with a scavenger whose only goal is to con you out of money you can’t afford to lose, and who will ultimately rob you of any opportunity to save your home with the help of legitimate organizations.” - Illinois Attorney General Lisa Madigan

“Mortgage foreclosure rescue scams ask consumers to pay hundreds of dollars up-front for so-called rescue from foreclosure, but they just take your money and do nothing to help.  The scam puts the homeowner deeper into a financial hole and does nothing to save the home.  In fact, the scam often diverts consumers from getting the real help they need such as from the free Iowa Mortgage Help Hotline sponsored by our office.” – Iowa Attorney General Tom Miller

“An unfortunate result of the country’s current economic situation is the exponential increase in the number of disreputable companies and individuals eager to strip homeowners of their most valuable asset. I am pleased that our federal partners are working with the Attorneys General to help shut these operations down and keep millions of families in their homes.” - Maryland Attorney General Douglas F. Gansler

“In Missouri we have zero tolerance for people who prey on those in serious risk of losing their homes. We will continue to aggressively pursue businesses that engage in mortgage-relief scams to stop them from operating in Missouri.” - Missouri Attorney General Chris Koster

“This federal and state partnership is an important continuing effort to bring relief and justice to Nevadans from mortgage fraud.” - Nevada Attorney General Catherine Cortez Masto

“Foreclosure scams cost homeowners time and money, two things you can’t afford to lose when you’re fighting to save your home. We’re cracking down on foreclosure scammers who take homeowners’ money but do little or nothing to help them.” – North Carolina Attorney General Roy Cooper

“Consumer education is the new burglar alarm and state-federal cooperative enforcement is the deadbolt that will protect homeowners from today’s crooks – fraudsters who claim to offer mortgage relief.” -Washington Attorney General Rob McKenna

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