Obama's New Mortgage Relief Plan Prevents Deeper Recession

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Obama's Latest Housing Plan Likely To Help Prevent Deeper Recession


Three years after the housing bust sent foreclosures rates soaring, the White House has gone back to the drawing board to try to keep another 8 million homeowners in their homes.

But a series of enhancements to the Obama administration's year-old foreclosure relief plan announced Friday does little to attack the fundamental logjams that have plagued a program designed to modify loans to create more affordable payments.

As a result, the latest changes likely will help relatively few borrowers, according to those briefed on the program.

“We continue to tinker around the edges of foreclosure prevention,” said John Taylor, president of the National Community Reinvestment Coalition, who testified Thursday on Capitol Hill about the program’s failings.

“We rush to give banks tax breaks, but we dawdle to help homeowners who through no fault of their own lost their jobs because of the economic crisis or bought defective loans that caused the economic crisis.”

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When the pace of U.S. foreclosures began rising in 2007, the hardest hit were borrowers who had been sold subprime loans that reset to unaffordable levels. As the housing market cratered and the recession deepened, the problem spread to other groups, including those who lost their jobs or saw the value of their homes fall below what they owed on their mortgage.

The changes announced Friday are intended to help those groups. Lenders and mortgage servicers will be required to offer three to six months of temporary relief for borrowers who have lost their jobs.

Mortgage companies participating in the existing Home Affordable Modification Program (HAMP), also will be required to consider cutting the amount borrowers owe, for which they would be paid an incentive from the $75 billion set aside to fund the HAMP program. "They’re trying,” said Helen Raynaud, vice president of national grants for the National Foundation for Credit Counseling. “But a lot of the aspects are still voluntary for the servicers to participate."

Additional incentives are being offered to lenders and servicers that cut payments or eliminate second mortgages — a key roadblock in many loan modifications. But unless lenders and servicers suddenly increase the pace of loan modifications, the cost of those incentives will likely remain small. So far, the government has paid out only about $50 million under the HAMP program.

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After the Bush administration’s first foreclosure relief plan, Hope Now, failed to make a dent in the rising foreclosure rate, the Obama administration a year ago announced the HAMP program to try to head off the widening crisis. The plan originally was expected to save between 3 million and 4 million homes. So far, of 1.1 million homeowners who have signed up, only 170,000 have won permanent loan modifications.

To be sure, the latest changes will help boost that number. But those who have looked at the new guidelines say the numbers helped likely will still be counted in the hundreds of thousands. As many as 8 million homeowners are at risk of losing their homes in the next two years.

"We remain dubious about government mortgage modification efforts," wrote Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. "So far none have lived up to expectations, and we see little reason to believe the latest effort will turn out any different."

Part of the problem lies with the scope of the crisis. Three years after the housing bubble burst, the number of homeowners falling behind on their mortgages continues to rise. On Thursday, U.S. banking regulators reported that the number of seriously delinquent mortgages jumped in the fourth quarter, led by a sharp increase among the most creditworthy borrowers.

Some 13.6 percent of all homeowners with mortgages — more than one in seven — are behind in their payments, according to the Office of the Comptroller of the Currency. It was the seventh consecutive quarterly rise.

Meanwhile, millions of homeowners who were sold “pay-option” adjustable mortgages during the housing boom face the prospect of big jumps in monthly payments this year and next. Millions more are “underwater,” owing more than their home is worth.

The mortgage mess remains mired in the complex financial innovation that created the hundreds of billions of dollars of mortgage-backed bonds that financed the housing bubble. That has created an equally complex quagmire of multiple investors holding pieces of an individual homeowner's mortgage. Disagreements over how to value those investments, and how and when to book losses, have stymied the process from the beginning.

“We have to do a real reality check,” said David Berenbaum, chief program officer at the NCRC. “Until we address the underlying problems with this paper — who holds it, how it was originated, how people are accountable and how we can correct this epidemic of foreclosures — our communities' tax base, as well as the economic climate of the nation, is at risk.”

Rising unemployment has also expanded the crisis to a pool of borrowers who were once among the most creditworthy. But one of the nasty side effects of the loan modification has been that homeowners who see their payments reduced below the original amount can see their credit scores lowered.

“That can hurt them when they go looking for a job,” said Raynaud. “When you get a job offer, employers are looking at credit scores.”

It’s not clear whether Friday’s announcement addresses that problem, said Raynaud.

Homeowners who have applied for help with their mortgages report a blizzard of red tape when trying to deal with lenders and servicers. Many servicers have acknowledged the problem, but argue that they were never set up to deal with the historic wave of defaults and foreclosures.

But three years after the housing bust began, homeowners and housing counselors report that the process involves endless delays on hold, repeated redirection from one department to another, delayed or no response, lost paperwork and little or no explanations when applications are denied.

“These problems have not really been addressed yet,” said Raynaud “I have not heard from any counselors that it’s getting better.”


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Obama To Launch Principal Reduction Program For Unemployed Homeowners

Mortgage Modification: Principal Reduction Program For Struggling Homeowners


After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is expected to announce Friday a plan to reduce the amount some troubled borrowers owe on their home loans.

The effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, people briefed on the plan said. It would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program.

The people briefed on the plan asked Thursday that they not be identified because the details had not yet been announced.

The plan will also require the more than 100 mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

It also will include three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans – a problem that has blocked many loan modifications.

The changes "will better assist responsible homeowners who have been affected by the economic crisis through no fault of their own," an administration official said.

To date, the administration's $75 billion foreclosure-prevention program has been a disappointment. Critics have complained the program does little to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage are "under water" – they owe more than their property is worth – according to Moody's Economy.com.

An expansion of the foreclosure-prevention program has long been expected because only 170,000 homeowners have completed the process out of 1.1 million who began it over the past year.

The program is designed to lower borrowers' monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms up to 40 years. To complete the program, homeowners need to go through a three month trial period and provide proof of their income, plus a letter documenting their financial hardship.

Though $75 billion in funding is available to the more than 100 lenders who have signed up, only a tiny fraction has been spent. Lenders had received $58 million in incentive payments as of last month, according to the Government Accountability Office.

Meanwhile, one long-delayed piece of the government effort is getting off the ground.

Citigroup Inc. on Thursday joined the government's program to modify second mortgages such as home equity loans. With Citi on board, now four big owners of second mortgages have joined. The others are Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co.




Obama readies steps to fight foreclosures, particularly for unemployed


The Obama administration plans to overhaul how it is tackling the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed, senior officials said Thursday.

Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower's income, which would typically be the amount of unemployment insurance, for three to six months. In some cases, administration officials said, a lender could allow a borrower to skip payments altogether.

The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment. While the initial mortgage crisis that erupted three years ago resulted from millions of risky home loans that went bad, more-recent defaults reflect the country's economic downturn and the inability of jobless borrowers to keep paying.

The administration's new push also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, offering financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners. Those who are still current on their mortgages could get the chance to refinance on better terms into loans backed by the Federal Housing Administration.

The problem of "underwater" borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged.

Officials said the new initiatives will take effect over the next six months and be funded out of $50 billion previously allocated for foreclosure relief in the emergency bailout program for the financial system. No new taxpayer funds will be needed, the officials said.

The measures have been in the works for weeks, but President Obama is finally to release the details days after his watershed victory on health-care legislation. Following that bruising battle on Capitol Hill, his administration is now welcoming a chance to change the subject and turn its attention to the economy and, in particular, the plight of the unemployed -- concerns that are paramount for many Americans.

The administration has been facing increasing pressure from lawmakers and housing advocates to overhaul its foreclosure prevention efforts. So far, fewer than 200,000 borrowers have received permanent loan modifications under its $75 billion marquee program, known as Making Home Affordable. In the meantime, there is a growing backlog of distressed borrowers awaiting help from their lenders, which threatens to undercut efforts to stabilize the housing market.

Challenges unmet

Assistant Treasury Secretary Herbert M. Allison Jr. told a House panel Thursday that "we did not fully envision the challenges that we would encounter" when the earlier program was launched.

The efforts have been hampered by the difficulty of helping unemployed homeowners, who struggled to qualify for the government's mortgage relief plan. In requiring temporary relief for jobless borrowers, known as forbearance, officials are hoping to give them time to find a new job. Some will still need more assistance after the six-month period while others will ultimately lose their homes, administration officials said.

"We certainly support a forbearance opportunity for unemployed borrowers," said John A. Courson, chief executive of the Mortgage Bankers Association. He said he had not seen full details of the program.

Four measures

In addition to mortgage relief for unemployed borrowers, the program features four other key elements, including several steps to address the growing population of borrowers who owe significantly more than their home is worth, according to officials who spoke on the condition of anonymity because the official announcement had not been made. Underwater borrowers now make up about a quarter of all homeowners, according to First American CoreLogic. Economists consider these homeowners at higher risk of default because they cannot sell or refinance their home when they run into financial troubles.

The first key element is that the government will provide financial incentives to lenders that cut the balance of a borrower's mortgage. Banks and other lenders will be asked to reduce the principal owed on a loan if the amount is 15 percent more than their home is worth. The reduced amount would be set aside and forgiven by the lender over three years, as long as the homeowner remained current on the loan.

Until recently, administration officials had been reluctant to encourage lenders to cut the principal balance, worrying that this would encourage borrowers to become delinquent. But as federal regulators have struggled to make an impact on the foreclosure crisis, those qualms have weakened.

"We would prefer to see a required principal forgiveness program. But this is helpful," said David Berenbaum, chief program officer for the National Community Reinvestment Coalition, a nonprofit housing group. "This is another tool that will help consumers weather the crisis."

Second, the government will double the amount it pays to lenders that help modify second mortgages, such as piggyback loans, which enabled home buyers to put little or no money down, and home equity lines of credit.

These second mortgages are an added burden on struggling homeowners, especially when their total debt, as a result, is greater than their home value.

Federal officials have estimated that about half of all troubled homeowners have a second mortgage and last year launched a program to encourage lenders to restructure them. That effort has struggled to get off the ground.

Third, the new effort also increases the incentives paid to those lenders that find a way to avoid foreclosing on delinquent borrowers even if they can't qualify for mortgage relief. For example, the administration is scheduled to launch a program next month encouraging lenders to have borrowers sell their homes for less than the mortgage balance in what is known as a short sale.

Fourth, the administration is increasingly turning to the Federal Housing Administration to help underwater borrowers who are still keeping up their payments. The aim is to help these borrowers refinance into a more affordable loan. The FHA will offer incentives to lenders that reduce the amount borrowers owe on their primary mortgages by at least 10 percent.

For those borrowers who have more than one mortgage on their house, the FHA will allow refinancing of the first loan only. The new loan and any second mortgage could not exceed 15 percent of the home's value. This approach is meant to benefit not only borrowers but also lenders by allowing them to offload mortgages that might otherwise fail.

Only homeowners who are refinancing their main residence, have a credit score above 500 and can document their income are eligible.

Administration official say this refinancing program should not strain the FHA's already weakened finances because the effort will be financed with up to $14 billion out of the federal bailout program.


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Sources: CBS News, Huffington Post, MSNBC, Youtube, Google Maps

Homeowner's Dilemma: Pay Underwater Mortgages Or Abandon?

Debtor's Dilemma: Pay the Mortgage or Walk Away


Should I stay or should I go? That is the question more Americans are asking as the housing market continues to drag.

In good times, it would have been unthinkable to stop paying the mortgage. But for Derek Figg, a 30-year-old software engineer, it now seems like the best option.

Mr. Figg felt trapped in a home he bought two years ago in the Phoenix suburb of Tempe for $340,000. He still owes about $318,000 but figures the home's value has dropped to $230,000 or less. After agonizing over the pros and cons, he decided recently to stop making loan payments, even though he can afford them.

Mr. Figg plans to rent an apartment nearby, saving about $700 a month.

A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what is known as a "strategic default," walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.

A standard mortgage-loan document reads, "I promise to pay" the amount borrowed plus interest, and some people say that promise should remain good even if it is no longer convenient.

George Brenkert, a professor of business ethics at Georgetown University, says borrowers who can pay -- and weren't deceived by the lender about the nature of the loan -- have a moral responsibility to keep paying. It would be disastrous for the economy if Americans concluded they were free to walk away from such commitments, he says.

Walking away isn't risk-free. A foreclosure stays on a consumer's credit record for seven years and can send a credit score (based on a scale of 300 to 850) plunging by as much as 160 points, according to Fair Isaac Corp., which provides tools for analyzing credit records. A lower credit score means auto and other loans are likely to come with much higher interest rates, and credit card issuers may charge more interest or refuse to issue a card.

In addition, many states give lenders varying degrees of scope to seize bank deposits, cars or other assets of people who default on mortgages.

Even so, in neighborhoods with high concentrations of foreclosures, "it's going to be really difficult to prevent a cascade effect" as one strategic default emboldens others to take that drastic step, says Paola Sapienza, a professor of finance at Northwestern University. A study by researchers at Northwestern and the University of Chicago found that as many as one in four defaults may be strategic.

Driving this phenomenon is the rising number of households that are deeply "under water," owing much more than the current value of their homes. First American CoreLogic, a real-estate information company, estimates that 5.3 million U.S. households have mortgage balances at least 20% higher than their homes' value, and 2.2 million of those households are at least 50% under water. The problem is concentrated in Arizona, California, Florida, Michigan and Nevada.

Josh Cotner, who owns an insurance agency, says his mortgage balance is about $100,000 more than the market value of his home in Gilbert, Ariz. Mr. Cotner could rent a bigger home nearby for $600 a month, far below the $1,655 he now pays on his mortgage, home insurance and property tax. He says he recently stopped making mortgage payments because his lender wouldn't help him reduce the principal on his loan under a federal program in which he believes he is qualified to participate. Given the sometimes lengthy legal process of foreclosure, he may be able to stay in the home for at least another nine months without making any payments.

Banks warn they may get tough with strategic defaulters by pursuing legal claims on a borrower's other assets. "We will try to reduce people's payments if they have a hardship," says Thomas Kelly, a spokesman for J.P. Morgan Chase & Co. "But we have a financial responsibility to get people to pay what they owe if they can afford it."

Steven Olson, a loan officer and roof installer in Roseville, Minn., defaulted in 2007 on a plot of land in Florida he had bought as an investment. "I thought I could move on with my life," he says. But the lender, RBC Bank, a subsidiary of Royal Bank of Canada, sued him, seeking to make him pay more than $400,000 to the bank to cover its losses on the loan. Mr. Olson has hired a Florida lawyer, Roy Oppenheim, to resist the claim. An RBC spokesman declined to comment.

States where lenders generally can pursue such legal claims include Florida and Nevada but not California and Arizona, where laws generally prohibit lenders from pursuing other assets of mortgage borrowers. A new Nevada law will protect many borrowers from these judgments if they bought a home for their own use after Sept. 30, 2009.

Another risk for defaulters is that banks could sell the rights to pursue claims to collection agencies or other firms, which could then dun the borrowers for up to 20 years after a foreclosure. Such threats appear to deter some borrowers. A recent study from the Federal Reserve Bank of Richmond found that under-water borrowers were 20% more likely to default in a state where mortgage lenders can't pursue claims on other assets than in those where they can.

Brent White, an associate law professor at the University of Arizona who has written about this issue, says homeowners should make the decision on whether to keep paying based on their own interests, "unclouded by unnecessary guilt or shame." He says borrowers can take a cue from lenders that "ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility."

But it isn't just a matter of the borrower's personal interest, says John Courson, chief executive of the Mortgage Bankers Association, a trade group. Defaults hurt neighborhoods by lowering property values, he says, adding: "What about the message they will send to their family and their kids and their friends?"

In Mesa, another suburb of Phoenix, low prices are helping to draw buyers who may walk away from other homes. Christina Delapp bought a house out of foreclosure in July for $49,000 in cash. She says she will stop paying the mortgage on another home she still owns in Tempe if she can't sell in the next few months for more than the $312,000 that she owes.

Ms. Delapp, who has been jobless for 18 months, says that the new home is part of her survival strategy. "I feel very fortunate," she says. "Regardless of what happens to my credit, we've managed to put together the best safety plan that I possibly could."

Mr. Figg says that deciding to default on his loan was "the toughest decision I ever made." He worried that if he ever loses his job he would be marooned in a home that he couldn't sell for enough to pay off his loan, limiting his ability to find work in other parts of the country: "I couldn't move up. I couldn't move down. I couldn't move out of the city. It was a very claustrophobic situation."

By moving to an apartment, Mr. Figg expects to lower his costs by about $700 a month. He plans to put that into his savings account and says he is willing to rent for the next five years or so.

Lenders are guilty of having "manipulated" the housing market during the boom by accepting dubious appraisals, Mr. Figg says. "When I weighed everything," he says, "I was able to sleep at night."



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Sources: Wall Street Journal, Google Maps

Foreclosure Prevention "Swat Teams" Review Loan Mod Results

The Banking Industry's Under Water Homes Crisis

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US Treasury Dept Unleashes Foreclosure "SWAT Teams"


The Treasury Department has started dispatching what it calls foreclosure "SWAT teams" to big banks to take a hard look at their operations.

The administration says it is cracking down on mortgage companies that aren't doing enough to implement President Obama's program to prevent foreclosures. The government hopes to help 3 million to 4 million people. But many economists say the program is stumbling, and that greater oversight is needed.

About 750,000 people have had their mortgage payments reduced so far through the president's Making Home Affordable plan. But the vast majority of those people — more than 95 percent — are just in the temporary trial stage of the program. Meanwhile, the foreclosure crisis remains one of the biggest threats to the economy.


Confusion At Bank Call Centers

Major banks including Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup run call centers that determine the fate of millions of homeowners.

A few months ago NPR did a story on one of the main call centers run by Bank of America. Some homeowners were getting rescued from foreclosure and offered more affordable payments. But there were also some problems. At one point, a call center worker, Crystal Ingram, told a homeowner that he didn't qualify for help through the Obama plan. She told him, "At this point, sir, I'm not getting a recommendation for a modification." After punching his information into her computer system, it rejected the homeowner for help. But it shouldn't have.

When NPR pursued the issue with supervisors, it turned out the person actually did qualify. And the homeowner was later offered a loan modification. NPR has been following up with Bank of America. The bank says it has a second review system to catch such mistakes. But three months after our visit, the bank still hasn't been able to tell us why the computer appeared to be rejecting homeowners who actually were eligible for help.


Logistical Nightmares

Problems like this seem to be widespread at many of the major banks. Andrew Jakabovics, an economist with the Center for American Progress — a think tank that's aligned with the Obama administration — says there have been all kinds of complaints about these call centers.

"It's a nightmare, to put it bluntly," Jakabovics says. Homeowners say they fax in information and the banks lose it. They complain they get lost in automated phone systems. Some banks say people who make too much money are trying to get help when they don't need it and clogging the system. And certainly the challenge of managing the information and documents coming in from millions of borrows trying to get help is a daunting task for the banks.


Rescue Operations

This month, Michael Barr, assistant Treasury secretary, said the administration would dispatch "SWAT teams" to the banks, which are referred to in the industry as loan servicers. It turns out that the teams actually consist of three people making three-day visits to the banks. Barr also said that there might be fines for companies that aren't doing what they should be.

But many experts were underwhelmed by the government's crackdown.

Jakabovics says the problems with the program require more aggressive steps. He says the president's plan should be reaching a lot more people, which would be good for both the housing market and the overall economy.

It's hard to tell exactly what's tangling things up at the call centers.

"I still think there's a lot of 'he said, she said,'" Jakabovics says. The banks say borrowers don't send in all their documents to qualify for loan modifications. Homeowners and housing counselors counter that they've sent in the material numerous times and that they continually encounter bank personnel who say they've never heard of the previous person that they contacted about their case.

Given all these problems, why is the Treasury Department sending in SWAT teams for just three days?


Permanent Oversight?

Jakabovics says better oversight could help solve the problem and prevent more foreclosures. He supports putting government officials inside the call centers on a permanent basis.

"By having people in the call centers, I think we'd get to the bottom of this and improve the operation of the program as a whole," Jakabovics says.

Bank examiners already monitor all sorts of bank activity. When it comes to foreclosures, private insurance companies already have personnel stationed inside the banks: They assist with efforts to prevent foreclosures when the insurance companies are on the hook.

Phyllis Caldwell, the chief of the Treasury's homeownership preservation office, says the department will complete the three-day visits. But she adds: "We're committed to doing whatever it takes."



President Obama speaks after holding a Housing Refinance Round table with real people who have benefited from renegotiating their mortgages and explains how millions of others can take advantage of his Making Home Affordable plan.







NACA’s “Save the Dream Tour” Now Disappointing Thousands in Phoenix


It started this past July 31st and went through August 3rd, and 40,000 very nervous homeowners waited in long lines in the hopes of saving their dreams.

One woman, a 46 year-old single mom who had lost her job, fallen behind on her bills, but was working again, waited apprehensively to find out if her lender, Wells Fargo, would modify her loan or throw her out in the street. (I know that’s a harsh way of putting it, but I’ve decided that there’s been enough soft pedaling on this point.)

The event was yet another brought to homeowners by the Neighborhood Assistance Corporation of America, or NACA for short. The event’s brochure promised “Same Day Solutions” for homeowners who would get their loan modifications approved on the spot by many of the largest lenders and servicers in the country.

Bank representatives, dressed in their golf shirts with embroidered bank logos, would be on hand and would get things done for homeowners on a while you wait basis. NACA, a nonprofit based in Boston would be there with hundreds of housing counselors.

Wow. When I first heard about this whole “Save the Dream” thing, I thought it sounded absolutely fabulous.

When our single mom left the event that day she felt terrific. She was confident that her home would now be saved. A NACA housing counselor had reviewed her financial documents, and then she had met with a representative from Wells Fargo, who had agreed to modify her loan, taking her interest rate down from 6.375 to 4.375, and cutting her payment by more than $200 a month. Wells also agreed to a forbearance agreement that would allow her to skip the next six payments, and tack the amount onto the back end of the loan.

She was so happy.

The Wells Fargo representative couldn’t give her a written agreement, but it was a direct contact with her lender, and she watched as the representative wrote her name down along with her phone number and the promised interest rate… right on her NACA workbook.

She was so happy.

Fast forward to September 22nd, eight weeks later when she received a letter from Wells Fargo that specified very different terms than she was promised. In the letter it said that at the end of a six-month moratorium on payments, she would have to pay a balloon payment of all six payments missed.

So, as you might expect, our single mom tried to call her Wells Fargo representative at the number she had been given while she was saving her dream two months earlier… but she was never put through to her. Instead, Wells Fargo now told her to stand by… because Wells would be contacting her in a few months, at which time she could apply for a loan modification! And even better, Wells now said that it had no record of the agreed to interest rate reduction.

So, next she called NACA, left voice mails and sent emails but never got a response. And wouldn’t you know it… the identification number that she was given to track her file online on the NACA website didn’t work. Darn the luck.

So, now our single mom is concerned. She’s facing a balloon payment in January and is once again scared that she will lose her home… the home she purchased in 2002 with a 20% down payment…. the home in which she has close to 50% equity, but can’t refinance because of her credit score.

Now she’s angry. Very angry, I would think.

Here’s what she told the St. Louis Beacon:

“I’m angry at both the bank and the organization — Wells Fargo and NACA. Is the idea of ’scam’ in my mind? Yes. And that’s a quick turnaround for me. But, it was a very difficult 40-minute call I had with the bank — to see what I thought was a gift, of sorts, a break, just kind of disintegrate.”

NACA’s CEO is Bruce Marks, and he’s known for his outrageous acts in defiance of banks. I read about the guy and frankly, had to like him. For a while, he was delivering old, crummy furniture to the front lawns of bank executives on weekends. Pretty cool, right? Now I’m not so sure.

When Bruce was asked for numbers on how many St. Louis homeowners have received loan modifications and how many are in some sort of pending status, all he would say is that “it’s a rolling number”. It’s apparently a number that rolls. Bruce went on to say that that the focus would be on completing pending cases before the tour would resume in Los Angeles in late September. The “vast majority” will be completed by the end of this week, he told the St. Louis Beacon.

Were they? I don’t know. I can’t find any published numbers anywhere. I sure hope “the vast majority” of the 40,000 people that attended the NACA “Save the Dream” event… had their dream saved.

But I’m skeptical. Because when you consider that, according to the administration’s report cards that were published on August 9th, Bank of America only modified 4% of its eligible loans. Bank of America is the country’s largest mortgage holder, so it seems hard to imagine that the “vast majority” of 40,000 homeowners could save a dream out of that 4%. Maybe I’m not getting the math right.

At least NACA provides their housing counselor services FREE! That’s right, they don’t charge any of those distasteful up front fees everyone is so concerned about. Nope, NACA gets their money the old fashioned way… from the taxpayers… well, from the government who gets their money from the taxpayers. In fact, NACA recently got $16 million in government funding to provide housing counselors to distressed homeowners. But that’s not considered an up front fee, I suppose. So, you see… that’s free right there.

Oh, and one more thing… just for fun I looked up NACA on the Better Business Bureau Website and guess what? You guessed it… an ‘F’. Uh oh. So, maybe they are doing some loan modifications after all. Go figure.

NACA’s Save the Dream? Or just another government funded nightmare?



NACA's "Save the Dream" Tour






More tax dollars for the self-proclaimed Bank Terrorist

Despite receiving taxpayer money, NACA doesn’t provide public reports on either its loan-brokerage business or its campaign to modify mortgages. Jim Campen, an economics professor emeritus at the University of Massachusetts, Boston, says he tried in the 1990s to analyze the performance of loans arranged by NACA, but Mr. Marks refused to provide data.

Mr. Marks says he feared the data would be used by another nonprofit to discredit his group. NACA does provide information to lenders that work with it, he says, but sees no duty to disclose it to the public.

“He’s been very effective in shaking money out of the banks,” says Mr. Campen, but “he’s not one to open up his records to public scrutiny.” Wall Street Journal
Article dated * May 20, 2009




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Sources: NPR, Mandelman Matters, MSNBC, CNBC, Wall Street Journal, Michelle Malkin, NACA, Youtube, Google Maps

Obama Tells Bankers To "Help Save Our Economy"

Pres. Obama tells Bank CEOs: "Help get our Economy moving". Awwww, isn't that nice? He gave the wealthy Bankers a little tap on the wrist while they continue sending their Lobbyists to Capitol Hill in opposition against his Financial Reform agenda.

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Bank CEOs agree to work with Pres. Obama on helping the American people. Sure they do. We'll see.

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Sources: MSNBC, CNBC

NACA's "Save The Dream" Tour Disappoints Struggling Homeowners

NACA Continues Promising Mortgages Despite BBB Complaints



The Neighborhood Assistance Corporation of America, or NACA, promises to help struggling homeowners save their houses from foreclosure. But are those promises kept?

This weekend NACA will stage one of the organization's Save the Dream events in Charlotte. At a similar event in Columbia, S.C., earlier this year, 30,000 people showed up looking for assistance.

"We're the one shining light in the country when it comes to foreclosure prevention and restructuring mortgages to make them affordable," said NACA CEO Bruce Marks at a news conference to announce the Charlotte event.

But the president of the Better Business Bureau in Charlotte, Tom Bartholomy, said that is a bit overstated.

"There's nothing that they do that is more special than any other mortgage broker or lender will do for you," Bartholomy said.

In Charlotte, the BBB has logged 5 complaints against NACA. Nationally, there have been 63 complaints.

"At the end of it all, it comes down to that what they promised going in, they weren't getting at the end of it all," said Bartholomy.

Because NACA has helped thousands of satisfied homeowners across the country, the number of complaints is relatively small, so the BBB still gives NACA a B+ rating.

Katoma Cardwell was a NACA employee until he turned up at the news conference Tuesday afternoon. He admits he is in a pay dispute with the organization but also wanted to question CEO Marks about his claims.

"He is trying to distort what type of success NACA is currently able to provide for their members," Cardwell said.

Security guards barred Cardwell from going inside, telling him he had been fired.

A NACA executive who came outside told Cardwell, "Obviously you are attacking the organization so you can go through human resources to discuss anything further."

NewsChannel 36 questioned Marks about Cardwell's claims. Marks said, "There are some people that want to make a name for themselves by being on the media but we are focused on getting the job done."




More tax dollars for the self-proclaimed Bank Terrorist

Despite receiving taxpayer money, NACA doesn’t provide public reports on either its loan-brokerage business or its campaign to modify mortgages. Jim Campen, an economics professor emeritus at the University of Massachusetts, Boston, says he tried in the 1990s to analyze the performance of loans arranged by NACA, but Mr. Marks refused to provide data.

Mr. Marks says he feared the data would be used by another nonprofit to discredit his group. NACA does provide information to lenders that work with it, he says, but sees no duty to disclose it to the public.

“He’s been very effective in shaking money out of the banks,” says Mr. Campen, but “he’s not one to open up his records to public scrutiny.” Wall Street Journal
Article dated * May 20, 2009








NACA’s “Save the Dream Tour” Now Disappointing Thousands in Phoenix


It started this past July 31st and went through August 3rd, and 40,000 very nervous homeowners waited in long lines in the hopes of saving their dreams.

One woman, a 46 year-old single mom who had lost her job, fallen behind on her bills, but was working again, waited apprehensively to find out if her lender, Wells Fargo, would modify her loan or throw her out in the street. (I know that’s a harsh way of putting it, but I’ve decided that there’s been enough soft pedaling on this point.)

The event was yet another brought to homeowners by the Neighborhood Assistance Corporation of America, or NACA for short. The event’s brochure promised “Same Day Solutions” for homeowners who would get their loan modifications approved on the spot by many of the largest lenders and servicers in the country.

Bank representatives, dressed in their golf shirts with embroidered bank logos, would be on hand and would get things done for homeowners on a while you wait basis. NACA, a nonprofit based in Boston would be there with hundreds of housing counselors.

Wow. When I first heard about this whole “Save the Dream” thing, I thought it sounded absolutely fabulous.

When our single mom left the event that day she felt terrific. She was confident that her home would now be saved. A NACA housing counselor had reviewed her financial documents, and then she had met with a representative from Wells Fargo, who had agreed to modify her loan, taking her interest rate down from 6.375 to 4.375, and cutting her payment by more than $200 a month. Wells also agreed to a forbearance agreement that would allow her to skip the next six payments, and tack the amount onto the back end of the loan.

She was so happy.

The Wells Fargo representative couldn’t give her a written agreement, but it was a direct contact with her lender, and she watched as the representative wrote her name down along with her phone number and the promised interest rate… right on her NACA workbook.

She was so happy.

Fast forward to September 22nd, eight weeks later when she received a letter from Wells Fargo that specified very different terms than she was promised. In the letter it said that at the end of a six-month moratorium on payments, she would have to pay a balloon payment of all six payments missed.

So, as you might expect, our single mom tried to call her Wells Fargo representative at the number she had been given while she was saving her dream two months earlier… but she was never put through to her. Instead, Wells Fargo now told her to stand by… because Wells would be contacting her in a few months, at which time she could apply for a loan modification! And even better, Wells now said that it had no record of the agreed to interest rate reduction.

So, next she called NACA, left voice mails and sent emails but never got a response. And wouldn’t you know it… the identification number that she was given to track her file online on the NACA website didn’t work. Darn the luck.

So, now our single mom is concerned. She’s facing a balloon payment in January and is once again scared that she will lose her home… the home she purchased in 2002 with a 20% down payment…. the home in which she has close to 50% equity, but can’t refinance because of her credit score.

Now she’s angry. Very angry, I would think.

Here’s what she told the St. Louis Beacon:

“I’m angry at both the bank and the organization — Wells Fargo and NACA. Is the idea of ’scam’ in my mind? Yes. And that’s a quick turnaround for me. But, it was a very difficult 40-minute call I had with the bank — to see what I thought was a gift, of sorts, a break, just kind of disintegrate.”

NACA’s CEO is Bruce Marks, and he’s known for his outrageous acts in defiance of banks. I read about the guy and frankly, had to like him. For a while, he was delivering old, crummy furniture to the front lawns of bank executives on weekends. Pretty cool, right? Now I’m not so sure.

When Bruce was asked for numbers on how many St. Louis homeowners have received loan modifications and how many are in some sort of pending status, all he would say is that “it’s a rolling number”. It’s apparently a number that rolls. Bruce went on to say that that the focus would be on completing pending cases before the tour would resume in Los Angeles in late September. The “vast majority” will be completed by the end of this week, he told the St. Louis Beacon.

Were they? I don’t know. I can’t find any published numbers anywhere. I sure hope “the vast majority” of the 40,000 people that attended the NACA “Save the Dream” event… had their dream saved.

But I’m skeptical. Because when you consider that, according to the administration’s report cards that were published on August 9th, Bank of America only modified 4% of its eligible loans. Bank of America is the country’s largest mortgage holder, so it seems hard to imagine that the “vast majority” of 40,000 homeowners could save a dream out of that 4%. Maybe I’m not getting the math right.

At least NACA provides their housing counselor services FREE! That’s right, they don’t charge any of those distasteful up front fees everyone is so concerned about. Nope, NACA gets their money the old fashioned way… from the taxpayers… well, from the government who gets their money from the taxpayers. In fact, NACA recently got $16 million in government funding to provide housing counselors to distressed homeowners. But that’s not considered an up front fee, I suppose. So, you see… that’s free right there.

Oh, and one more thing… just for fun I looked up NACA on the Better Business Bureau Website and guess what? You guessed it… an ‘F’. Uh oh.

NACA’s Save the Dream? Or just another government funded nightmare?




Home prices up, more borrowers Underwater. CNBC's Diana Olick reports that while home prices show a slight gain, about 25 percent of homeowners owe more on their mortgages than they are worth.

Visit msnbc.com for breaking news, world news, and news about the economy

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Sources: WCNC, NACA, Mandelman Matters, Wall Street Journal, Michelle Malkin, McClatchy Newspapers, Charlotte Observer, CNBC, Youtube, Google Maps

Property Taxes & Politics: Underwater Homes Taxed Too High

Home prices up, more borrowers Underwater. CNBC's Diana Olick reports that while home prices show a slight gain, about 25 percent of homeowners owe more on their mortgages than they are worth.

Visit msnbc.com for breaking news, world news, and news about the economy

The Truth about Property Taxes


I hope you’ve been following the eight-part series in this newspaper by D.L. Bennett and John Perry on Atlanta’s property tax meltdown. This exhaustive investigation is why we need newspapers. You simply aren’t going to get this quality of extensive journalism from radio or TV, and Atlanta’s various magazines are too full of plastic surgery ads and pictures of society-types stuffed into too-small gowns at their various functions to have room for such a report. (Ouch!)

The bottom line here? You are supposed to pay property taxes based on the value of your home. In case you haven’t checked lately, the value of your home has probably gone down. Now, check your property tax bill. Has it gone down? Well, it should have. Trouble is you most likely live in a tax jurisdiction where the political class is so addicted to your money they will go through any contrivance necessary to make sure your tax bill stays right where it is — or goes up.

I have a home in Atlanta. We just got nailed with a 42 percent increase in our property tax rate. Why? Because the city government is, and has been for a long, long time, a bloated and inefficient jobs program for graduates of the pathetic Atlanta government school system — and I used the term “graduates” advisedly.

When the esteemed Bill Campbell was flying the Jolly Roger from that tall building on Mitchell Street, the AJC regaled us with descriptions of how many more city employees Atlanta had per capita than most other major cities of the same size. Well, see if you remember this: Shortly after Campbell took office, he held a press conference. Sitting at a table with Campbell were officials of various government employee unions. Campbell proudly announced to the media that he had just entered into a “contract” with these unions whereby he pledged that as mayor he would never take any action that would result in the loss of one union job. Sweet.

A few torturous years later, Campbell was helping provide employment for unionized prison guards.

And you wonder why the city couldn’t allow your property taxes to drop?

I could spend the rest of this page entertaining and amazing you with Bill Campbell stories (remember the stolen car in his driveway?), but I want to bring up another Atlanta mayor: Andrew Young. Young came up with an amazing idea. Atlanta, you see, owns Hartsfield-Jackson International Airport, the most important economic entity in the Southeast. However, FAA regulations forbid the city from making one cent from the operation of the airport.

So, Young thought that the city should explore either selling or leasing Hartsfield to give Atlanta property owners some tax relief. Some studies showed that selling or leasing Hartsfield could wipe out residential property taxes for the entire city.

The idea went nowhere.

Why? That would be because Hartsfield was a power base for Atlanta politicians. The people who held the jobs at Hartsfield, their friends and families, represented a huge number of votes.

Political power, then as now, won out over financial responsibility. The city of Atlanta still makes nary a cent from the operation of an even bigger and more important Hartsfield-Jackson.

That’s the true story behind this property tax scandal. Politicians love power, and you gain power by spreading money around.

Lower taxes ... less money to spread around ... diminished power. I think I saw Einstein draw that equation on a blackboard once.




Broken Tax System hurts the Poor

Georgia’s property tax system is broken and homeowners in our most vulnerable neighborhoods are paying the greatest price. The AJC’s “Property Tax Meltdown” series highlights the need to reform systemic flaws that grossly over tax low-income and high-foreclosure neighborhoods and often under tax more stable affluent neighborhoods and commercial properties.

Fairness and due process are the foundation of a trusting relationship between a government and its people. But metro assessment practices have essentially violated that trust by over-billing low-income residents living in high-foreclosure neighborhoods by up to triple their fair share of property taxes.

Georgia law is pretty simple. Local assessors must set values at a price that a willing buyer would pay to a willing seller. In a competitive marketplace that value is the sales price at the time of purchase. Until very recently, it was a standard practice for assessors to exclude sales of foreclosed homes from their valuation formulas. In 2008, thanks to a change in state law, assessors can no longer legally ignore the devastating impact of foreclosures on our neighborhoods.

Across all five metro counties, low-income residents of high-foreclosure neighborhoods suffer the most from flawed assessments and the resulting tax burden. During the late 90s, these neighborhoods were the victims of mortgage fraud, flipping and predatory lending. As a result, they have been over-assessed for nearly a decade.

By contrast, owners of higher-end homes would often contest their tax assessments because their neighbor was paying less. Few have argued that they couldn’t sell their house for the assessed value. This bears out in the AJC’s research — in Atlanta’s most stable zip codes, assessed values are still only 84 to 88 percent of demonstrated market sales, despite the depressed market. This was especially true with commercial properties. Fulton County’s commercial digest was grossly undervalued. Until last year, Fulton’s commercial properties had not received a complete revaluation since 1991.

Property tax values in low-income, minority neighborhoods were already inflated prior to the onset of the foreclosure crisis. Now, these homeowners are living in the neighborhoods most ravaged by foreclosure. According to ANDP’s research, at the end of 2008 homes selling in southwest Atlanta’s Pittsburgh neighborhood were selling for a fraction (on average 20 percent) of the county’s assessed value. Fulton recently made a 27 percent average adjustment, but these residents are still paying $1,300 dollars more in taxes annually than they should.

The crisis is affecting homeowners and renters alike in our most damaged neighborhoods. Nonprofit affordable apartment communities are being assessed at up to three times market appraisal values. The increase in rent to cover the higher tax bill is squeezing residents, many of whom are minimum wage earners.

AJC’s research shows a similar story. Atlanta’s 30310 is the region’s most overassessed. It has a foreclosure rate of 8.5 percent, average annual income of under $28,000 and minority population of 96 percent. The stories are similar for low income neighborhoods along Atlanta’s southern crescent from Atlanta and south Fulton to Clayton and south DeKalb.

Providing tax equity is critical to stabilizing our most vulnerable neighborhoods. Some governments waive local property taxes in empowerment zones, which attracts new homeowners and investors to disadvantaged neighborhoods. Metro Atlanta is currently pursuing a strategy of dis-empowerment. We are driving out residents and investment by doubling taxes in struggling neighborhoods.

Acknowledging critical local government revenue shortfalls, some seem to argue that counties should ignore state law by not assessing homes for what they are actually worth. We should not ask any taxpayer to pay more than their fair share just because deficits are looming. The tax assessor’s job is to set fair values across the digest. After a level playing field is set, local government officials must determine the millage rate required to meet critical local needs.

If assessments are not adjusted to market levels in our most vulnerable neighborhoods, our region will pay the ultimate price in vacant and abandoned homes, blighted, crumbling communities, increased crime, and a deteriorating tax base.




(Oct. 02, 2009) Anthony Foxx: No Property Tax hike for Streetcar

Democratic mayoral candidate Anthony Foxx said Thursday he wouldn't raise property taxes to pay for a streetcar, despite his vote to move ahead with the project and suggestions from city staff that a hike may be needed.

"We aren't proposing or considering any increase in property taxes, and now would be a terrible time to think of that," he told the Observer. "I will not raise property taxes for the streetcar."

The streetcar and property tax issues came up when Foxx and Republican John Lassiter spoke to a luncheon of the Charlotte Regional Mortgage Lenders Association at the Myers Park Country Club.

Lassiter has also opposed Property Tax increases.

The rivals, both at-large city council members, were on opposite sides last month when council Democrats overrode Mayor Pat McCrory's veto of $4.5 million to start design work on the line.

The project, which would run from Johnson C. Smith University through uptown to Eastland Mall, would cost over $450 million. It's unclear where the money would come from.

"I could not promise to build something I didn't know how to pay for," Lassiter told the mortgage group.

Foxx defended his vote. He said the line would bring economic development to neighborhoods that need it. One study showed new development could generate $112million in new property taxes over 20 years.

"The future of our city is dependent on making every part ... a great place to live in," he told the group.

On Monday the city staff outlined ways to pay for the line to the council's Transportation Committee, which Foxx chairs. One option called for creating a special taxing district along the line and enacting a 4-cent tax hike for every $100 of taxable value. Another called for a citywide tax increase of 2 cents.

The city's current tax rate is 45.86cents.

"By supporting the streetcar, I'm not committing myself to a property tax increase," Foxx said later.

During the meeting, he defended his vote for a 2006 city budget that raised property taxes 9 percent - the first increase in at least a decade. Lassiter voted against the budget.

Foxx said the tax hike helped pay for the 70 new officers the police chief requested, more than in the no-new-tax budget supported by Lassiter and McCrory. It also brought in money for new roads and neighborhood improvements.

He suggested that without the tax hike, Charlotte's crime rate might not have gone down. Police say it's down 20percent from a year ago.

"You can't out a price on (a) family's sense of safety, put a value on the life saved because we had the additional police officers," he told the group.

Lassiter has criticized "unnecessary and unmanaged government spending" that he says had nothing to do with police, roads or neighborhoods.

Thursday he alluded to this year's General Assembly actions that raised the state sales tax by a penny and enacted surcharges of 2 percent or 3percent on some taxpayers. He told the mortgage lenders that he'll keep taxes down.

"We're in a high-taxed city in a high-taxed state," he said. "We've got to right the ship."



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Sources: Atlanta Journal Constitution, MSNBC, CNBC, McClatchy Newspapers, Charlotte Observer, Charmeck.org, The Real Estate Blogster, Google Maps