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FHA Bill Approved by Senate Vote 19-2
The changes to the bill mainly are that the government will have control of Fannie Mar and Freddie Macs profits, and will earmark about $500 million per year from their profits with a diversion of funds to low income rental housing. Areas hit most, like New Orleans from hurricane Katrina, will receive the first benefits. Many people speculate that Fannie and Freddie will not lobby against this since, they got busted for accounting fraud 1 1/2 years ago, and basically are doing whatever the government says at this point.
Since the foreclosure crisis started, there have been over 1.5 million foreclosures nationwide. FHA has been able to help 200,000 borrowers so far, however out that number, only 3,000 have been delinquent on their mortgage. FHA needs to dig deeper, and loosen their guidelines, so these people can save their homes, and not go into foreclosure. This bill should clear the Senate by Memorial Day, so hopefully President Bush will sign off on this in the next few weeks. With a 28% approval rate, I think he should do something good for once.
Republicans were adamant against the bill because of the cost to taxpayers, however when the democrats stated that they would take the money from Fannie Mae to fund FHA expansion plans, the White House is changing it’s tune, in a highly heated election year.
In closing, whatever happens, I expect more and more strict regulation on the mortgage broker industry, with the government slowly getting more and more involved. I would not be surprised if my industry shrinks another 30% until we find a bottom on this market.
Who Was Emmeline Pankhurst?
Emmeline Pankhurst (1858-1928) was born in Manchester to a politically active family. She was responsible for the suffragette movement in Britain which eventually in 1918 won for women in the right to vote – albeit for women over the age of 30. Emmeline’s mother Sophia came from the Isle of Man the first country to have accorded women the right to vote as far back as 1881. Perhaps it was from her mother that Emmeline inherited a sense of political awareness. Her parents played host to several dissident international political figures who had a significant influence on Emmeline’s future outlook.
Emmeline studied at the Ecole Normale de Neuilly in Paris. At the age of 20 she met and Richard Pankhurst, a barrister 24 years her senior and a supporter of women’s right to vote. They had five children over the next 10 years. Emmeline had no wish to be domesticated and the children were left in the care of a governess.
With Richard’s support, she actively involved herself in social affairs. Emmeline joined the Women’s Franchise League and later tried to join the Independent Labour Party which declined her application on grounds of gender. Later she founded the Women’s Social and Political Union (WSPU) an all-women’s organization dedicated to militantly fighting for the women’s right to vote. Their motto was ‘Deeds not Words’. The group quickly became notorious with violent incidents of political activism such as smashing windows, for which Emmeline and her colleagues were incarcerated on several occasions. Whilst in prison they continued to remain in the public eye with hunger strikes but were often brutally force-fed. With its policy of continued arson, prominent members of the WSPU left the organization including two of Emmeline’s daughters.
At the outbreak of World War I Emmeline called an immediate cessation of political activism to fight what she called the ‘German Peril’. They encouraged men to join the forces and women to play their part for the war effort. Later they campaigned vigorously against according Germany any peace concessions.
In 1917, Emmeline Pankhurst visited Russia where she exhorted the Russian people to continue their fight for justice. But after meeting the Bolshevists she became disillusioned with leftist politics.
In 1926, Emmeline Pankhurst joined the Conservative party. Two years later she stood for election from Whitechapel, but her campaign was forestalled by ill-health. Years of militancy, incarceration, touring and campaigning had taken its toll. In June of 1928 she died at the age of 70.
Loan Modification Laws Clearly Explained – HR, 1728 – The Mortgage Reform
On May 7, 2009, this bill was discussed and passed in the House. After this bill was passed in the House of Representatives, it was combined with HR. 4173 and introduced into the House again. It is still required to pass the Senate vote before it is law. HR 1728 was developed due to the questionable mortgage practices and investing strategies that were initiated during the housing boom. This bill was established in response to the sub-prime mortgage crisis perpetrated during this time. Reform was required to prevent these objectionable loans from being made.
Lenders are expected to ensure the capacity of the client to pay back the loan
H.R. 1728 involves an uncomplicated federal standard for all housing loans: mortgage companies must ensure provisions be established requiring the customers to be capable of repaying the loans the customers have accepted. The lender would have to guarantee that a borrower has a “reasonable ability to repay.” This information is based on income, credit history, indebtedness and other factors. As a result, this bill will demand that all loans being refinanced provide a net tangible benefit to the consumer, prohibiting “junk” lending. This lending is driven by fees instead genuine economics. During the real estate boom, institutions had deviated from the more reasonable and honest practices of the past and initiated the tendency to foster risky, exotic mortgages and exercising procedures such as “no documentation” loans.
Excludes unfair lending procedures
The bill forbids the financial enticements for sub-prime loans that persuade lenders to maneuver borrowers into more expensive loans, including the bonuses referred to as “yield spread premiums.” As a result, loan officers compensate brokers and cause the price of loans to escalate. Many of the homeowners in the existing mortgage catastrophe were directed into more expensive loans when in reality they were not financially qualified. This bill restricts the prepayment penalties charged to borrowers who wish to terminate their loans and refinance for more affordable contracts.
Bring responsibility to the secondary market for home loans
According to this bill, for the first time, contributors in the enormous secondary mortgage market would be accountable and designated to federal law for ensuring responsible lending. This law allows clients to achieve redress directly from companies implicated in “examining” mortgages, except if the “examiner” supplied the borrower with a loan that meets the basic ability to repay and net tangible benefit standards. In previous years, mortgage loans escalated and were “sliced and diced” by organizations that “bundle and resell” home loans to investors. This process made it difficult to discover the company who was ultimately accountable for establishing the integrity of the loans.
Require creditors to be accountable for the mortgages they established
In order to more completely promote underwriting accountability, the bill authorizes compelling original federal regulations that necessitate creditors to preserve the economic awareness in the material segment (at least 5 percent) of the credit risk of each loan that the creditor transfers, sells, or communicates to a third party. The Federal Banking bureau would have the discretion to make an exemption to HR 1728′s risk retention provisions, including form and amount.
Require penalties for frivolous mortgages
Due to the frivolous loans that were initiated during the housing boom, H.R. 1728 will require the lenders and the secondary mortgage market investors, who did not adhere to these regulations (like the ability to pay and requiring net tangible benefits) to be deemed responsible by consumers for rescission of the loans and the client’s expenses for rescission, including lawyer’s fees. The consumer would also have the alternative to have a loan amended to correspond with the bill’s standards within 90 days of receiving notice from the consumer.
Increase consumer protections for high-cost mortgages
This regulation improves the safeguards attainable under federal laws on high-cost loans. This law reduces the interest rate and the points and fee triggers that are standard procedures in high cost loans. The law continues to foster consumer protections for “high cost Loans” by:
. Forbidding methods that augments the risk of foreclosure, such as balloon payments, leading a borrower to default, and forcing one to make provisions
. Forbidding extreme fees for payoff information, modifications, or late payments
. Forbidding the financing of points and fees, and demanding more pro-loan explanations
Require supplementary discovery for consumers concerning mortgage loans
This law asserts, the lien holder is obliged to divulge the maximum a client is required pay on a variable rate mortgage, with the advice that expenditures will differ based on interest rate adjustments. Lenders are also required to apprise the consumer of the complete quantity of the allotment of the settlement charges, the entire amount of expenses combined in the mortgage loan, the sum the client must pay at closing, and the commission paid to a mortgage lender. Numerous home owners did not understand the stipulations of their mortgage, particularly when acquiring sub-prime loans. This law will necessitate exposure about the loan that will disclose any relevant information related to the loan. These disclosures will assist the client in gaining the necessary data to make informed and educated decisions.
Protection for renters who’s rented homes run into foreclosure problems
A tenant that is renting a home can also be impacted by a foreclosure. The HR1728 bill will require the tenant to have proper and timely notification before the individuals are forced out of their homes. If the home is the renter’s primary residence, they will have to be notified ninety days before the date of foreclosure. This will allow the individual time to find a new residence and relocate.
The Office of Housing Counseling was created to assist the client
This law institutes an office agency called the Office of Housing Counsel associated with HUD to encourage home-ownership and rental housing counseling. This organization will direct and synchronize other endeavors to expand the access of home-ownership counseling. This office will launch a multimedia promotion such as national public service campaign to educate clients concerning financial counseling and home-ownership and the creation of a website and toll-free hot-line.
Impart legal assistance to homeowners and tenants confronting foreclosure
According to this law, home buyers will be allowed HUD measures to implement competitive grants for numerous varieties of legal assistance for low income and moderate income homeowners and tenants dealing with foreclosure associated with home ownership protection, home foreclosure deterrence, and tenancy. Preference will be awarded consideration of the top 100 areas for home foreclosures. Beneficiaries will be forbidden from utilizing any monies for any class action lawsuits.