Bo McCarver’s weekly news compilation, 2-8-2011

Special to the Texas Low Income Housing Information Service

Congress takes up the fate of Fannie Mae and Freddie Mac this month with conservatives proposing to privatize the mortgage security giants while others propose major restructuring with a separate entity insuring catastrophic risks. At this point, it is apparent that the present organizations will undergo major revamping.

Meanwhile, a report by Fitch Ratings says the Obama Administration’s HAMP program has had little effect on foreclosure rates and projects an increase in foreclosures in the upcoming year.

For a pdf version of the full stories, plus contextual articles in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.rr.com

As debate begins, here are the facts on Fannie and Freddie

By Kevin G. Hall        McClatchy Newspapers February 7, 2011

WASHINGTON — What role should government play in housing finance?

A struggle over that $5 trillion dollar question, which divides Democrats from Republicans, will begin Wednesday when a subcommittee of the GOP-controlled House of Representatives considers the fate of mortgage-finance titans Fannie Mae and Freddie Mac.

Fannie and Freddie have been in government conservatorship since the Bush administration seized them in September 2008 in an effort to quell global financial panic. Republicans vow to get the government mostly out of the business of mortgage lending; Democrats want to change the role of government support, but not end it.

Fannie and Freddie right now either back or guarantee more than $5 trillion worth of U.S. mortgages, so the stakes are high.

Full story at: http://www.mcclatchydc.com/2011/02/06/108185/the-great-debate-begins-what-to.html

 

Foreclosures likely to rise because of poor loan-modification performance, report says

Los Angeles Times February 7, 2011

Major financial institutions’ poor record with modifying home mortgage loans will probably lead to an increase in the number of U.S. foreclosures, according to a report released Monday.

About 36,500 mortgage modifications on private mortgages were completed in December 2010, according to Fitch Ratings, which studied those loans packaged into mortgage-backed securities. That number is 58% below a high hit in April 2009.

“The combined efforts of HAMP [the Obama administration’s Home Affordable Modification Plan] and other mortgage loan modification programs have made little more than a dent in the large volume of outstanding distressed loans,” said Diane Pendley, a Fitch managing director and one of the report’s authors.

Full story at: http://latimesblogs.latimes.com/money_co/2011/02/loan-modification-foreclosures.html

Foreclosed Homeowners Go to Court on Their Own

By David Streitfeld       New York Times February 4, 2011

ALBUQUERQUE — Saving your home from foreclosure is increasingly a do-it-yourself project.

Lawyers are scarce and free legal assistance is overwhelmed in New Mexico, so a community center here is offering an hourlong class in how to download the correct forms, decipher the lingo and mount a defense, however tentative and primitive, against a multibillion-dollar bank.

“I don’t see success for someone like me who doesn’t understand the law,” said Skylar Perea, a senior care aide who fell behind on her payments during the eight months she was out of a job. “But it’s better than nothing.”

Full story at: http://www.nytimes.com/2011/02/03/business/economy/03class.html?src=me&ref=business

Bank of America drops reverse mortgages

By Christina Rexrode         Charlotte Observer February 8, 2011

Bank of America will stop offering reverse mortgages, products that late-night TV advertises to the elderly as an easy way to get quick cash.

The move is meant to free up resources so the bank can focus on making traditional mortgages and helping struggling homeowners get modified mortgage loans, said spokesman Terry Francisco. It’s also the latest of several big moves the bank has made to try to right its money-losing mortgage unit.

Reverse mortgages are useful to some borrowers, but they have many critics. In a reverse mortgage, the bank pays the borrower instead of the other way around, meaning that the borrower loses equity instead of building it. They’re available only to borrowers who are at least 62 years old, and banks tout them as a way for seniors to get cash without having to sell a home they love.

Full story at: http://www.mcclatchydc.com/2011/02/08/108275/bank-of-america-drops-reverse.html

Home sales: No tax credit plan likely to mean flat sales for ’11

By Vic Kolenc        El Paso Times February 6, 2011

A federal tax credit program boosted El Paso home sales in the first half of 2010, but sales dropped off in the second half, leaving total home sales down 2 percent from 2009, recently released data show.

Last year, 6,389 new and used homes were sold in El Paso County — 130 fewer than in 2009, and well below pre-recession levels.

Full story at: http://www.elpasotimes.com/business/ci_17305426

Councilwoman asked HOA not to ‘advertise’ city spending

Chan didn’t want her use of city funds discussed.

By Karisa King        San Antonio Express-News February 4, 2011

Councilwoman Elisa Chan attempted to quietly broker a deal to spend as much as $300,000 of city funds to repair a drainage canal that might not qualify as a public project.

At a meeting last week with board members of the Ridgestone Unit 9 Homeowners Association, Chan said she was attempting to scrape together city money from various sources to rebuild the culvert in their gated North Side subdivision.

In exchange, Chan told the board that homeowners would be required to remain silent about the use of city funds and pay for future upkeep on the canal.

Full story at: http://www.mysanantonio.com/default/article/Residents-silence-sought-995973.php