Home foreclosure crisis

[wlmmyers]

From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>

Dear Folks,

To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?

Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html

But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?

Thanks for anything anyone can suggest quickly

Please reply off-line, or call me.

Greg deGiere

Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)




This post transferred from the cdb-l mailing list

[CGladstone at caseyfamily]

There is a public education campaign, "Don't Borrow Trouble," here in New Hampshire and in other states as well. *In our state, the NH Housing Finance Authority is taking the lead. *The focus is on predatory lending practices directed at existing homeowners, with an eye to preventing foreclosure by helping those homeowners become aware of some of those practices. *Andy Cadorette is the contact person there, and he can be reached at 603.310.9287 or acadorette@nhhfa.org.


Cary Gladstone
Community Liaison
Casey Family Services, NH Division
105 Loudon Rd.
Concord, NH 03301
603.224.8909 ext. 4627
800.417.7375
cgladstone@caseyfamilyservices.org


------------------------------------------------------
*********Confirmed*virus-free*by*mymssp.net
*see*www.anchortechnologies.com*for*more*informati on.
------------------------------------------------------

This post transferred from the cdb-l mailing list

[Michael Schaaf]

The Governor of the Commonwealth of Massachusetts is proposing legislation
that regulates subprime lending. See
http://www.boston.com/realestate/news/articles/2007/06/12/patrick_files_bill
_to_help_home_buyers

----------------------
Michael Schaaf
Community Investment Associates
P.O. Box 235
Ipswich, MA 01938
978/356-2164 voice
978/356-9881 fax
www.communityinvestment.net


-----Original Message-----
From: William Myers [mailto:WMyers@alternatives.org]
Sent: Wednesday, June 13, 2007 3:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis


From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>

Dear Folks,

To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?

Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html

But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?

Thanks for anything anyone can suggest quickly

Please reply off-line, or call me.

Greg deGiere

Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)







This post transferred from the cdb-l mailing list

[emmett at emmettpickett.c]

http://www.nybusiness.com/apps/pbcs.dll/article?AID=/20070608/FREE/70608006

I hope this Crain's NY Business Weblink helps. I ran across it
recently. I am a transplanted New Yorker now in Irvine, Orange
County, Southern California. The "appraisal angle focus specifically"
is a new one in terms of what I have seen reported throughout the US.
Wondering if foreclosures clould be stalled or stopped around
appraisal (versus loans themselves) "intentional" (?)
misrepresentations???

A reach, I know, but we must always seek a solution, somehow, that
really can help in a timely way, those in need.

http://www.nybusiness.com/apps/pbcs.dll/article?AID=/20070608/FREE/70608006

Take care,

Regards,
Emmett T. Pickett
www.emmettpickett.com
emmett@emmettpickett.com

On 6/13/07, William Myers <WMyers@alternatives.org> wrote:

>From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>
>
>Dear Folks,
>
>To your knowledge, is any state or local government in the country
>taking or planning action that will actually prevent many foreclosures
>of currently-owned homes?
>
>Most of the proposed actions I've seen have been prospective, designed
>to prevent lenders from getting people into unsustainable loans in the
>future. One of those efforts in California is Assembly Bill 512, which
>would require a residential lender to give a borrower a translated copy
>of their loan agreement if it was negotiated in Spanish, Chinese,
>Tagalog, Vietnamese, or Korean. This is more modest than the Texas
>constitutional provision requiring a translated copy to be given to the
>borrower in any language in which it was negotiated, but from the
>California banking industry's response, you'd think it would bankrupt
>them. We would appreciate letters of support from anyone in California.
>You can find full information on the bill here:
>http://www.leginfo.ca.gov/bilinfo.html
>
>But there's not much I've seen that would help those already in this
>mess. Do you know of any moratoria proposals that look promising? Or any
>effort to use the homestead exemption laws (the ones concerning
>foreclosures of homes for private debts, not the ones concerning
>property taxes)?
>
>Thanks for anything anyone can suggest quickly
>
>Please reply off-line, or call me.
>
>Greg deGiere
>
>Gregory deGiere
>Senior Consultant
>Office of Assembly Speaker Pro Tempore Sally J. Lieber
>State Capitol, Room 3013
>Sacramento, CA 95814
>916-319-2022
>916-319-2122 (fax)






This post transferred from the cdb-l mailing list

[Greg.deGiere at asm.ca.go]

Thank you for sharing, Neil
*
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)

-----Original Message-----
From: Niel Moser [mailto:moser@homeloanguide.net]
Sent: Wednesday, June 13, 2007 3:05 PM
To: 'William Myers'; communitydevelopmentbanking-l@cornell.edu
Cc: deGiere, Greg
Subject: RE: Home foreclosure crisis



Regarding: California is Assembly/Senate Bill 512, which would require a residential lender to give a borrower a translated copy of their loan agreement if it was negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean.
*
Are you serious???* This legislation is really dumb!
*
I have been in the mortgage business for 40 years.* I have yet to see anyone, English speaking or any other language, take the time to read what they are signing.* They want to buy a home.* The terms are confusing and secondary to what they want.* Borrowers listen to the loan officer and believe what they are told about the terms of the deal.* At the closing, the borrower is under lots of pressure... sign the loan documents or don't buy the house.* That is the bottom line.*
*
This legislation is typical of politicians wanting to get publicity for passing a bill to "prevent" foreclosures or at best reduce them.* Ha!* Do you really think that the language of the documents or written explanation of the documents will make people stop and not sign for a bad mortgage to buy their home?* Dream on.
*
It would seem that a better approach would be to regulate the terms of home mortgages.* Adjustable Rate Loans should be controlled.* The interest rate adjustment caps, life of loan caps, margin over index, type of index, first year entry rate, pre-payment penalties, yield spread premiums paid to the lender, negative amortization, and points/fees charged by the lender should be monitored and regulated. (If you don't know what these terms mean, you are part of the problem!)*
*
These are the terms of the loan that result in unethical and predatory lending practices.* These terms are manipulated by brokers and lenders to get applicants into homes they can't afford and later gouge them on higher rates and higher payments that lead to higher foreclosures or to higher fees for refinancing later to get the borrowers out of trouble.
*
Subprime loans are just part for the problem.* Understanding what you are signing is just part of the problem.* The real problem is that mortgage brokers and mortgage lenders (even loan officers at respectable banks) get paid higher fee income for higher rates, higher margins over the index, and for closing loans.* Getting a loan approved is paramount. *Low entry rates and payments allow more people to qualify. More approved loans means more closed loans and more fee income.*
*
The fate of the borrower (inevitable higher rates and payment amounts coupled with decreasing property values, domestic problems, and/or employment problems) is not the concern of lenders today.* Nearly all mortgages are sold.* The originator of the home mortgage loan is not held responsible for the performance of that loan in the future.*
*
The language of the loan documents is not the problem.* The written words make no difference.* The words of the mortgage broker/loan office/lender are the deciding factor.* In the absence of regulated mortgage loan terms, lenders will say and do what has to be done to close loans.*
*
I reiterate... regulate the mortgage terms... the factors that make a loan good or bad for the borrower.* It is not easy.* First the politicians have to understand the mortgage terms and understand how the mortgage lending game is played.* What self respecting politician has time to dig too deep and understand the problem?* After all, re-election is just around the corner.
*
Niel Moser
Home Mortgage Solutions, LLC
moser@homeloanguide.net (moser@homeloanguide.net)
*
P.S. (Or is it B.S.) *Without regulating loan terms, this new language Bill when passed will increase the cost to the lenders and, in tern, the lenders will pass the cost to the borrower who can't afford the loan in the first place.* Ha!* Another example of our political process working for the American people!*
*
*
*
-----Original Message-----
From: bounce-1529444-4990460@list.cornell.edu [mailto:bounce-1529444-4990460@list.cornell.edu] On Behalf Of William Myers
Sent: Wednesday, June 13, 2007 2:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis
*
*
From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>
*
Dear Folks,
*
To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?
*
Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html
*
But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?
*
Thanks for anything anyone can suggest quickly
*
Please reply off-line, or call me.
*
Greg deGiere
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)
*
*
*
*

This post transferred from the cdb-l mailing list

[mthakker at fwg.com]

Regarding: Predatory Mortgage Lending Legislation
*
For anyone interested in past and present state-level legislation surrounding predatory mortgage lending, here’s a great resource:
*
The National Conference of State Legislatures
*
http://www.ncsl.org/programs/banking/predlend_intro.htm#Legislation
*
All legislation that has been proposed or enacted over the past 5 years in any state is listed here, and there are many interesting examples (good and bad) of what how different states have been trying to address these problems.
*
M.
*
*
--------------------------------------------------------
Mehul M. Thakker
Progressive Asset Management-FWG
520 Third Street, Suite 204
Oakland, CA 94607
1-800-786-2998 x-207--P
510-287-2419--F
--------------------------------------------------------
*
Securities and investment advisory services offered through Financial West Group (FWG), Member NASD/ SIPC.* Progressive Asset Management (PAM) is the socially responsible investment division of FWG.* This e-mail message and any attachments are intended solely for the use of the addressee(s) named above and may contain information that is confidential.
*

*

This post transferred from the cdb-l mailing list

[tloc at centuryhousing.or]

I have to say I agree with Neil, but perhaps for another reason.
*
I recently attended a conference put on by the Federal Reserve and there was much presentating about subprime lending, and pay-day lending and stored value debit cards.* Mortgage lending with the various subprime terms was pretty bad, but pay-day lending is racking up APRs exceeding 400% with all costs included, and the stored debit cards, often sold at the check cashing stores that make the pay-day loans are doing a brisk business* layering fees on unbanked workers that sometimes exceed 20%.* When I was young and lending was regulated, that would have been considered usury and only Guido and Lamont would have been willing to extend credit at those rates of return, and backed up their collection efforts with baseball bats.
*
Nowadays most major banks have subsidiaries in these businesses, making subprime mortgages, pay-day loans and selling stored value cards.* And just as Elizabeth Warren has testified regarding credit card lenders and bankruptcy reform, the lenders do not want to curb their own behavior, and they do not care about disclosure - - they just want to make money and as long as they make more than their losses cost them, they will stay in the business and do what they must to keep the government from interfering.* So you can amend the law to require disclosure until you are blue in the face, you won't affect their profit margins.* [see http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/warren.html*for more on Warren]
*
When I returned home from the FedReserve conference, my cousin picked me up at the airport and I was still livid over what I had heard.* I was rabbiting on about consumer education, and financial counseling and proper disclosure and she stopped me cold to say "You have it all wrong.* None of that will matter.* These borrowers are not ignorant or stupid - - they are like me, they don't CARE about tomorrow, they live in the NOW. They was instant gratification and they don't save or care about what it costs.* When they want money, they want it NOW and nothing will discourage them from getting it NOW, even if it bankrupts them in the future.
*
Since cousin has gone through bankruptcy and was about to move back into her elderly mother's home after losing her job at age 60 (no savings, no safety net at all, despite having earned very good salaries most of her life), I listened.* After a long dinner discussion, I started looking at the psychology of the question, and I agree with my cousin.
*
Unless we are to return to a "fettered capitalism" model where people are protected against themselves (Blue laws, stores closed on Sunday, etc.) then there will be people who put everything they have on the Black and let the roulette wheel of life take a spin with their futures.
*
And the only real flaw in the ointment is that they have become convinced that they will be saved at the last moment like they were last time, or like their parents did when they were little.* The only real solution is to let capitalism work -- and capitalism only works when mistakes are sanctioned and failure is punished.* They should be allowed to go into debt and they should then have to either buy their way out of lose.* Foreclosure is the right solution.* It would warn future lenders that they borrowers are NOT credit worthy and it would remind the ill-equipped borrowers that they should think twice before doing it again. When you gamble, as all these folks were doing, you have to be willing and able to lose.*
*
I have come to the uncomfortable conclusion that we have to let them lose their shirts.* If we bail the subprime borrowers out, we are really bailing the lenders who made these loans at unconscionable terms out, and that is just wrong.
*
The other advantage to letting the properties go to foreclosure is that it will pop the real estate bubble that is pricing so many people out of the market.* No one has quantified it that I have seen, but you have to figure that the subprime lending was pumping up prices by artificially creating more demand that could not be met by a limited supply, and (since the low teaser rates were depressing payments) inducing buyers to pay more than the houses were actually worth in a real market not being hyped up by low interest rates.* If these loans fail and the properties reenter the market place with realistic lending then it should depress home prices across the market.*
*
Other homeowners may complain about that, but they have grounds for it.* Their "home values" were artificially and arbitrarily inflated* and it is not "earned wealth" at all.* Once the adjustment period is over, we can go back to a more rational market.
*
So, my bottom line - let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers.* There will always be plenty of people who are like the Grasshopper in Aesop's fable* -- they just want to have fun today and nothing we can do will get them to pay attention to tomorrow.* [see http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper*for more on the fable]
*
Tim O'Connell

From: bounce-1529830-5282651@list.cornell.edu [mailto:bounce-1529830-5282651@list.cornell.edu] On Behalf Of deGiere, Greg
Sent: Wednesday, June 13, 2007 3:57 PM
To: Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis



Thank you for sharing, Neil
*
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)

-----Original Message-----
From: Niel Moser [mailto:moser@homeloanguide.net]
Sent: Wednesday, June 13, 2007 3:05 PM
To: 'William Myers'; communitydevelopmentbanking-l@cornell.edu
Cc: deGiere, Greg
Subject: RE: Home foreclosure crisis



Regarding: California is Assembly/Senate Bill 512, which would require a residential lender to give a borrower a translated copy of their loan agreement if it was negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean.
*
Are you serious???* This legislation is really dumb!
*
I have been in the mortgage business for 40 years.* I have yet to see anyone, English speaking or any other language, take the time to read what they are signing.* They want to buy a home.* The terms are confusing and secondary to what they want.* Borrowers listen to the loan officer and believe what they are told about the terms of the deal.* At the closing, the borrower is under lots of pressure... sign the loan documents or don't buy the house.* That is the bottom line.*
*
This legislation is typical of politicians wanting to get publicity for passing a bill to "prevent" foreclosures or at best reduce them.* Ha!* Do you really think that the language of the documents or written explanation of the documents will make people stop and not sign for a bad mortgage to buy their home?* Dream on.
*
It would seem that a better approach would be to regulate the terms of home mortgages.* Adjustable Rate Loans should be controlled.* The interest rate adjustment caps, life of loan caps, margin over index, type of index, first year entry rate, pre-payment penalties, yield spread premiums paid to the lender, negative amortization, and points/fees charged by the lender should be monitored and regulated. (If you don't know what these terms mean, you are part of the problem!)*
*
These are the terms of the loan that result in unethical and predatory lending practices.* These terms are manipulated by brokers and lenders to get applicants into homes they can't afford and later gouge them on higher rates and higher payments that lead to higher foreclosures or to higher fees for refinancing later to get the borrowers out of trouble.
*
Subprime loans are just part for the problem.* Understanding what you are signing is just part of the problem.* The real problem is that mortgage brokers and mortgage lenders (even loan officers at respectable banks) get paid higher fee income for higher rates, higher margins over the index, and for closing loans.* Getting a loan approved is paramount. *Low entry rates and payments allow more people to qualify. More approved loans means more closed loans and more fee income.*
*
The fate of the borrower (inevitable higher rates and payment amounts coupled with decreasing property values, domestic problems, and/or employment problems) is not the concern of lenders today.* Nearly all mortgages are sold.* The originator of the home mortgage loan is not held responsible for the performance of that loan in the future.*
*
The language of the loan documents is not the problem.* The written words make no difference.* The words of the mortgage broker/loan office/lender are the deciding factor.* In the absence of regulated mortgage loan terms, lenders will say and do what has to be done to close loans.*
*
I reiterate... regulate the mortgage terms... the factors that make a loan good or bad for the borrower.* It is not easy.* First the politicians have to understand the mortgage terms and understand how the mortgage lending game is played.* What self respecting politician has time to dig too deep and understand the problem?* After all, re-election is just around the corner.
*
Niel Moser
Home Mortgage Solutions, LLC
moser@homeloanguide.net (moser@homeloanguide.net)
*
P.S. (Or is it B.S.) *Without regulating loan terms, this new language Bill when passed will increase the cost to the lenders and, in tern, the lenders will pass the cost to the borrower who can't afford the loan in the first place.* Ha!* Another example of our political process working for the American people!*
*
*
*
-----Original Message-----
From: bounce-1529444-4990460@list.cornell.edu [mailto:bounce-1529444-4990460@list.cornell.edu] On Behalf Of William Myers
Sent: Wednesday, June 13, 2007 2:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis
*
*
From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>
*
Dear Folks,
*
To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?
*
Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html
*
But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?
*
Thanks for anything anyone can suggest quickly
*
Please reply off-line, or call me.
*
Greg deGiere
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)
*
*
*
*

This post transferred from the cdb-l mailing list

[Southon Planning]

The Michigan State Housing Development Authority has created a new single family mortgage product to be used with those who have their mortgage through MSHDA. It is designed to prevent foreclosures by extending the term of the mortgages to reduce payments.

-----Original Message-----
From: William Myers <WMyers@alternatives.org>
Sent: Jun 13, 2007 3:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis


>From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>
>
>Dear Folks,
>
>To your knowledge, is any state or local government in the country
>taking or planning action that will actually prevent many foreclosures
>of currently-owned homes?
>
>Most of the proposed actions I've seen have been prospective, designed
>to prevent lenders from getting people into unsustainable loans in the
>future. One of those efforts in California is Assembly Bill 512, which
>would require a residential lender to give a borrower a translated copy
>of their loan agreement if it was negotiated in Spanish, Chinese,
>Tagalog, Vietnamese, or Korean. This is more modest than the Texas
>constitutional provision requiring a translated copy to be given to the
>borrower in any language in which it was negotiated, but from the
>California banking industry's response, you'd think it would bankrupt
>them. We would appreciate letters of support from anyone in California.
>You can find full information on the bill here:
>http://www.leginfo.ca.gov/bilinfo.html
>
>But there's not much I've seen that would help those already in this
>mess. Do you know of any moratoria proposals that look promising? Or any
>effort to use the homestead exemption laws (the ones concerning
>foreclosures of homes for private debts, not the ones concerning
>property taxes)?
>
>Thanks for anything anyone can suggest quickly
>
>Please reply off-line, or call me.
>
>Greg deGiere
>
>Gregory deGiere
>Senior Consultant
>Office of Assembly Speaker Pro Tempore Sally J. Lieber
>State Capitol, Room 3013
>Sacramento, CA 95814
>916-319-2022
>916-319-2122 (fax)






Sue Southon
Strategic Planning Services
1885 Wingate Road
Bloomfield Hills, MI 48302
ssouthon@earthlink.net
cell: 248-895-4411
office: 248-851-2918
fax: 248-851-1638

This post transferred from the cdb-l mailing list

[janderson at sefcu.com]

Well said Tim. I agree completely.

John G. Anderson
SEFCU
700 Patroon Creek Blvd.
Albany, NY 12206
(518) 452-8234
janderson@sefcu.com

>> "Tim O'Connell" <tloc@centuryhousing.org> 6/13/2007 9:01 PM >>>
I have to say I agree with Neil, but perhaps for another reason.

I recently attended a conference put on by the Federal Reserve and there
was much presentating about subprime lending, and pay-day lending and
stored value debit cards. Mortgage lending with the various subprime
terms was pretty bad, but pay-day lending is racking up APRs exceeding
400% with all costs included, and the stored debit cards, often sold at
the check cashing stores that make the pay-day loans are doing a brisk
business layering fees on unbanked workers that sometimes exceed 20%.
When I was young and lending was regulated, that would have been
considered usury and only Guido and Lamont would have been willing to
extend credit at those rates of return, and backed up their collection
efforts with baseball bats.

Nowadays most major banks have subsidiaries in these businesses, making
subprime mortgages, pay-day loans and selling stored value cards. And
just as Elizabeth Warren has testified regarding credit card lenders and
bankruptcy reform, the lenders do not want to curb their own behavior,
and they do not care about disclosure - - they just want to make money
and as long as they make more than their losses cost them, they will
stay in the business and do what they must to keep the government from
interfering. So you can amend the law to require disclosure until you
are blue in the face, you won't affect their profit margins. [see
http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/warren.h
tml for more on Warren]

When I returned home from the FedReserve conference, my cousin picked me
up at the airport and I was still livid over what I had heard. I was
rabbiting on about consumer education, and financial counseling and
proper disclosure and she stopped me cold to say "You have it all wrong.
None of that will matter. These borrowers are not ignorant or stupid -
- they are like me, they don't CARE about tomorrow, they live in the
NOW. They was instant gratification and they don't save or care about
what it costs. When they want money, they want it NOW and nothing will
discourage them from getting it NOW, even if it bankrupts them in the
future.

Since cousin has gone through bankruptcy and was about to move back into
her elderly mother's home after losing her job at age 60 (no savings, no
safety net at all, despite having earned very good salaries most of her
life), I listened. After a long dinner discussion, I started looking at
the psychology of the question, and I agree with my cousin.

Unless we are to return to a "fettered capitalism" model where people
are protected against themselves (Blue laws, stores closed on Sunday,
etc.) then there will be people who put everything they have on the
Black and let the roulette wheel of life take a spin with their futures.

And the only real flaw in the ointment is that they have become
convinced that they will be saved at the last moment like they were last
time, or like their parents did when they were little. The only real
solution is to let capitalism work -- and capitalism only works when
mistakes are sanctioned and failure is punished. They should be allowed
to go into debt and they should then have to either buy their way out of
lose. Foreclosure is the right solution. It would warn future lenders
that they borrowers are NOT credit worthy and it would remind the
ill-equipped borrowers that they should think twice before doing it
again. When you gamble, as all these folks were doing, you have to be
willing and able to lose.

I have come to the uncomfortable conclusion that we have to let them
lose their shirts. If we bail the subprime borrowers out, we are really
bailing the lenders who made these loans at unconscionable terms out,
and that is just wrong.

The other advantage to letting the properties go to foreclosure is that
it will pop the real estate bubble that is pricing so many people out of
the market. No one has quantified it that I have seen, but you have to
figure that the subprime lending was pumping up prices by artificially
creating more demand that could not be met by a limited supply, and
(since the low teaser rates were depressing payments) inducing buyers to
pay more than the houses were actually worth in a real market not being
hyped up by low interest rates. If these loans fail and the properties
reenter the market place with realistic lending then it should depress
home prices across the market.

Other homeowners may complain about that, but they have grounds for it.
Their "home values" were artificially and arbitrarily inflated and it
is not "earned wealth" at all. Once the adjustment period is over, we
can go back to a more rational market.

So, my bottom line - let the people who got into this mess get out of
it, by bankruptcy and foreclosure if necessary, and don't worry about
protecting future buyers. There will always be plenty of people who are
like the Grasshopper in Aesop's fable -- they just want to have fun
today and nothing we can do will get them to pay attention to tomorrow.
[see http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper for more
on the fable]

Tim O'Connell

________________________________

From: bounce-1529830-5282651@list.cornell.edu
[mailto:bounce-1529830-5282651@list.cornell.edu] On Behalf Of deGiere,
Greg
Sent: Wednesday, June 13, 2007 3:57 PM
To: Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis


Thank you for sharing, Neil


Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)

-----Original Message-----
From: Niel Moser [mailto:moser@homeloanguide.net]
Sent: Wednesday, June 13, 2007 3:05 PM
To: 'William Myers'; communitydevelopmentbanking-l@cornell.edu
Cc: deGiere, Greg
Subject: RE: Home foreclosure crisis



Regarding: California is Assembly/Senate Bill 512, which would
require a residential lender to give a borrower a translated copy of
their loan agreement if it was negotiated in Spanish, Chinese, Tagalog,
Vietnamese, or Korean.



Are you serious??? This legislation is really dumb!



I have been in the mortgage business for 40 years. I have yet
to see anyone, English speaking or any other language, take the time to
read what they are signing. They want to buy a home. The terms are
confusing and secondary to what they want. Borrowers listen to the loan
officer and believe what they are told about the terms of the deal. At
the closing, the borrower is under lots of pressure... sign the loan
documents or don't buy the house. That is the bottom line.



This legislation is typical of politicians wanting to get
publicity for passing a bill to "prevent" foreclosures or at best reduce
them. Ha! Do you really think that the language of the documents or
written explanation of the documents will make people stop and not sign
for a bad mortgage to buy their home? Dream on.



It would seem that a better approach would be to regulate the
terms of home mortgages. Adjustable Rate Loans should be controlled.
The interest rate adjustment caps, life of loan caps, margin over index,
type of index, first year entry rate, pre-payment penalties, yield
spread premiums paid to the lender, negative amortization, and
points/fees charged by the lender should be monitored and regulated. (If
you don't know what these terms mean, you are part of the problem!)



These are the terms of the loan that result in unethical and
predatory lending practices. These terms are manipulated by brokers and
lenders to get applicants into homes they can't afford and later gouge
them on higher rates and higher payments that lead to higher
foreclosures or to higher fees for refinancing later to get the
borrowers out of trouble.



Subprime loans are just part for the problem. Understanding
what you are signing is just part of the problem. The real problem is
that mortgage brokers and mortgage lenders (even loan officers at
respectable banks) get paid higher fee income for higher rates, higher
margins over the index, and for closing loans. Getting a loan approved
is paramount. Low entry rates and payments allow more people to
qualify. More approved loans means more closed loans and more fee
income.



The fate of the borrower (inevitable higher rates and payment
amounts coupled with decreasing property values, domestic problems,
and/or employment problems) is not the concern of lenders today. Nearly
all mortgages are sold. The originator of the home mortgage loan is not
held responsible for the performance of that loan in the future.



The language of the loan documents is not the problem. The
written words make no difference. The words of the mortgage broker/loan
office/lender are the deciding factor. In the absence of regulated
mortgage loan terms, lenders will say and do what has to be done to
close loans.



I reiterate... regulate the mortgage terms... the factors that
make a loan good or bad for the borrower. It is not easy. First the
politicians have to understand the mortgage terms and understand how the
mortgage lending game is played. What self respecting politician has
time to dig too deep and understand the problem? After all, re-election
is just around the corner.



Niel Moser

Home Mortgage Solutions, LLC

moser@homeloanguide.net



P.S. (Or is it B.S.) Without regulating loan terms, this new
language Bill when passed will increase the cost to the lenders and, in
tern, the lenders will pass the cost to the borrower who can't afford
the loan in the first place. Ha! Another example of our political
process working for the American people!







-----Original Message-----
From: bounce-1529444-4990460@list.cornell.edu
[mailto:bounce-1529444-4990460@list.cornell.edu] On Behalf Of William
Myers
Sent: Wednesday, June 13, 2007 2:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis





>From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>

>

>Dear Folks,

>

>To your knowledge, is any state or local government in the
country

>taking or planning action that will actually prevent many
foreclosures

>of currently-owned homes?

>

>Most of the proposed actions I've seen have been prospective,
designed

>to prevent lenders from getting people into unsustainable loans
in the

>future. One of those efforts in California is Assembly Bill
512, which

>would require a residential lender to give a borrower a
translated copy

>of their loan agreement if it was negotiated in Spanish,
Chinese,

>Tagalog, Vietnamese, or Korean. This is more modest than the
Texas

>constitutional provision requiring a translated copy to be
given to the

>borrower in any language in which it was negotiated, but from
the

>California banking industry's response, you'd think it would
bankrupt

>them. We would appreciate letters of support from anyone in
California.

>You can find full information on the bill here:

>http://www.leginfo.ca.gov/bilinfo.html

>

>But there's not much I've seen that would help those already in
this

>mess. Do you know of any moratoria proposals that look
promising? Or any

>effort to use the homestead exemption laws (the ones concerning

>foreclosures of homes for private debts, not the ones
concerning

>property taxes)?

>

>Thanks for anything anyone can suggest quickly

>

>Please reply off-line, or call me.

>

>Greg deGiere

>

>Gregory deGiere

>Senior Consultant

>Office of Assembly Speaker Pro Tempore Sally J. Lieber

>State Capitol, Room 3013

>Sacramento, CA 95814

>916-319-2022

>916-319-2122 (fax)









-----------------------------------------
This message may contain confidential information and is intended
for the sole purpose of communication with the addressee.
Dissemination or publication in any format is strictly prohibited.
If you have received this communication in error please notify
SEFCU immediately. Thank you for your cooperation.

This post transferred from the cdb-l mailing list

[George Samuels]

"So, my bottom line - let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers."*

Tim, I don't know if this is exactly what Neil was saying in his note. He didn't say we should forget future buyers.
The population of those now dealing with forclosure and backruptcy is a diverse one.
Your cousin represents a protion of potential/actual subprime borrowers. The elderly, represents a portion as well. These are older people that in many cases are duped into taking out loans on their properties, many which have already been paid off. We should protect them?
Another portion is made up of people who would qualify for a commercial bank mortgage but instead went to a mortgage lender and got a higher rate than they would have gotten otherwise. This portion is not talked about often, but we have seen many cases of this, especially with middle and upper-middle income blacks and Hispanics.
Others have been forced into homownership earlier than they should have been, as Neil points out when he talks about Brokers and other lenders manipulating the terms to get applicants into home that they can't afford. Some people need that extra year or two or three *to save more money.
The mortgage industry (particularly independent mortgage brokers) is highly unregulated. I know here in Florida, you can work at one place one day, and then move your certificate to another place the next day. Once you make that loan, you can disappear and go somewhere else. No one is scrutinizing your practices or your movements, so a borrower can be left in the dust. (I don't know if this has changed recently, but I doubt it. I took the mortgage lender class two years ago).
A mixture of regulation of the industry and consumer education is surely what is needed. I know the latter works. I've seen many instances of people making the right decision, when I was with the Boston Fed, and now on my own as a private consultant, so I know education is one key. I don't know how more regulation will effect the market, but my guess is that Neil is right about the associated costs. It seems to me though that the federal, state, and local agencies that regulate the mortgage industry can be more vigilant in monitoring the industry, and they should bear the cost of that. HUD, in case you did not know, has a role in monitoring many of the independent mortgage brokers. They are not out there doing much of it because they don't have the budget for it. So we have another case where the goverment continues to fail, and borrowers are paying the price!
George
GS Consultants



*

From: "Tim O'Connell" <tloc@centuryhousing.org>
Reply-To: "Tim O'Connell" <tloc@centuryhousing.org>
To: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>, "Niel Moser" <moser@homeloanguide.net>, "William Myers" <WMyers@alternatives.org>, <communitydevelopmentbanking-l@cornell.edu>
Subject: RE: Home foreclosure crisis
Date: Wed, 13 Jun 2007 18:01:56 -0700

@page Section1 {size:8.5in 11.0in;margin:1.0in 58.65pt 1.0in 58.6pt;} P.MsoNormal {font-size:12pt;margin:0in 0in 0pt;font-family:'Times New Roman';} LI.MsoNormal {font-size:12pt;margin:0in 0in 0pt;font-family:'Times New Roman';} DIV.MsoNormal {font-size:12pt;margin:0in 0in 0pt;font-family:'Times New Roman';} A:link {color:blue;text-decoration:underline;} SPAN.MsoHyperlink {color:blue;text-decoration:underline;} A:visited {color:purple;text-decoration:underline;} SPAN.MsoHyperlinkFollowed {color:purple;text-decoration:underline;} P.MsoPlainText {font-size:11pt;margin:0in 0in 0pt;color:black;font-family:Verdana;} LI.MsoPlainText {font-size:11pt;margin:0in 0in 0pt;color:black;font-family:Verdana;} DIV.MsoPlainText {font-size:11pt;margin:0in 0in 0pt;color:black;font-family:Verdana;} DIV.Section1 {page:Section1;} I have to say I agree with Neil, but perhaps for another reason.
*
I recently attended a conference put on by the Federal Reserve and there was much presentating about subprime lending, and pay-day lending and stored value debit cards.* Mortgage lending with the various subprime terms was pretty bad, but pay-day lending is racking up APRs exceeding 400% with all costs included, and the stored debit cards, often sold at the check cashing stores that make the pay-day loans are doing a brisk business* layering fees on unbanked workers that sometimes exceed 20%.* When I was young and lending was regulated, that would have been considered usury and only Guido and Lamont would have been willing to extend credit at those rates of return, and backed up their collection efforts with baseball bats.
*
Nowadays most major banks have subsidiaries in these businesses, making subprime mortgages, pay-day loans and selling stored value cards.* And just as Elizabeth Warren has testified regarding credit card lenders and bankruptcy reform, the lenders do not want to curb their own behavior, and they do not care about disclosure - - they just want to make money and as long as they make more than their losses cost them, they will stay in the business and do what they must to keep the government from interfering.* So you can amend the law to require disclosure until you are blue in the face, you won't affect their profit margins.* [see http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/warren.html*for more on Warren]
*
When I returned home from the FedReserve conference, my cousin picked me up at the airport and I was still livid over what I had heard.* I was rabbiting on about consumer education, and financial counseling and proper disclosure and she stopped me cold to say "You have it all wrong.* None of that will matter.* These borrowers are not ignorant or stupid - - they are like me, they don't CARE about tomorrow, they live in the NOW. They was instant gratification and they don't save or care about what it costs.* When they want money, they want it NOW and nothing will discourage them from getting it NOW, even if it bankrupts them in the future.
*
Since cousin has gone through bankruptcy and was about to move back into her elderly mother's home after losing her job at age 60 (no savings, no safety net at all, despite having earned very good salaries most of her life), I listened.* After a long dinner discussion, I started looking at the psychology of the question, and I agree with my cousin.
*
Unless we are to return to a "fettered capitalism" model where people are protected against themselves (Blue laws, stores closed on Sunday, etc.) then there will be people who put everything they have on the Black and let the roulette wheel of life take a spin with their futures.
*
And the only real flaw in the ointment is that they have become convinced that they will be saved at the last moment like they were last time, or like their parents did when they were little.* The only real solution is to let capitalism work -- and capitalism only works when mistakes are sanctioned and failure is punished.* They should be allowed to go into debt and they should then have to either buy their way out of lose.* Foreclosure is the right solution.* It would warn future lenders that they borrowers are NOT credit worthy and it would remind the ill-equipped borrowers that they should think twice before doing it again. When you gamble, as all these folks were doing, you have to be willing and able to lose.*
*
I have come to the uncomfortable conclusion that we have to let them lose their shirts.* If we bail the subprime borrowers out, we are really bailing the lenders who made these loans at unconscionable terms out, and that is just wrong.
*
The other advantage to letting the properties go to foreclosure is that it will pop the real estate bubble that is pricing so many people out of the market.* No one has quantified it that I have seen, but you have to figure that the subprime lending was pumping up prices by artificially creating more demand that could not be met by a limited supply, and (since the low teaser rates were depressing payments) inducing buyers to pay more than the houses were actually worth in a real market not being hyped up by low interest rates.* If these loans fail and the properties reenter the market place with realistic lending then it should depress home prices across the market.*
*
Other homeowners may complain about that, but they have grounds for it.* Their "home values" were artificially and arbitrarily inflated* and it is not "earned wealth" at all.* Once the adjustment period is over, we can go back to a more rational market.
*
So, my bottom line - let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers.* There will always be plenty of people who are like the Grasshopper in Aesop's fable* -- they just want to have fun today and nothing we can do will get them to pay attention to tomorrow.* [see http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper*for more on the fable]
*
Tim O'Connell

From: bounce-1529830-5282651@list.cornell.edu [mailto:bounce-1529830-5282651@list.cornell.edu] On Behalf Of deGiere, Greg
Sent: Wednesday, June 13, 2007 3:57 PM
To: Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis



Thank you for sharing, Neil
*
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)

-----Original Message-----
From: Niel Moser [mailto:moser@homeloanguide.net]
Sent: Wednesday, June 13, 2007 3:05 PM
To: 'William Myers'; communitydevelopmentbanking-l@cornell.edu
Cc: deGiere, Greg
Subject: RE: Home foreclosure crisis



Regarding: California is Assembly/Senate Bill 512, which would require a residential lender to give a borrower a translated copy of their loan agreement if it was negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean.
*
Are you serious???* This legislation is really dumb!
*
I have been in the mortgage business for 40 years.* I have yet to see anyone, English speaking or any other language, take the time to read what they are signing.* They want to buy a home.* The terms are confusing and secondary to what they want.* Borrowers listen to the loan officer and believe what they are told about the terms of the deal.* At the closing, the borrower is under lots of pressure... sign the loan documents or don't buy the house.* That is the bottom line.*
*
This legislation is typical of politicians wanting to get publicity for passing a bill to "prevent" foreclosures or at best reduce them.* Ha!* Do you really think that the language of the documents or written explanation of the documents will make people stop and not sign for a bad mortgage to buy their home?* Dream on.
*
It would seem that a better approach would be to regulate the terms of home mortgages.* Adjustable Rate Loans should be controlled.* The interest rate adjustment caps, life of loan caps, margin over index, type of index, first year entry rate, pre-payment penalties, yield spread premiums paid to the lender, negative amortization, and points/fees charged by the lender should be monitored and regulated. (If you don't know what these terms mean, you are part of the problem!)*
*
These are the terms of the loan that result in unethical and predatory lending practices.* These terms are manipulated by brokers and lenders to get applicants into homes they can't afford and later gouge them on higher rates and higher payments that lead to higher foreclosures or to higher fees for refinancing later to get the borrowers out of trouble.
*
Subprime loans are just part for the problem.* Understanding what you are signing is just part of the problem.* The real problem is that mortgage brokers and mortgage lenders (even loan officers at respectable banks) get paid higher fee income for higher rates, higher margins over the index, and for closing loans.* Getting a loan approved is paramount. *Low entry rates and payments allow more people to qualify. More approved loans means more closed loans and more fee income.*
*
The fate of the borrower (inevitable higher rates and payment amounts coupled with decreasing property values, domestic problems, and/or employment problems) is not the concern of lenders today.* Nearly all mortgages are sold.* The originator of the home mortgage loan is not held responsible for the performance of that loan in the future.*
*
The language of the loan documents is not the problem.* The written words make no difference.* The words of the mortgage broker/loan office/lender are the deciding factor.* In the absence of regulated mortgage loan terms, lenders will say and do what has to be done to close loans.*
*
I reiterate... regulate the mortgage terms... the factors that make a loan good or bad for the borrower.* It is not easy.* First the politicians have to understand the mortgage terms and understand how the mortgage lending game is played.* What self respecting politician has time to dig too deep and understand the problem?* After all, re-election is just around the corner.
*
Niel Moser
Home Mortgage Solutions, LLC
moser@homeloanguide.net (moser@homeloanguide.net)
*
P.S. (Or is it B.S.) *Without regulating loan terms, this new language Bill when passed will increase the cost to the lenders and, in tern, the lenders will pass the cost to the borrower who can't afford the loan in the first place.* Ha!* Another example of our political process working for the American people!*
*
*
*
-----Original Message-----
From: bounce-1529444-4990460@list.cornell.edu [mailto:bounce-1529444-4990460@list.cornell.edu] On Behalf Of William Myers
Sent: Wednesday, June 13, 2007 2:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis
*
*
From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>
*
Dear Folks,
*
To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?
*
Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html
*
But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?
*
Thanks for anything anyone can suggest quickly
*
Please reply off-line, or call me.
*
Greg deGiere
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)
*
*
*
*


Hotmail to go? Get your Hotmail, news, sports and much more! (http://g.msn.com/8HMBENUS/2749??PS=47575)
This post transferred from the cdb-l mailing list

[Dan.Immergluck at coa.gat]

Greg-

In case you havent seen it, the Center for American Progress has a piece that discusses such initiatives - though it does not capture the recent actions in places like Maryland, Ohio, etc.

http://www.americanprogress.org/issues/2007/03/pdf/foreclosure_paper.pdf

I believe folks in Ohio are working on ways to do large-scale loan modifications with lenders/investors, but am not sure how that is going. Others on this list are likely to know more.

Dan

Dan Immergluck
Associate Professor
City and Regional Planning Program
College of Architecture
Georgia Institute of Technology
Atlanta, GA 30332-0155
(404) 385-7214
(404) 384-1628 fax
dan.immergluck@coa.gatech.edu
www.prism.gatech.edu/~di17


________________________________

From: bounce-1529444-4991664@list.cornell.edu on behalf of William Myers
Sent: Wed 6/13/2007 3:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis




From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>

Dear Folks,

To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?

Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html

But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?

Thanks for anything anyone can suggest quickly

Please reply off-line, or call me.

Greg deGiere

Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)







This post transferred from the cdb-l mailing list

[Dodson Mae]

Tim O'Connell wrote:

The other advantage to letting the properties go to foreclosure is that
it will pop the real estate bubble that is pricing so many people out of
the market. No one has quantified it that I have seen, but you have to
figure that the subprime lending was pumping up prices by artificially
creating more demand that could not be met by a limited supply, and
(since the low teaser rates were depressing payments) inducing buyers to
pay more than the houses were actually worth in a real market not being
hyped up by low interest rates. If these loans fail and the properties
reenter the market place with realistic lending then it should depress
home prices across the market.

Other homeowners may complain about that, but they have grounds for it.
Their "home values" were artificially and arbitrarily inflated and it
is not "earned wealth" at all. Once the adjustment period is over, we
can go back to a more rational market.

Ed Dodson here:
The reasons why people use check cashing services and other high cost
sources of borrowed funds are complex, to be sure. I recall listening to
minority focus groups discuss their distrust of banks. Even individuals with
college educations and professional careers expressed their distaste for the
process of applying for a loan and having their personal life examined in
what they felt to be overly intrusive detail. A general feeling was that
banks only extended credit to people who did not really need it.

The part of your posting I really want to comment on, Tim, is what you wrote
about the "real estate bubble." I have studied real estate cycles going back
well over a century. The remarkable thing is that the stresses that create
bubbles that eventually burst are not generally appreciated; and, public
policy has tended to add fuel to the inflationary fires that cause severe
crashes when the cycle reaches its critical stress point. Nearly everyone
refers to these cycles incorrectly; they are a function of land markets and
the process of capitalization of imputed (i.e., unrealized) and actual
economic rent associated with land. Economists and government analysts
report on increases in the CPI and come up with a rate of inflation that is
not only misleading but useless in analysis of economic cycles. Since the
last land market downturn in the late 1980s, land prices have been spiraling
upwards often at double-digit rates of inflation. In parts of the world (and
the U.S.) the land market cycle has already reached the end of its upward
climb.

Bankruptcies and foreclosures are as much a symptom as a contributing cause
to the potential for broader economic problems. As land owners ask for
higher and higher prices for access to land, businesses whose revenue stream
is limited by prices set in a global market, are hard-pressed to cut costs
in order to remain profitable. Many shift from labor to capital goods to try
to preserve profit margins. When that does not work, they relocate to find
lower cost labor and land and less expense to meet government regulations.
When enough businesses take these steps, the result, of course, is high
umemployment; and, this leads to rising defaults, foreclosures and
recession.







This post transferred from the cdb-l mailing list

[Rivee059 at newschool.edu]

There are many good points being said regarding the foreclosures.
I used to do Housing/Tenant advocacy in NYC. And several years ago, I saw a trend between mortgage fraud and community displacement or forced housing evictions.
Many borrowers were fooled into purchasing a rent-stabilized building where rent control provides housing opportunity for working poor families [When I say working poor, I'm talking about a family of four earning 15,000 a year]. Many of these rent rolls did not cover the monthly mortgage, causing many landlords to either illegally raise rents on these working poor families or go into foreclosure.

What I am getting at is that foreclosures affect more than just the borrower. In many cases with foreclosed buildings, I've seen many of these buildings abandoned, heat and hot water turned off while working poor families are forced to live there.

So I'm not so sure if allowing the market to correct itself is worthy.

I sincerely do feel that all parties should assume more responsibility. But let's face it. Lenders have an advantage since they are more aware of mortgage agreements. Although I do believe that consumer education is important and part of the solution, fair government regulation is the only thing that will provide a balance to lenders seeking a bottom line. Let's face it. Lenders have choices too. Why not sell a good loan?

>> "Edward Dodson" <ejdodson@comcast.net> 06/14/07 10:24 AM >>>
Tim O'Connell wrote:

The other advantage to letting the properties go to foreclosure is that
it will pop the real estate bubble that is pricing so many people out of
the market. No one has quantified it that I have seen, but you have to
figure that the subprime lending was pumping up prices by artificially
creating more demand that could not be met by a limited supply, and
(since the low teaser rates were depressing payments) inducing buyers to
pay more than the houses were actually worth in a real market not being
hyped up by low interest rates. If these loans fail and the properties
reenter the market place with realistic lending then it should depress
home prices across the market.

Other homeowners may complain about that, but they have grounds for it.
Their "home values" were artificially and arbitrarily inflated and it
is not "earned wealth" at all. Once the adjustment period is over, we
can go back to a more rational market.

Ed Dodson here:
The reasons why people use check cashing services and other high cost
sources of borrowed funds are complex, to be sure. I recall listening to
minority focus groups discuss their distrust of banks. Even individuals with
college educations and professional careers expressed their distaste for the
process of applying for a loan and having their personal life examined in
what they felt to be overly intrusive detail. A general feeling was that
banks only extended credit to people who did not really need it.

The part of your posting I really want to comment on, Tim, is what you wrote
about the "real estate bubble." I have studied real estate cycles going back
well over a century. The remarkable thing is that the stresses that create
bubbles that eventually burst are not generally appreciated; and, public
policy has tended to add fuel to the inflationary fires that cause severe
crashes when the cycle reaches its critical stress point. Nearly everyone
refers to these cycles incorrectly; they are a function of land markets and
the process of capitalization of imputed (i.e., unrealized) and actual
economic rent associated with land. Economists and government analysts
report on increases in the CPI and come up with a rate of inflation that is
not only misleading but useless in analysis of economic cycles. Since the
last land market downturn in the late 1980s, land prices have been spiraling
upwards often at double-digit rates of inflation. In parts of the world (and
the U.S.) the land market cycle has already reached the end of its upward
climb.

Bankruptcies and foreclosures are as much a symptom as a contributing cause
to the potential for broader economic problems. As land owners ask for
higher and higher prices for access to land, businesses whose revenue stream
is limited by prices set in a global market, are hard-pressed to cut costs
in order to remain profitable. Many shift from labor to capital goods to try
to preserve profit margins. When that does not work, they relocate to find
lower cost labor and land and less expense to meet government regulations.
When enough businesses take these steps, the result, of course, is high
umemployment; and, this leads to rising defaults, foreclosures and
recession.









This post transferred from the cdb-l mailing list

[Rebecca Carlice-DeLoof]

I am not an expert or even very knowledgeable about this field. I just
know what has happened in my neighborhood. Some houses were bought with
the speculation that a large big box store was going to be snatching up
the property in my neighborhood. Some of the houses went for ridiculous
prices considering the repairs needed and the size of the houses (1-2
small bedroom homes). The big box did not relocate and the speculator
was left with the homes. He couldn't afford to fix them and recoup with
the increase in rent. He really didn't have the money for the payments
as he was planning to flip them real fast at 4 times the SEV. The houses
are empty, the value of my home and my neighbors has dropped but the
property taxes are still going up. We have the highest foreclosure rate
in Michigan and it isn't all due to predatory lenders but the closure of
our major employers to satisfy wall street. Wall street doesn't value
hard work and therefore doesn't reward the middle class by supporting
their employers. The erosion of the middle class has a large impact on
housing. But that is just my opinion.

>> "Edgardo Rivera" <Rivee059@newschool.edu> 06/14/2007 12:03:23 PM
>>
There are many good points being said regarding the foreclosures.
I used to do Housing/Tenant advocacy in NYC. And several years ago, I
saw a trend between mortgage fraud and community displacement or forced
housing evictions.
Many borrowers were fooled into purchasing a rent-stabilized building
where rent control provides housing opportunity for working poor
families [When I say working poor, I'm talking about a family of four
earning 15,000 a year]. Many of these rent rolls did not cover the
monthly mortgage, causing many landlords to either illegally raise rents
on these working poor families or go into foreclosure.

What I am getting at is that foreclosures affect more than just the
borrower. In many cases with foreclosed buildings, I've seen many of
these buildings abandoned, heat and hot water turned off while working
poor families are forced to live there.

So I'm not so sure if allowing the market to correct itself is worthy.

I sincerely do feel that all parties should assume more responsibility.
But let's face it. Lenders have an advantage since they are more aware
of mortgage agreements. Although I do believe that consumer education is
important and part of the solution, fair government regulation is the
only thing that will provide a balance to lenders seeking a bottom line.
Let's face it. Lenders have choices too. Why not sell a good loan?

>> "Edward Dodson" <ejdodson@comcast.net> 06/14/07 10:24 AM >>>
Tim O'Connell wrote:

The other advantage to letting the properties go to foreclosure is
that
it will pop the real estate bubble that is pricing so many people out
of
the market. No one has quantified it that I have seen, but you have
to
figure that the subprime lending was pumping up prices by artificially
creating more demand that could not be met by a limited supply, and
(since the low teaser rates were depressing payments) inducing buyers
to
pay more than the houses were actually worth in a real market not
being
hyped up by low interest rates. If these loans fail and the
properties
reenter the market place with realistic lending then it should depress
home prices across the market.

Other homeowners may complain about that, but they have grounds for
it.
Their "home values" were artificially and arbitrarily inflated and it
is not "earned wealth" at all. Once the adjustment period is over, we
can go back to a more rational market.

Ed Dodson here:
The reasons why people use check cashing services and other high cost
sources of borrowed funds are complex, to be sure. I recall listening
to
minority focus groups discuss their distrust of banks. Even individuals
with
college educations and professional careers expressed their distaste
for the
process of applying for a loan and having their personal life examined
in
what they felt to be overly intrusive detail. A general feeling was
that
banks only extended credit to people who did not really need it.

The part of your posting I really want to comment on, Tim, is what you
wrote
about the "real estate bubble." I have studied real estate cycles going
back
well over a century. The remarkable thing is that the stresses that
create
bubbles that eventually burst are not generally appreciated; and,
public
policy has tended to add fuel to the inflationary fires that cause
severe
crashes when the cycle reaches its critical stress point. Nearly
everyone
refers to these cycles incorrectly; they are a function of land markets
and
the process of capitalization of imputed (i.e., unrealized) and actual
economic rent associated with land. Economists and government analysts
report on increases in the CPI and come up with a rate of inflation
that is
not only misleading but useless in analysis of economic cycles. Since
the
last land market downturn in the late 1980s, land prices have been
spiraling
upwards often at double-digit rates of inflation. In parts of the world
(and
the U.S.) the land market cycle has already reached the end of its
upward
climb.

Bankruptcies and foreclosures are as much a symptom as a contributing
cause
to the potential for broader economic problems. As land owners ask for
higher and higher prices for access to land, businesses whose revenue
stream
is limited by prices set in a global market, are hard-pressed to cut
costs
in order to remain profitable. Many shift from labor to capital goods
to try
to preserve profit margins. When that does not work, they relocate to
find
lower cost labor and land and less expense to meet government
regulations.
When enough businesses take these steps, the result, of course, is
high
umemployment; and, this leads to rising defaults, foreclosures and
recession.










This post transferred from the cdb-l mailing list

[David.Beck at self-help.o]

Tim,* I can't agree with your sentiment to: "let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers." One could easily make the same argument for privatizing Social Security; i.e. if people aren't smart enough to plan ahead then let them eat cake.* In my view, capitalism survives because protections and enhancements get built in when outrageous abuses**and excesses*are uncovered. That's what the Trust Busters were all about.* And that's why it is logical to enact laws to effectively ban usurious payday lenders, outrageous home loans and other exhorbitant financial service charges.**I think we can rest assured that there will*always be ways for the over-indulgent to ruin themselves financially but that doesn't mean we shouldn't seek protections for the vulnerable and unwitting.*
*
David Beck
Self-Help
*

From: bounce-1529974-4990067@list.cornell.edu [mailto:bounce-1529974-4990067@list.cornell.edu (bounce-1529974-4990067@list.cornell.edu)] On Behalf Of Tim O'Connell
Sent: Wednesday, June 13, 2007 9:02 PM
To: deGiere, Greg; Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis

I have to say I agree with Neil, but perhaps for another reason.
*
I recently attended a conference put on by the Federal Reserve and there was much presentating about subprime lending, and pay-day lending and stored value debit cards.* Mortgage lending with the various subprime terms was pretty bad, but pay-day lending is racking up APRs exceeding 400% with all costs included, and the stored debit cards, often sold at the check cashing stores that make the pay-day loans are doing a brisk business* layering fees on unbanked workers that sometimes exceed 20%.* When I was young and lending was regulated, that would have been considered usury and only Guido and Lamont would have been willing to extend credit at those rates of return, and backed up their collection efforts with baseball bats.
*
Nowadays most major banks have subsidiaries in these businesses, making subprime mortgages, pay-day loans and selling stored value cards.* And just as Elizabeth Warren has testified regarding credit card lenders and bankruptcy reform, the lenders do not want to curb their own behavior, and they do not care about disclosure - - they just want to make money and as long as they make more than their losses cost them, they will stay in the business and do what they must to keep the government from interfering.* So you can amend the law to require disclosure until you are blue in the face, you won't affect their profit margins.* [see http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/warren.html for more on Warren]
*
When I returned home from the FedReserve conference, my cousin picked me up at the airport and I was still livid over what I had heard.* I was rabbiting on about consumer education, and financial counseling and proper disclosure and she stopped me cold to say "You have it all wrong.* None of that will matter.* These borrowers are not ignorant or stupid - - they are like me, they don't CARE about tomorrow, they live in the NOW. They was instant gratification and they don't save or care about what it costs.* When they want money, they want it NOW and nothing will discourage them from getting it NOW, even if it bankrupts them in the future.
*
Since cousin has gone through bankruptcy and was about to move back into her elderly mother's home after losing her job at age 60 (no savings, no safety net at all, despite having earned very good salaries most of her life), I listened.* After a long dinner discussion, I started looking at the psychology of the question, and I agree with my cousin.
*
Unless we are to return to a "fettered capitalism" model where people are protected against themselves (Blue laws, stores closed on Sunday, etc.) then there will be people who put everything they have on the Black and let the roulette wheel of life take a spin with their futures.
*
And the only real flaw in the ointment is that they have become convinced that they will be saved at the last moment like they were last time, or like their parents did when they were little.* The only real solution is to let capitalism work -- and capitalism only works when mistakes are sanctioned and failure is punished.* They should be allowed to go into debt and they should then have to either buy their way out of lose.* Foreclosure is the right solution.* It would warn future lenders that they borrowers are NOT credit worthy and it would remind the ill-equipped borrowers that they should think twice before doing it again. When you gamble, as all these folks were doing, you have to be willing and able to lose.*
*
I have come to the uncomfortable conclusion that we have to let them lose their shirts.* If we bail the subprime borrowers out, we are really bailing the lenders who made these loans at unconscionable terms out, and that is just wrong.
*
The other advantage to letting the properties go to foreclosure is that it will pop the real estate bubble that is pricing so many people out of the market.* No one has quantified it that I have seen, but you have to figure that the subprime lending was pumping up prices by artificially creating more demand that could not be met by a limited supply, and (since the low teaser rates were depressing payments) inducing buyers to pay more than the houses were actually worth in a real market not being hyped up by low interest rates.* If these loans fail and the properties reenter the market place with realistic lending then it should depress home prices across the market.*
*
Other homeowners may complain about that, but they have grounds for it.* Their "home values" were artificially and arbitrarily inflated* and it is not "earned wealth" at all.* Once the adjustment period is over, we can go back to a more rational market.
*
So, my bottom line - let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers.* There will always be plenty of people who are like the Grasshopper in Aesop's fable* -- they just want to have fun today and nothing we can do will get them to pay attention to tomorrow.* [see http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper for more on the fable]
*
Tim O'Connell

From: bounce-1529830-5282651@list.cornell.edu [mailto:bounce-1529830-5282651@list.cornell.edu (bounce-1529830-5282651@list.cornell.edu)] On Behalf Of deGiere, Greg
Sent: Wednesday, June 13, 2007 3:57 PM
To: Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis

Thank you for sharing, Neil
*
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)

-----Original Message-----
From:[/b] Niel Moser [mailto:moser@homeloanguide.net (moser@homeloanguide.net)]
Sent:[/b] Wednesday, June 13, 2007 3:05 PM
To:[/b] 'William Myers'; communitydevelopmentbanking-l@cornell.edu
Cc:[/b] deGiere, Greg
Subject:[/b] RE: Home foreclosure crisis

Regarding[/u]: California is Assembly/Senate Bill 512, which would require a residential lender to give a borrower a translated copy of their loan agreement if it was negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean.



* Are you serious???* This legislation is really dumb!



* I have been in the mortgage business for 40 years.* I have yet to see anyone, English speaking or any other language, take the time to read what they are signing.* They want to buy a home.* The terms are confusing and secondary to what they want.* Borrowers listen to the loan officer and believe what they are told about the terms of the deal.* At the closing, the borrower is under lots of pressure... sign the loan documents or don't buy the house.* That is the bottom line.*



* This legislation is typical of politicians wanting to get publicity for passing a bill to "prevent" foreclosures or at best reduce them.* Ha!* Do you really think that the language of the documents or written explanation of the documents will make people stop and not sign for a bad mortgage to buy their home?* Dream on.



* It would seem that a better approach would be to regulate the terms of home mortgages[/u].* Adjustable Rate Loans should be controlled.* The interest rate adjustment caps, life of loan caps, margin over index, type of index, first year entry rate, pre-payment penalties, yield spread premiums paid to the lender, negative amortization, and points/fees charged by the lender should be monitored and regulated. (If you don't know what these terms mean, you are part of the problem!)*



* These are the terms of the loan that result in unethical and predatory lending practices.* These terms are manipulated by brokers and lenders to get applicants into homes they can't afford and later gouge them on higher rates and higher payments that lead to higher foreclosures or to higher fees for refinancing later to get the borrowers out of trouble.



* Subprime loans are just part for the problem.* Understanding what you are signing is just part of the problem.* The real problem is that mortgage brokers and mortgage lenders (even loan officers at respectable banks) get paid higher fee income for higher rates, higher margins over the index, and for closing loans.* Getting a loan approved is paramount.* Low entry rates and payments allow more people to qualify. More approved loans means more closed loans and more fee income.*



* The fate of the borrower (inevitable higher rates and payment amounts coupled with decreasing property values, domestic problems, and/or employment problems) is not the concern of lenders today.* Nearly all mortgages are sold.* The originator of the home mortgage loan is not held responsible for the performance of that loan in the future.*



* The language of the loan documents is not the problem.* The written words make no difference.* The words of the mortgage broker/loan office/lender are the deciding factor.* In the absence of regulated mortgage loan terms, lenders will say and do what has to be done to close loans.*



* I reiterate... regulate the mortgage terms... the factors that make a loan good or bad for the borrower.* It is not easy.* First the politicians have to understand the mortgage terms and understand how the mortgage lending game is played.* What self respecting politician has time to dig too deep and understand the problem?* After all, re-election is just around the corner.



* Niel Moser

Home Mortgage Solutions, LLC

moser@homeloanguide.net (moser@homeloanguide.net)



* P.S. (Or is it B.S.)* Without regulating loan terms, this new language Bill when passed will increase the cost to the lenders and, in tern, the lenders will pass the cost to the borrower who can't afford the loan in the first place.* Ha!* Another example of our political process working for the American people!*



*

*

* -----Original Message-----
From: bounce-1529444-4990460@list.cornell.edu [mailto:bounce-1529444-4990460@list.cornell.edu (bounce-1529444-4990460@list.cornell.edu)] On Behalf Of William Myers
Sent: Wednesday, June 13, 2007 2:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis



*

* >From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>

>

>Dear Folks,

>

>To your knowledge, is any state or local government in the country

>taking or planning action that will actually prevent many foreclosures

>of currently-owned homes?

>

>Most of the proposed actions I've seen have been prospective, designed

>to prevent lenders from getting people into unsustainable loans in the

>future. One of those efforts in California is Assembly Bill 512, which

>would require a residential lender to give a borrower a translated copy

>of their loan agreement if it was negotiated in Spanish, Chinese,

>Tagalog, Vietnamese, or Korean. This is more modest than the Texas

>constitutional provision requiring a translated copy to be given to the

>borrower in any language in which it was negotiated, but from the

>California banking industry's response, you'd think it would bankrupt

>them. We would appreciate letters of support from anyone in California.

>You can find full information on the bill here:

>http://www.leginfo.ca.gov/bilinfo.html

>

>But there's not much I've seen that would help those already in this

>mess. Do you know of any moratoria proposals that look promising? Or any

>effort to use the homestead exemption laws (the ones concerning

>foreclosures of homes for private debts, not the ones concerning

>property taxes)?

>

>Thanks for anything anyone can suggest quickly

>

>Please reply off-line, or call me.

>

>Greg deGiere

>

>Gregory deGiere

>Senior Consultant

>Office of Assembly Speaker Pro Tempore Sally J. Lieber

>State Capitol, Room 3013

>Sacramento, CA 95814

>916-319-2022

>916-319-2122 (fax)



*

*

*
*
This post transferred from the cdb-l mailing list

[pturney at bvahc.org]

I understood Tim’s recommended course of action was just that…..regulate the industry…. Because we will never be able to help all the grasshoppers survive the winter otherwise. This will take a serious amount of advocacy effort as the big money does want to be regulated. But as a society and as a country we will bankrupt ourselves if we don’t require responsible action from the parties responsible on all sides of the closing table.
Homeownership is not usually a viable option for households with very low and extremely low incomes and there a rental opportunities designed from the federal level on down for just that purpose. We are doing families a disservice by putting them into a homeownership situation when they do not have sufficient income to maintain the mortgage, taxes, insurance and repairs.
*

From: bounce-1531750-4989726@list.cornell.edu [mailto:bounce-1531750-4989726@list.cornell.edu] On Behalf Of David Beck
Sent: Thursday, June 14, 2007 11:15 AM
To: communitydevelopmentbanking-l@CORNELL.EDU
Subject: FW: Home foreclosure crisis

*
Tim,* I can't agree with your sentiment to: "let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers." One could easily make the same argument for privatizing Social Security; i.e. if people aren't smart enough to plan ahead then let them eat cake.* In my view, capitalism survives because protections and enhancements get built in when outrageous abuses**and excesses*are uncovered. That's what the Trust Busters were all about.* And that's why it is logical to enact laws to effectively ban usurious payday lenders, outrageous home loans and other exhorbitant financial service charges.**I think we can rest assured that there will*always be ways for the over-indulgent to ruin themselves financially but that doesn't mean we shouldn't seek protections for the vulnerable and unwitting.*
*
David Beck
Self-Help
*

From: bounce-1529974-4990067@list.cornell.edu [mailto:bounce-1529974-4990067@list.cornell.edu (bounce-1529974-4990067@list.cornell.edu)] On Behalf Of Tim O'Connell
Sent: Wednesday, June 13, 2007 9:02 PM
To: deGiere, Greg; Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis

I have to say I agree with Neil, but perhaps for another reason.
*
I recently attended a conference put on by the Federal Reserve and there was much presentating about subprime lending, and pay-day lending and stored value debit cards.* Mortgage lending with the various subprime terms was pretty bad, but pay-day lending is racking up APRs exceeding 400% with all costs included, and the stored debit cards, often sold at the check cashing stores that make the pay-day loans are doing a brisk business* layering fees on unbanked workers that sometimes exceed 20%.* When I was young and lending was regulated, that would have been considered usury and only Guido and Lamont would have been willing to extend credit at those rates of return, and backed up their collection efforts with baseball bats.
*
Nowadays most major banks have subsidiaries in these businesses, making subprime mortgages, pay-day loans and selling stored value cards.* And just as Elizabeth Warren has testified regarding credit card lenders and bankruptcy reform, the lenders do not want to curb their own behavior, and they do not care about disclosure - - they just want to make money and as long as they make more than their losses cost them, they will stay in the business and do what they must to keep the government from interfering.* So you can amend the law to require disclosure until you are blue in the face, you won't affect their profit margins.* [see http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/warren.html for more on Warren]
*
When I returned home from the FedReserve conference, my cousin picked me up at the airport and I was still livid over what I had heard.* I was rabbiting on about consumer education, and financial counseling and proper disclosure and she stopped me cold to say "You have it all wrong.* None of that will matter.* These borrowers are not ignorant or stupid - - they are like me, they don't CARE about tomorrow, they live in the NOW. They was instant gratification and they don't save or care about what it costs.* When they want money, they want it NOW and nothing will discourage them from getting it NOW, even if it bankrupts them in the future.
*
Since cousin has gone through bankruptcy and was about to move back into her elderly mother's home after losing her job at age 60 (no savings, no safety net at all, despite having earned very good salaries most of her life), I listened.* After a long dinner discussion, I started looking at the psychology of the question, and I agree with my cousin.
*
Unless we are to return to a "fettered capitalism" model where people are protected against themselves (Blue laws, stores closed on Sunday, etc.) then there will be people who put everything they have on the Black and let the roulette wheel of life take a spin with their futures.
*
And the only real flaw in the ointment is that they have become convinced that they will be saved at the last moment like they were last time, or like their parents did when they were little.* The only real solution is to let capitalism work -- and capitalism only works when mistakes are sanctioned and failure is punished.* They should be allowed to go into debt and they should then have to either buy their way out of lose.* Foreclosure is the right solution.* It would warn future lenders that they borrowers are NOT credit worthy and it would remind the ill-equipped borrowers that they should think twice before doing it again. When you gamble, as all these folks were doing, you have to be willing and able to lose.*
*
I have come to the uncomfortable conclusion that we have to let them lose their shirts.* If we bail the subprime borrowers out, we are really bailing the lenders who made these loans at unconscionable terms out, and that is just wrong.
*
The other advantage to letting the properties go to foreclosure is that it will pop the real estate bubble that is pricing so many people out of the market.* No one has quantified it that I have seen, but you have to figure that the subprime lending was pumping up prices by artificially creating more demand that could not be met by a limited supply, and (since the low teaser rates were depressing payments) inducing buyers to pay more than the houses were actually worth in a real market not being hyped up by low interest rates.* If these loans fail and the properties reenter the market place with realistic lending then it should depress home prices across the market.*
*
Other homeowners may complain about that, but they have grounds for it.* Their "home values" were artificially and arbitrarily inflated* and it is not "earned wealth" at all.* Once the adjustment period is over, we can go back to a more rational market.
*
So, my bottom line - let the people who got into this mess get out of it, by bankruptcy and foreclosure if necessary, and don't worry about protecting future buyers.* There will always be plenty of people who are like the Grasshopper in Aesop's fable* -- they just want to have fun today and nothing we can do will get them to pay attention to tomorrow.* [see http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper for more on the fable]
*
Tim O'Connell

From: bounce-1529830-5282651@list.cornell.edu [mailto:bounce-1529830-5282651@list.cornell.edu (bounce-1529830-5282651@list.cornell.edu)] On Behalf Of deGiere, Greg
Sent: Wednesday, June 13, 2007 3:57 PM
To: Niel Moser; William Myers; communitydevelopmentbanking-l@cornell.edu
Subject: RE: Home foreclosure crisis

Thank you for sharing, Neil
*
*
Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)
-----Original Message-----
From: Niel Moser [mailto:moser@homeloanguide.net (moser@homeloanguide.net)]
Sent: Wednesday, June 13, 2007 3:05 PM
To: 'William Myers'; communitydevelopmentbanking-l@cornell.edu
Cc: deGiere, Greg
Subject: RE: Home foreclosure crisis
Regarding: California is Assembly/Senate Bill 512, which would require a residential lender to give a borrower a translated copy of their loan agreement if it was negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean.


*
Are you serious???* This legislation is really dumb!


*
I have been in the mortgage business for 40 years.* I have yet to see anyone, English speaking or any other language, take the time to read what they are signing.* They want to buy a home.* The terms are confusing and secondary to what they want.* Borrowers listen to the loan officer and believe what they are told about the terms of the deal.* At the closing, the borrower is under lots of pressure... sign the loan documents or don't buy the house.* That is the bottom line.*


*
This legislation is typical of politicians wanting to get publicity for passing a bill to "prevent" foreclosures or at best reduce them.* Ha!* Do you really think that the language of the documents or written explanation of the documents will make people stop and not sign for a bad mortgage to buy their home?* Dream on.


*
It would seem that a better approach would be to regulate the terms of home mortgages.* Adjustable Rate Loans should be controlled.* The interest rate adjustment caps, life of loan caps, margin over index, type of index, first year entry rate, pre-payment penalties, yield spread premiums paid to the lender, negative amortization, and points/fees charged by the lender should be monitored and regulated. (If you don't know what these terms mean, you are part of the problem!)*


*
These are the terms of the loan that result in unethical and predatory lending practices.* These terms are manipulated by brokers and lenders to get applicants into homes they can't afford and later gouge them on higher rates and higher payments that lead to higher foreclosures or to higher fees for refinancing later to get the borrowers out of trouble.


*
Subprime loans are just part for the problem.* Understanding what you are signing is just part of the problem.* The real problem is that mortgage brokers and mortgage lenders (even loan officers at respectable banks) get paid higher fee income for higher rates, higher margins over the index, and for closing loans.* Getting a loan approved is paramount.* Low entry rates and payments allow more people to qualify. More approved loans means more closed loans and more fee income.*


*
The fate of the borrower (inevitable higher rates and payment amounts coupled with decreasing property values, domestic problems, and/or employment problems) is not the concern of lenders today.* Nearly all mortgages are sold.* The originator of the home mortgage loan is not held responsible for the performance of that loan in the future.*


*
The language of the loan documents is not the problem.* The written words make no difference.* The words of the mortgage broker/loan office/lender are the deciding factor.* In the absence of regulated mortgage loan terms, lenders will say and do what has to be done to close loans.*


*
I reiterate... regulate the mortgage terms... the factors that make a loan good or bad for the borrower.* It is not easy.* First the politicians have to understand the mortgage terms and understand how the mortgage lending game is played.* What self respecting politician has time to dig too deep and understand the problem?* After all, re-election is just around the corner.


*
Niel Moser
Home Mortgage Solutions, LLC
moser@homeloanguide.net (moser@homeloanguide.net)


*
P.S. (Or is it B.S.)* Without regulating loan terms, this new language Bill when passed will increase the cost to the lenders and, in tern, the lenders will pass the cost to the borrower who can't afford the loan in the first place.* Ha!* Another example of our political process working for the American people!*


*


*


*
-----Original Message-----
From: bounce-1529444-4990460@list.cornell.edu [mailto:bounce-1529444-4990460@list.cornell.edu (bounce-1529444-4990460@list.cornell.edu)] On Behalf Of William Myers
Sent: Wednesday, June 13, 2007 2:43 PM
To: communitydevelopmentbanking-l@cornell.edu
Cc: Greg.deGiere@asm.ca.gov
Subject: Home foreclosure crisis


*


*
From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov>

Dear Folks,

To your knowledge, is any state or local government in the country
taking or planning action that will actually prevent many foreclosures
of currently-owned homes?

Most of the proposed actions I've seen have been prospective, designed
to prevent lenders from getting people into unsustainable loans in the
future. One of those efforts in California is Assembly Bill 512, which
would require a residential lender to give a borrower a translated copy
of their loan agreement if it was negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. This is more modest than the Texas
constitutional provision requiring a translated copy to be given to the
borrower in any language in which it was negotiated, but from the
California banking industry's response, you'd think it would bankrupt
them. We would appreciate letters of support from anyone in California.
You can find full information on the bill here:
http://www.leginfo.ca.gov/bilinfo.html

But there's not much I've seen that would help those already in this
mess. Do you know of any moratoria proposals that look promising? Or any
effort to use the homestead exemption laws (the ones concerning
foreclosures of homes for private debts, not the ones concerning
property taxes)?

Thanks for anything anyone can suggest quickly

Please reply off-line, or call me.

Greg deGiere

Gregory deGiere
Senior Consultant
Office of Assembly Speaker Pro Tempore Sally J. Lieber
State Capitol, Room 3013
Sacramento, CA 95814
916-319-2022
916-319-2122 (fax)


*


*


*

*

This post transferred from the cdb-l mailing list

[prozhkova at smart-money.]

Yes, the Don't Borrow Trouble Campaign is a Freddie Mac program:* http://www.dontborrowtrouble.com/sp/* Some government entity has to get behind the program to bring it to your area.* But, this is still preventative, not dealing with current problem.
*
My best advice is to see if you can get your attorney general behind a campaign to use what ever programs/laws are available in your state against bad business practices. (Ohio did not do that; they passed one of the laws you mentioned in your post*that went into effect on 01/01/07).
*
*Our legal aid society will take on some of the cases from before that date.* If the client does not meet income guidelines, they have a set of attorneys who will take cases on a contingency basis.*
*
Also, one of our non-profits (www.wincincy.org (http://www.wincincy.org)) in town has an agreement with some of the lenders/servicers in the area who are highest in foreclosures to stop foreclosure proceedings while they are in counseling with the agency, and the agency has a contact in loss mit to workout something.* Talking to Sister Barb at WIN might be worthwhile if you would like to try and set something like that up in Sacramento/CA.
*
Penelope Rozhkova
Financial Education Coordinator
SmartMoney Community Services
19 W. Elder Street
Cincinnati, OH 45202
513-241-7266 x107
513-361-4783 fax
*

From: bounce-1529637-5864296@list.cornell.edu [mailto:bounce-1529637-5864296@list.cornell.edu] On Behalf Of CGladstone@caseyfamilyservices.org
Sent: Wednesday, June 13, 2007 3:47 PM
To: William Myers
Cc: bounce-1529444-5852250@list.cornell.edu; communitydevelopmentbanking-l@cornell.edu; Greg.deGiere@asm.ca.gov
Subject: Re: Home foreclosure crisis




There is a public education campaign, "Don't Borrow Trouble," here in New Hampshire and in other states as well. *In our state, the NH Housing Finance Authority is taking the lead. *The focus is on predatory lending practices directed at existing homeowners, with an eye to preventing foreclosure by helping those homeowners become aware of some of those practices. *Andy Cadorette is the contact person there, and he can be reached at 603.310.9287 or acadorette@nhhfa.org.


Cary Gladstone
Community Liaison
Casey Family Services, NH Division
105 Loudon Rd.
Concord, NH 03301
603.224.8909 ext. 4627
800.417.7375
cgladstone@caseyfamilyservices.org


------------------------------------------------------
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*see*www.anchortechnologies.com*for*more*informati on.
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This post transferred from the cdb-l mailing list

[Josh Silver]

Colleagues:
*
The National Community Reinvestment Coalition (NCRC) operates a national level rescue fund program called the Consumer Rescue Fund (CRF) program.* CRF rescues families on the brink of foreclosure and bankruptcy due to predatory lending.* Our program involves mediation with lenders, resulting in loan modifications.* We also arrange rescue refinance loans through participating lenders.* To find out more about our Consumer Rescue Fund and our views about the foreclosure crisis, check out our web page of http://www.ncrc.org (http://www.ncrc.org/). **We also have our Congressional testimony on our web page that describes our solutions.*
*
Best,
*
Josh Silver
Vice President of Research and Policy
National Community Reinvestment Coalition
(202) 628-8866 or http://www.ncrc.org
*




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