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communitydevelopmentbanking-l digest: June 13, 2007
Greg,
An organization called ACTION Housing in Pittsburgh, PA devised a foreclosure prevention program years ago (initially in response to job layoffs, not predatory lending) that has been highly successful over the long haul. It has been translated into a statewide program for PA (called HEMAP), which has a record of success in about 30,000 cases of potential foreclosure prevented. It of course may require some adjustment to deal with some of the specifics of predatory and subprime lending, but I would bet ACTION has already been doing that themselves as they confront the same issues as in other locations. Try talking to exec director Larry Swanson, who is a very policy-savvy guy and often works at state and national levels. Neil Neil S. Mayer Neil Mayer & Associates 1309 Solano Avenue, Suite B Albany, CA 94706 Ph: (510) 528-1071 Fax: (510) 528-1072 e-mail: NSMayer@earthlink.net -----Original Message----- From: bounce-1530153-4991469@list.cornell.edu [mailto:bounce-1530153-4991469@list.cornell.edu] On Behalf Of For more information digest Sent: Wednesday, June 13, 2007 9:14 PM To: communitydevelopmentbanking-l digest recipients Subject: communitydevelopmentbanking-l digest: June 13, 2007 COMMUNITYDEVELOPMENTBANKING-L Digest for Wednesday, June 13, 2007. 1. Home foreclosure crisis 2. Re: Home foreclosure crisis 3. RE: Home foreclosure crisis 4. Re: Home foreclosure crisis 5. RE: Home foreclosure crisis 6. RE: Home foreclosure crisis 7. RE: Home foreclosure crisis 8. Re: Home foreclosure crisis ---------------------------------------------------------------------- Subject: Home foreclosure crisis From: William Myers <WMyers@alternatives.org> Date: Wed, 13 Jun 2007 15:43:09 -0400 X-Message-Number: 1 Quote:
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---------------------------------------------------------------------- Subject: Re: Home foreclosure crisis From: CGladstone@caseyfamilyservices.org Date: Wed, 13 Jun 2007 16:47:07 -0400 X-Message-Number: 2 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 information. ------------------------------------------------------ ---------------------------------------------------------------------- Subject: RE: Home foreclosure crisis From: "Michael Schaaf" <mschaaf@communityinvestment.net> Date: Wed, 13 Jun 2007 17:42:46 -0400 X-Message-Number: 3 The Governor of the Commonwealth of Massachusetts is proposing legislation that regulates subprime lending. See http://www.boston.com/realestate/new...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 Quote:
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---------------------------------------------------------------------- Subject: Re: Home foreclosure crisis From: "Emmett T. Pickett" <emmett@emmettpickett.com> Date: Wed, 13 Jun 2007 15:56:35 -0700 X-Message-Number: 4 http://www.nybusiness.com/apps/pbcs....608/FREE/70608 006 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....608/FREE/70608 006 Take care, Regards, Emmett T. Pickett www.emmettpickett.com emmett@emmettpickett.com On 6/13/07, William Myers <WMyers@alternatives.org> wrote: Quote:
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Subject: RE: Home foreclosure crisis From: "deGiere, Greg" <Greg.deGiere@asm.ca.gov> Date: Wed, 13 Jun 2007 15:57:24 -0700 X-Message-Number: 5 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) ---------------------------------------------------------------------- Subject: RE: Home foreclosure crisis From: "Mehul Thakker" <mthakker@fwg.com> Date: Wed, 13 Jun 2007 16:30:36 -0700 X-Message-Number: 6 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...tm#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. ---------------------------------------------------------------------- Subject: RE: Home foreclosure crisis From: "Tim O'Connell" <tloc@centuryhousing.org> Date: Wed, 13 Jun 2007 18:01:56 -0700 X-Message-Number: 7 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/frontl...views/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...he_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) ---------------------------------------------------------------------- Subject: Re: Home foreclosure crisis From: Sue Southon <ssouthon@earthlink.net> Date: Wed, 13 Jun 2007 21:47:10 -0400 (GMT-04:00) X-Message-Number: 8 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----- Quote:
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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 --- END OF DIGEST This post transferred from the cdb-l mailing list 
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