Posts Tagged ‘SAFE Mortgage Licensing Act’

Manufactured Housing, Armed Forces Personnel, and Emergency Assistance for Abandoned and Foreclosed Homes

Tuesday, August 12th, 2008

    The housing legislation provides for increased loan limits for manufactured housing for low and moderate income homebuyers.  In an attempt to prevent or forestall mortgage foreclosures, the bill provides for credit counseling, home mortgage counseling, or any counseling deemed appropriate.

   The mortgage foreclosure protection for servicemen extends the period of time prior to foreclosure of the mortgage from 90 days to nine months.  The stay of proceedings is also extended to nine months.  This provision will expire December 31, 2010.

   Under the Emergency Asistance Redevelopment for Abandoned and Foreclosed Homes section of the bill, a total of $4,000,000.000 will be made available until expended to states and local governments for redevelopment of abandoned and foreclosed homes.

   The Secretary of the Department of Housing and Urban Development will construct  a funding formula within 60 days of enactment of the bill.  Most of funds will go to low and moderate income metropolitan areas or areas deemed the areas of greatest need.  This may be the areas with the highest subprime mortage related loans and/or the highest foreclosure rates.

   A funding mechanism will be established so that these homes can be purchased to sell, rent, or redevelop.  Blighted areas will be demolished.  All properties purchased must be purchased at a discount to the appraised value.

     Additionally, $30,000,000 will be set aside for neighborhood reinvestment for the 100 metropolitan areas which are suffering the most from foreclosures. 

      The Mortgage Disclosure Improvement Act, also known as Truth in Lending, provides that full disclosure be made and that warnings be made to homeowners by lenders about foreclosure rescue scams.  Lenders must send the notices to homeowners who are deliquent by two months in their payments. The notice must contain the following statement in 14 point bold type in both Spanish and English:

    “Mortgage foreclosure is a complex process.  Some people may approach you about  saving your home.  You should be careful about any such promises.  There are government and non profit agencies you may contact for helpful information about the foreclosure process.  Contact your lender immediately at —-, call the Department of Housing and Urban Development Housing Counseling Line at (800) 569-4287 to find a housing counseling agency certified by the Department to assist you in avoiding foreclosure, or visit the Department’s Tips for Avoiding Foreclosure website at http://www.hud.gov/foreclosure for additonal assistance.”

   Any homeowner signing a contract with a foreclosure rescue person or company has a three day right of recission. 

     Veterans disabled before discharge or release who must move because of a foreclsoure of a rental property can have their move paid for by the government. 

   The approximate 700 page housing bill constains provisions for housing tax incentives , low income housing tax credits, first time home buyers credit against the tax, and tax changes regarding Real Estate Investment Trusts and Health Care REITS.

    The bill, which is now law, is now being interpreted by the various agencies designated to carry out and enforce the legislation.  These series are only a snapshot of the the true scope of the law.

Resources:  http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3221eas2.pdf

http://www.fha.com/

http://www.hud.gov/

S.A.F.E. Mortgage Licensing Act

Monday, August 11th, 2008

     The Secure and Fair Enforcement (S.A.F.E.) for a nationwide mortgage licensing system and registery is one of the provisions of this housing legislation.  It provides for licensing and supervision and a nationwide database of all loan originators.   The purpose is to enhance consumer protection.

    Publically adjudicated disciplinary and enforcement actions are specified for violations and mortgage fraud with a maximum penalty of $25,000.  Additionally, loan originators will be required to be fingerprinted, provide history and experience, a credit report, and any admission of civil or criminal findings to the Conference of State Banking Supervisors and the American Association of Residential Mortgage Regulators.  A surety bond is also required.    Pre licensing classes will be required as well as continuing education classes including classes in ethics.      

   A study and report concerning defaults and foreclosrues will be prepared to determine the “root causes of default and foreclosure of home loans” using empirical evidence.  This report will be presented to Congress within one year. 

    The FHA Modernization Act of 2008, also known as Building American Homeownership Act of 2008 prohibits seller funded down payments as has been permitted in the past.  At least 3.5% of the appraised value of the house must be a down payment, which can be borrowed from family members but any lien against the property must be subordinate to the first mortgage.

   The Act prohibits any third party from putting money down and then be reimbursed.  This targets programs such as Ameridream and Nehemiah.  The borrower did not have to put any money down on a property.  The down payment was paid for by inflating the price of the house about 4% .  Usually 3% was used for down payment and 1% was the income earned by the program.

    Other types of loans such as 203 K loans, or loans which provide funds for rehabiitation of properties, the insurance of condos , the Hawaiian Home Lands and Indian Reservations  and Home Equity Conversion Mortgages, also known as Reverse Mortgages, and Energy Efficient Mortgage Programs all have specific guidelines within the legislaton.

   Provision is made for alternative methods of credit ratings for people who have insufficient credit histories by using rent history, payment of utilities and insurance payment history.

    A pilot program for not more than 3,000 home buyers annually will be enacted by the Department of Housing and Urban Development for pre purchase home ownership counseling.   This will target first time home buyers with loan to value ratios of 97% to 98.5%.  Counseling can be via telephone, in person counseling, web based counseling, counseling classes or any other method deemed appropriate by the Secretary of HUD.   HUD will follow the progression of these homebuyers and attempt to determine if pre purchase counseling impacts the numbers of defaults or foreclosures.

Next:  Manufactured Housing and Mortgage Foreclosure Protection for Servicemen

Resources:  http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3221eas2.pdf

http://www.ameridream.org/

http://www.nehemiahcorp.org/