Ilyce Glink's Blog

Welcome to Ilyce Glink's blog! Here you'll find Ilyce's latest insights on personal finance advice, real estate advice and consumer issues. Come back often for timely and interesting posts on a wide variety of topics.

Thursday, October 16, 2008

Rep. Barney Frank's Office Responds to Rep. John Culberson's Comments on Glenn Beck Show

You may have seen this comment on an Oct 14 entry to this blog:

Listened to Glenn Beck tonight on cable --had a senator (sorry don't remember his name) said that Barney Frank and his group got a bill passed this last year --a $460 fee is attached to the closing costs of financing or re-financing a home --it will be donated to ACORN---this fee is now law !!!!!!!!!!!!!!! This is nation-wide ! Extortion???? Any comment???

The senator the poster mentioned was actually Rep. John Culberson of Texas. And his media rep said he misspoke - instead of $420 per $100,000 of new mortgage business, he meant to say $42. There's a big difference between $420 and $42.

To see his exact words go to Glenn Beck's Web site and the TV tab and click on the CNN transcripts area and choose Oct. 14.

Or read here - "But the fact of the matter is that in the Fannie and Freddie Mae bill that Barney Frank put together this summer, when we nationalized the mortgage banking industry, that legislation, Glenn, contained language that gave these community activist organizations like ACORN --out of every $100,000 mortgage from this day forward, each one of us will pay a fee of $420 forever that will go directly to these community activist organizations. It's going to be a line item on your closing statement."

Culberson's media rep sent me an email with the calculation:

Section 1338 of H.R. 3221, the Housing and Economic Recovery Act,requires both Fannie Mae and Freddie Mac to contribute 4.2 basis points for each dollar of the unpaid principal balances of their new business purchases to the affordable housing funds each year. A basis point is .01 percent (.0001 x 4.2 = .00042 x 100,000 = 42). So, $42 out of every$100,000 of new GSE mortgages goes to the Housing Trust Funds. The bill would require the GSEs to contribute the basis point of the value of their mortgage portfolios to TWO new affordable housing funds to transfer money to the States then to the low-income-housing activities of nonprofits like ACORN and La Raza nationwide. This provision siphons money away from the GSEs and further puts them in financial straits. The largest organizations (and thus the most able to commit resources to apply for federal grants) who work on affordable housing issues include,for example, ACORN, National Council of La Raza, and Housing Works. There is no language prohibiting funds from the Housing Trust Fund from going to entities, like ACORN, whose employees or volunteers have been indicted or pleaded guilty for vote fraud. Such language appears in the bill for the Community Development Block Grant funds.

But I was unable to reconcile the math when I read this section of the bill - so I called Rep. Barney Frank's office and asked for comment in response to Rep. Culberson's remarks.

Steven Adamske, a spokesman for the House Financial Services Committee who I reached through Rep. Frank's office, said: "I've never heard anything where you could constitute a dollar amount for a specific organization. You can't - in any way."

Adamske spoke to me about the purpose of the Housing Trust Fund. He said 65 percent of the money goes to states and 35 percent goes to "qualified applicants directly for purposes of building houses." I asked Adamske who is a qualified applicant and he said the Treasury Department has yet to determine the criteria.

For Culberson to say that money from every Fannie Mae and Freddie Mac mortgage goes to ACORN and similar organization is "a real stretch," said Adamske. "It's very surprising to me that you can cite that kind of cite with any degree of credibility."

Thanks to the blog poster for bringing these remarks to our attention.

Labels: ACORN, Barney Frank, Fannie Mae, Freddie Mac, Glenn Beck, GSE, Housing Trust Fund, John Culberson

posted by Melanie G. Rogers at 4:22 PM 1 comments

1 Comments:

Please visit:www.truthabouthousingtrustfund.org
to get the FACTS

posted by Anonymous | October 17, 2008 8:57 AM | more stuff

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Tuesday, August 19, 2008

Mortgage Applicants Choose Less Risky Loans

Perhaps homeowners are taking the advice of the mortgage industry and refinancing into more affordable loans. A light at the end of the tunnel if you will.

It seems to me that this past spring the industry and government really tried to publicize options for home owners facing foreclosure. The federal government, especially, exuded urgency about getting out of risky subprime mortgages into something more stable. And so it isn't that surprising that we now have data showing that proactive home owners and home buyers have been choosing government-insured loans. The positive in all this is that the message is getting out and that while the mortgage market still seems unstable, consumers are moving to stabilize their own situations.

The Mortgage Bankers Association announced yesterday that more than 29 percent of July 2008 mortgage loans were for government-insured loans (mostly from the Federal Housing Administration). That's up from the 8.4 percent during July of last year. MBA announced that the July numbers show a steady increase since January of this year, when the percentage of government-issued loans was 9.4 percent.

MBA attributes the increase to the following:

- In March of this year, the Economic Stimulus Act of 2008 temporarily raised the FHA and conforming loan limits for most areas in the country, which broadened FHA financing for more borrowers. The passage of the Housing Bill in July 2008 made these higher loan limits permanent.

- Data from the U.S. Department of Housing and Urban Development (HUD) show that the level of conventional to FHA refinance applications has increased 317 percent on a year over year basis in July, the bulk of which is likely from subprime ARM products. Similarly, the level of conventional to FHA refinance endorsements has increased 260.8 percent on a year over year basis. Based on the MBA survey, application volume for government-insured loans was up 133.9 percent in July from a year ago, while application volume for conventional loans was down 50.2 percent, evidence of a shift from conventional to government-insured mortgages.

- FHA loans typically have lower down payments than those offered by Fannie Mae and Freddie Mac. Generally the maximum loan to value (LTV) ratio for FHA loans is 97 percent and 95 percent for the Government Sponsored Enterprises (GSEs). (The loan to value ratio is how much of the home can be financed - so a 97 percent LTV requires a 3 percent down payment.)

- Conventional GSE loans typically have higher credit score requirements than FHA loans.

MBA's data comes from information provided by mortgage lenders and the survey covers approximately 50 percent of U.S. retail residential mortgages.

Because of the lower down payment and credit requirements, it's generally easier to obtain a government-insured loan than another and many of the home owners who have had trouble keeping their homes have poor credit scores and less equity in their homes.

Again the good news is that people are acting - they're not just resigning themselves to losing their homes, despite some of the stories we may hear about people abandoning their properties.

If you're worried about your situation, a good place to start is the HOPE hotline - 1-888-995-HOPE (4673).

Labels: FHA, GSE, Mortgage, refinance

posted by Melanie G. Rogers at 9:47 AM 0 comments

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