Fact Sheet: The Mortgage Forgiveness Debt Relief Act of 2007
President Bush Signs Legislation Protecting American Families From Higher Taxes When They Refinance Their Homes
"When your home is losing value and your family is under financial stress, the last thing you need is to be hit with higher taxes. So I'm working with members of both parties to pass a bill that will protect homeowners from having to pay taxes on cancelled mortgage debt."
- President George W. Bush, 9/1/07
Today, President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007, which will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed.
This Act will increase the incentive for borrowers and lenders to work together to refinance loans and allow American families to secure lower mortgage payments without facing higher taxes.
This Act Is A Good Step To Address The Housing Market, But Congress Has More Work To Do
Congress needs to complete work on responsible legislation modernizing the Federal Housing Administration (FHA). This bill will give FHA the necessary flexibility to help hundreds of thousands of additional families qualify for prime-rate financing.
Congress needs to pass legislation permitting State and local governments to help troubled borrowers by issuing tax-exempt bonds for refinancing existing home loans. Under current law, cities and States can issue tax-exempt bonds to finance new mortgages for first-time homebuyers.
Congress needs to pass legislation to reform Government Sponsored Enterprises (GSEs) like Freddie Mac and Fannie Mae. GSEs provide liquidity to the mortgage market that benefits millions of homeowners, and it is vital that they operate safely and soundly. The President has called on Congress to pass legislation that strengthens independent regulation of the GSEs and ensures they focus on their important housing mission.
The Administration Has Moved Forward On Targeted Actions To Assist Homeowners That The President Announced In August
The President and his Administration have launched a new initiative at the Federal Housing Administration (FHA) called FHASecure.FHASecure expands the FHA's ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. By the end of 2008, the FHA expects this program to help more than 300,000 families refinance their homes.
Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson have assembled the private-sector HOPE NOW alliance. HOPE NOW recently mailed hundreds of thousands of letters to borrowers falling behind on their payments and is supporting a toll-free mortgage counseling hotline, 1-888-995-HOPE.
HOPE NOW has developed a plan under which up to 1.2 million homeowners could be eligible for assistance. The HOPE NOW plan will help subprime borrowers who can afford the current, starter rate on a subprime loan, but would not be able to make the higher payments once the interest rate goes up.
HUD No. 07-182 Steve O'Halloran (202) 708-0980 For Release Friday December 14, 2007
STATEMENT BY HUD SECRETARY ALPHONSO JACKSON ON PASSAGE OF FHA MODERNIZATION LEGISLATION BY THE U.S. SENATE
"I applaud the Senate's overwhelming passage today of an FHA Modernization bill that will provide hundreds of thousands of hard working American families a safer mortgage option -- whether they're looking to purchase a home or refinance an existing mortgage. HUD's Federal Housing Administration can provide many homeowners with a fairer, more affordable, and more sustainable alternative to costly subprime loans. I especially appreciate the bipartisan leadership of Senators Chris Dodd and Mel Martinez in our effort to reform FHA.
I strongly urge the House and Senate to send the President a bill he can sign before the end of the year. Keeping a roof over the heads of families is the best gift Congress could give the American public this year."
Thousands Have Switched to FHASecure to Keep Their Homes
Why Not You?
In only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new housing insurance program to protect their families' investment in the American Dream. Announced by President Bush on August 31, 2007, along with HUD Secretary Jackson and Treasury Secretary Paulson, FHASecure is already helping thousands of American families, faced with the possibility of foreclosure because of rising interest rates, to keep their homes.
More good news is that an additional 20,000 are in the pipeline and their approval is expected by the end of December. That will mean that in the first 4 months of the program, FHASecure will have helped 53,000 families and received more than 127,000 refinance applications from families whose loans are current or past due.
Prepared Remarks for Alphonso Jackson Secretary of Housing and Urban Development at the Press Briefing of the President's Announcement Concerning Foreclosure Prevention Efforts at the Treasury Department
WASHINGTON, D.C. THURSDAY, DECEMBER 6, 2007
Thank you, Secretary (Henry) Paulson. Good afternoon.
Today's announcement is of national and global import. It will surely counter the fear and anxiety that is corrosive and dangerous to the economy. This interest rate freeze will be well-received across the board, by lenders, investors, bankers, governments, and, especially, homeowners who stand at the brink of foreclosure.
And we must never forget that these homeowners have invested themselves and their money in their homes. These are people who are worried - very worried -- about their homes and their families. They want real solutions. They want to know that we are thinking of them ... that we care ... that we are doing something. Homeownership is part of the American Dream. It is a place we can call our own...our stake in the community...our investment in our future...our individual source of equity and personal wealth. These are no small matters but the essential elements of freedom and choice, now and in our retirement years.
And these homes are where our families live and grow together and grow up, where our children spend their formative years, and where extended families gather in the holiday season.
We cannot ignore Americans at risk. This December, we want to see the welcome mat out, not a foreclosure notice in the mailbox.
And as we move into midwinter, when the chill of the season often silences the hope in our hearts, these actions today will warm the hearts of Americans caught in the swirling subprime crisis.
I applaud the HOPE NOW alliance for stepping forward and taking action together, pro-actively contacting homeowners at risk of foreclosure, and working to find affordable solutions.
And already we see results: many homeowners have refinanced into new, affordable mortgages. Some people have been directed to new and better mortgages. Many homeowners at risk have been directed to HUD's Federal Housing Administration. Since early September we have received more than 118,000 refinancing applications, and already 35,000 homeowners have refinanced into an FHA-backed loan. We expect to do 50,000 refis by year's end with more to come next year. And, by freezing current interest rates for five years, the industry has again made a decisive, necessary action that will be good news for hundreds of thousands of American homeowners.
But there is more work to do - much more. Not everyone is out of danger. And we want to prevent another cycle like this in the future. That's why we have taken several decisive steps, such as pushing FHA to the limit of its statutory authority, expanding the scope of the governmental response with "FHASecure," and other actions. We have also attempted to work with Congress to pass FHA Modernization. This bill would increase access to home loans by lowering down payment requirements and allow FHA to insure bigger mortgages in high-cost states. It would also expand FHA's authority to price the insurance fairly, with risk-based premiums.
This bill could allow the FHA to help more than 250,000 families by the end of 2008 - including many with low incomes, less-than-perfect credit records, or little savings.
All of these changes are critically important to effort to help subprime borrowers refinance into safe and affordable home loans. The House has twice passed a version of the President's proposal. We are still waiting for the Senate to act. We've done our part. It is time for Congress to act...we need this bill now...as do hundreds of thousands of Americans...right now!
In combination with our administrative actions at FHA, and passage of this bill, we could help as many as 800,000 people in Fiscal Year 2008.
This is in addition to those helped by the HOPE NOW efforts.
So, today's good news is another step in the right direction, right for the economy and right for Americans at risk of losing their homes. Thank you.
FHASecure: Working Hard for Your Homeownership
The Federal Housing Administration has helped millions of Americans secure their dream of homeownership since 1934. Now we want to keep those dreams alive.
We provide mortgage insurance on loans made by FHA approved lenders throughout the United States and its territories. FHA insures mortgages on single family, multifamily, manufactured homes and healthcare facilities. It is the largest government backed mortgage insurer.
WHAT IS FHASecure
FHASecure is a refinancing option that gives credit-worthy homeowners, who were making timely mortgage payments before their loans reset but are now in default, a second chance with a FHA insured loan product. ------------------------------------------------
FHASecure Fact Sheet - Refinance Options
YOU WORKED HARD FOR HOMEOWNERSHIP
The Federal Housing Administration has helped millions of Americans secure their dream of homeownership since 1934. Now we want to keep those dreams alive.
We provide mortgage insurance on loans made by FHA approved lenders throughout the United States and its territories. FHA insures mortgages on single family, multifamily, manufactured homes and healthcare facilities. It is the largest government backed mortgage insurer.
WHAT IS FHASecure
FHASecure is a refinancing option that gives credit-worthy homeowners, who were making timely mortgage payments before their loans reset but are now in default, a second chance with a FHA insured loan product.
WHO IS ELIGIBLE
To qualify for FHASecure, and include the delinquent loan payments, homeowners wishing to refinance must meet the following requirements:
Have a non-FHA insured ARM that has reset;
Sufficient income to make the mortgage payment; and
A history of on-time mortgage payments before the loan reset.
Homeowners who are current on their conventional mortgages must have sufficient income to make the mortgage payment.
By refinancing into a FHA insured mortgage, you can expect to pay lower monthly mortgage payments. FHASecure can improve the quality of life for many communities by helping to reduce the number of mortgage defaults and bringing greater stability to local housing markets.
HOW TO APPLY
Search online for your nearest FHA approved lender, or for more information phone 1-800-CALL-FHA (1-800-225-5342).
FOR RELEASE Steve O'Halloran (202) 708-0980 For Release Monday December 3, 2007
BUSH ADMINISTRATION'S FHASECURE PLAN HELPING TENS OF THOUSANDS OF FAMILIES KEEP THEIR HOMES New HUD data shows program has helped 33,000 homeowners prevent foreclosure in three months; More than 50,000 to be helped by end of year
WASHINGTON - In response to the Bush Administration's plan to help families avoid foreclosure, tens of thousands of homeowners are refinancing their exotic subprime loans with HUD's new government-backed mortgage product. HUD Secretary Alphonso Jackson today announced that more than 33,000 borrowers have already refinanced their subprime home loans with FHASecure, a government-insured foreclosure avoidance initiative created in September. An additional 20,000 are in the pipeline for approval this month, bringing the total to more than 53,000 in a four month period.
"FHASecure is providing tens of thousands of families with a powerful incentive to obtain affordable and safe home loans," Jackson said during his keynote address to the Office of Thrift Supervision's National Housing Forum. "Homeowners finally have an opportunity to save their American Dream without risking their financial future, and they're taking advantage of it everyday."
On August 31, 2007, President Bush announced the creation of FHASecure. Backed by the government, FHASecure is enabling homeowners who have a history of on-time mortgage payments under their original interest rates, but missed payments after their rates reset, to refinance into FHA's mortgage insurance program. Families with high-cost mortgages and mortgages that are due to reset, but are still current on their loan, also continue to refinance through FHASecure. This is a more viable option because FHA-backed loans are less likely to result in foreclosure.
HUD's Federal Housing Administration (FHA) is on target to insure over 240,000 FHASecure home loans in Fiscal Year 2008, nearly two and one-half times the number served in Fiscal Year 2007. Since the creation of FHASecure three months ago, FHA has received more than 113,000 refinance applications from families whose loans are current or past due.
FHA refinancing has increased 125 percent over the past year, and is expected to increase further next year as more homeowners examine their mortgage options. FHASecure will save the average subprime homeowner about $400 a month, or $30,000 over the expected life of the loan.
As a result of extensive nationwide consumer outreach, more subprime borrowers recognize they have a choice and are turning to FHA for assistance. FHA's toll-free call center has received more than 137,000 calls over the past three months. Nearly 900 FHA-approved lenders around the country are participating in FHASecure by helping families refinance with home loans insured by FHA.
"This is a decisive moment in the economic history of our country...We must turn the housing market around, and create greater stability and predictability...In the near future, homeownership should continue to be the bedrock of our economy, this time with affordable loans that won't implode," Jackson added.
Jackson also said FHA could reach more borrowers who need safe and affordable financing alternatives if Congress approves bipartisan legislation to further modernize the 74-year old agency. HUD estimates 200,000 more first-time homebuyers and current homeowners who need access to capital could obtain FHA-insured mortgages next year if Congress expedites passage of FHA reform legislation. Higher FHA loan limits and flexible downpayment requirements would help more subprime borrowers refinance, particularly in high-cost areas such as California and the Northeast United States. Expanded FHA activity will also stabilize local real estate markets by reducing foreclosures.
"Each day of delay by the Congress unnecessarily places thousands of families at risk of foreclosure. These families are in danger of losing their homes. Think of what this means to them," Jackson added.
The House overwhelmingly approved The Expanding American Homeownership Act on September 18, 2007. The Senate Banking Committee approved similar legislation the following day. Yet, the full Senate has delayed passing this critical legislation.
For more information about FHASecure or to find the nearest FHA approved lender, phone 1 (800) CALL-FHA (225-5342) or visit fha.gov
HUD No. 07-169 Steve O'Halloran (202) 708-0980 For Release Thursday November 15, 2007
SECRETARY JACKSON DISCUSSES FORECLOSURE PREVENTION METHODS IN DETROIT AND INCENTIVE PROGRAM TO BUY HUD HOMES IN MICHIGAN AND OHIO
DETROIT - More Michigan families can obtain financial relief from their exotic subprime home loans, thanks to a new government-backed refinancing resource offered by the U.S. Department of Housing and Urban Development's Federal Housing Administration (FHA). HUD Secretary Alphonso Jackson recently highlighted the new FHASecure product and other reliable homebuying incentives at a HUD-sponsored foreclosure prevention workshop for homeowners who want to stay in their homes and prospective borrowers who want to make an educated choice when they buy.
"Homeownership has been an anchor of stability in uncertain times. And it will be once again. The steps we take today to educate and encourage potential homebuyers will help put that anchor back into place," Jackson told the audience.
The Bush Administration's new FHASecure plan is helping troubled homeowners who have good credit, but have found themselves in default after their adjustable interest rates reset - typically doubling or tripling from the original rate that was teased to them. An affordable alternative to high-cost, high-risk mortgages, FHASecure will enable many families who have a history of on-time mortgage payments under the original interest rates to refinance into FHA's mortgage insurance program. Families with high cost mortgages and mortgages that are due to reset, but are still current on their loan, are also eligible to refinance through FHASecure, which is backed by the full faith and credit of the government.
HUD estimates FHA's current and new products will bring the total number of families it can help refinance to approximately 240,000 next year. In fact, FHA's mortgage insurance business in Michigan has increased 34 percent in 2007. FHA refinancing in Michigan has also increased 140 percent since 2005, and is expected to increase further next year thanks to FHASecure. FHASecure will save the average subprime homeowner about $400 a month, or $30,000 over the expected life of the loan, Jackson noted.
Even more families could avoid the subprime market's risky home loans if Congress passes legislation to modernize the FHA, Jackson said. The Administration's bipartisan FHA modernization proposal, which was first sent to Congress 17 months ago, would lower downpayment requirements, allow FHA to insure bigger loans in high cost areas, and give FHA more pricing flexibility. These reforms would empower FHA to reach an additional 200,000 families that need help - first-time homebuyers, minorities, and those with low-to-moderate incomes - and offer more options to homeowners looking to refinance their existing mortgage.
"We need to give qualified homeowners who find themselves behind on payments a second chance. FHASecure allows homeowners who have fallen into default because of a reset the ability to obtain a safe, affordable, government-backed loan. Families still current on their loan can also qualify," Jackson added.
Beginning November 15, 2007, prospective homebuyers in Michigan and Ohio will also be offered unique incentives to purchase HUD-owned properties using financing insured by the FHA. The Department estimates 2,000 people in Michigan and Ohio will benefit from these options over the next 10 months.
First, individuals will be able to purchase a HUD Home with a $100 downpayment when they utilize an FHA-insured mortgage. Second, homebuyers can obtain a $2,500 sales allowance at closing when they use FHA financing, or a $1,000 sales allowance using other financing types. This incentive can be put towards closing costs, to make home repairs, or to pay down the mortgage. The $1,000 allowance for non-FHA financing must be used to pay closing costs. Finally, real estate brokers can obtain a $500 bonus when borrowers utilize FHA financing and a $250 bonus if borrowers use other financing options. The incentives are available through September 30, 2008.
HUD expects these incentives will be widely used with its Purchase and Repair Program, which allows homebuyers to finance needed repairs and desired updates from the same loan used to purchase the home. By selling homes to families who then repair their home using FHA financing, HUD is helping to stabilize neighborhoods in Michigan and Ohio that have been hard hit by defaults and foreclosures. A state-by-state list of HUD Homes is available at: www.hud.gov/homes/
Jackson also discussed several other ways homeowners can avoid foreclosure, including contacting local HUD-approved housing counselors and calling their lenders for help before their adjustable rate mortgages reset. HUD has reached out to a wide variety of groups that offer foreclosure prevention, counseling, and refinancing for American homeowners. The goal of this initiative is to expand mortgage financing options, identify homeowners before they face hardships, help them understand their financing options, and allow them to find a mortgage product that works for them.
"It is vital that we prevent foreclosure. Foreclosure doesn't just hurt families, it devastates neighborhoods. We must help these communities recover," concluded Jackson.
Following Jackson's remarks, attendees attended several seminars aimed at addressing their current financial situation, including one-on-one assistance. More than 75 HUD-sponsored workshops and seminars for first-time homeowners, current homeowners and industry representatives have been held in over 50 cities throughout 25 states since late July and will continue through the remainder of the year.
Interested parties should call 1-800-CALL-FHA to learn more and sign up for these events. ---------------------------------------------
HUD No. 07-143 Brian Sullivan (202) 708-0685 For Release Wednesday September 26, 2007
HUD SECRETARY ANNOUNCES DISASTER ASSISTANCE FOR ILLINOIS FLOOD VICTIMS Foreclosure protection offered to displaced families in Land of Lincoln
WASHINGTON - U.S. Housing and Urban Development Secretary Alphonso Jackson today announced HUD will speed federal disaster assistance to certain flood-ravaged counties in Illinois and provide support to homeowners and low-income renters forced from their homes following severe storms and flooding.
Yesterday, President Bush declared DeKalb, Grundy, Kane, LaSalle, Lake, and Will Counties a federal disaster area. This presidential declaration triggers a variety of federal assistance including grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of the disaster.
"Those who are forced from their homes due to these severe storms need to know that help is available," said Jackson. "Whether its foreclosure relief for FHA-insured families or helping these counties to rebuild, HUD stands ready to help in any way we can."
Making mortgage insurance available- HUD's Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying another home. Borrowers are eligible for 100 percent financing, including closing costs;
Making insurance available for both mortgages and home rehabilitation- HUD's Section 203(k) loan program enables those who have lost their homes to finance the purchase or refinance of a house along with its repair through a single mortgage. It also allows homeowners who have damaged houses to finance the rehabilitation of their existing single-family home; and
For more information about these and other HUD programs designed to assist disaster victims, visit www.fha.gov.
HUD No. 07-141 Steve O'Halloran (202) 708-0980 For Release Wednesday September 19, 2007
HUD SECRETARY URGES SWIFT PASSAGE OF FHA REFORM IN SENATE
WASHINGTON - U.S. Housing and Urban Development Secretary Alphonso Jackson today said legislation overwhelmingly approved by a Senate panel this morning to modernize HUD's Federal Housing Administration (FHA) will go a long way toward achieving the Administration's goal of better serving low- and moderate-income, minority and first-time homebuyers.
Yesterday, the U.S. House of Representatives widely approved H.R. 1852, The Expanding American Homeownership Act of 2007, which Jackson said would "serve as a starting point to bring good news to families who need a safe, fair and affordable FHA alternative to the exotic subprime market."
In a follow-up letter to the Chairman and Ranking Member of the Senate Banking Committee today, Jackson said the FHA modernization legislation that was marked up by this Committee today includes several "beneficial provisions" including reasonably adjusting FHA's loan limits, eliminating the cap on the number of reverse mortgages FHA can insure, and simplifying the downpayment requirement.
"The primary mission of FHA is to reach borrowers who either are not being served or are being underserved, and to help them achieve the American Dream of homeownership. Like the Administration's proposal, the bipartisan Dodd-Martinez bill would more effectively reach these borrowers by reasonably adjusting the loan limits for the single family mortgage insurance program to account for high-cost housing markets and increased construction costs," Jackson said in his letter to Senators Dodd and Richard Shelby.
Below is the full text of Secretary Jackson's letter to Senators Dodd and Shelby:
September 19, 2007
The Honorable Christopher Dodd Chairman Committee on Banking, Housing, & Urban Affairs United States Senate Washington, D.C. 20510
The Honorable Richard Shelby Ranking Member Committee on Banking, Housing, & Urban Affairs United States Senate Washington, D.C. 20510
Dear Chairman Dodd and Senator Shelby:
I am pleased to offer my enthusiastic support for legislation to modernize the Federal Housing Administration (FHA). One of our key objectives at the Department of Housing and Urban Development is to update the FHA mortgage insurance program to better serve low- and moderate-income and first-time homebuyers. The comprehensive legislation that Chairman Christopher Dodd and Senator Mel Martinez have drafted would bring us a long way toward achieving that goal. I urge the Committee on Banking, Housing, and Urban Affairs to approve FHA Modernization so that the full Senate can vote on it.
The primary mission of FHA is to reach borrowers who either are not being served or are being underserved, and to help them achieve the American Dream of homeownership. Like the Administration's proposal, the bipartisan Dodd-Martinez bill would more effectively reach these borrowers by reasonably adjusting the loan limits for the single family mortgage insurance program to account for high-cost housing markets and increased construction costs. The bill also provides FHA with more flexibility on upfront premiums. Such flexibility, combined with solid reporting requirements, is necessary to allow FHA to design mortgage products that reward borrowers with good credit histories and protect taxpayers with actuarially sound pricing. It is for these reasons that the Administration proposed new flexibility for both upfront and annual premiums and we urge the Committee to adopt this proposal.
The bill includes several other beneficial provisions: eliminating the arbitrary cap on the number of reverse mortgages FHA can insure, which could help hundreds of thousands more seniors stay in their homes; simplifying FHA's down payment requirements; and expanding sources of private lending for manufactured home purchases.
On August 31, 2007, President Bush renewed his call for Congress to enact FHA Modernization. If Congress approves legislation to modernize FHA, as the President and I have called for, I estimate that we could help another 200,000 families avoid problems with their mortgages and instead help them get into a safe, fair, and affordable FHA-backed loan.
While we may raise additional concerns as the FHA bill moves through the legislative process, I am grateful for the priority that the Senate Baking Committee has placed on modernizing FHA. I therefore urge swift passage of the Dodd-Martinez bill so that more families can realize and maintain the American Dream of homeownership.
The Office of Management and Budget advises that from the standpoint of the Administration's program that there is no objection to the transmittal of this letter.
cc: Members of the Senate Committee on Banking, Housing and Urban Affairs
HUD No. 07-139 Steve O'Halloran (202) 708-0980 For Release Tuesday September 18, 2007
STATEMENT FROM HUD SECRETARY ALPHONSO JACKSON ON HOUSE PASSAGE OF FHA MODERNIZATION LEGISLATION
"Today's vote in the House brings us one step closer to getting a comprehensive FHA Modernization bill to the President's desk. While more work needs to be done, I'm grateful for the strong support that the President's proposals received in the House, and I urge the Senate to take up its version as soon as possible so we can help even more Americans keep their homes. I also appreciate the leadership and support of Barney Frank, Spencer Bachus, Maxine Waters, and Judy Biggert to reform FHA's mortgage insurance program.
The bipartisan reforms overwhelmingly passed by the House serve as a starting point to bring good news to families who need a safe, fair and affordable FHA alternative to the exotic subprime market. Now more than ever, Americans want financially sound mortgage options that won't turn the dream of homeownership into a nightmare. With the bill approved by the House today, we estimate FHA will be able to help hundreds of thousands of borrowers obtain an FHA-insured mortgage in 2008."
HUD No. 07-108 Steve O’Halloran (202) 708-0685 Tuesday July 17, 2007
TWO MILLION MORE SENIORS COULD ACCESS REVERSE MORTGAGES UNDER FHA REFORM PROPOSAL Congressional action could give seniors the financial security they deserve
WASHINGTON -Two million older Americans could tap into the equity they have built up in their homes by obtaining reverse mortgages if Congress passes legislation to modernize HUD's Federal Housing Administration (FHA), according to a U.S. Department of Housing and Urban Development estimate released today.
HUD Secretary Alphonso Jackson is urging Congress to quickly enact The Expanding American Homeownership Act of 2007, which could help more seniors access reverse mortgages and build nest eggs for health care needs, home repairs and other emergencies. "If you love your home, and want to stay in it for years to come, then a reverse mortgage is your best and safest bet for retirement security. Reverse mortgages offer seniors the financial freedom they deserve, and this legislation could help two million more older Americans turn their homes into retirement nest eggs," said Jackson.
"If you love your home, and want to stay in it for years to come, then a reverse mortgage is your best and safest bet for retirement security. Reverse mortgages offer seniors the financial freedom they deserve, and this legislation could help two million more older Americans turn their homes into retirement nest eggs," said Jackson.
Many older Americans who have lived in their current homes for several years or decades have seen the value of their homes rise dramatically, especially in recent years. However, in high cost areas, such as the Northeast and West, home values have surpassed the Congressionally-mandated cap of $362,790 for obtaining an FHA-backed reverse mortgage - leaving millions of seniors without access to the financial security this critical program offers.
The Expanding American Homeownership Act of 2007 would make reverse mortgages available to an additional two million seniors by raising the FHA's Home Equity Conversation Mortgage (HECM) loan limit equal to the Fannie Mae/Freddie Mac conforming loan limit. By increasing and simplifying the loan amount, this change would help those seniors who have homes valued above the current FHA loan limit of $362,790 but less than $600,000, obtain a reverse mortgage through FHA. Eligible seniors would still have to be 62 years of age or older and have paid off their mortgages or have only a small mortgage balance remaining. The loan amount depends on the value of the home, the age of the homeowner and the expected interest rates. The reverse mortgage does not have to be repaid until the borrower moves out of the home permanently.
Last month, HUD announced that more than 308,000 seniors have used the federally-insured HECM loan program since 1990 to convert the equity in their home into cash without having to move. The volume of new reverse mortgages insured by the FHA's HECM program has increased 10-fold over the past six years.
In addition to providing greater access to reverse mortgages, The Expanding American Homeownership Act of 2007 would address growing concerns about increasing home foreclosures and high-risk mortgages. The legislation would protect and preserve the American Dream of homeownership by modernizing the FHA and giving homebuyers access to a safe, fair and affordable alternative to exotic subprime loans. The legislation is currently pending before the U.S. House of Representatives. To learn more about the FHA's HECM program, visit: http://www.fha.gov/reverse/index.cfm
HUD No. 07-105 Amy Cantu (202) 708-0980 For Release Wednesday July 11, 2007
HUD RELEASES TIPS FOR AVOIDING FORECLOSURE Information aimed at helping more homeowners stay in their home
WASHINGTON - Today, the U.S. Department of Housing and Urban Development (HUD) released its top 10 tips for homeowners who are facing foreclosure.
"These guidelines will assist homeowners who are struggling to pay their mortgage and could be threatened with foreclosure," said HUD Secretary Alphonso Jackson. "We want to encourage homeowners to take action and use every resource available so that they can get control of their finances and stay in their home."
If you are unable to make your mortgage payment:
1. Don't ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at www.fha.gov.
6. Contact a non-profit housing counselor.
The U.S. Department of Housing and Urban Development funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance.
7. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
8. Use your assets.
Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies.
Many for-profit companies will contact you promising to negotiate a loan work out with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide for free if you contact them. You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead.
10. Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a HUD approved housing counselor or trusted real estate professional.
To find out more about HUD-approved housing counseling agencies and their services, please visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call toll free (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. Eastern Standard Time (6:00 a.m. to 2:00 p.m. Pacific Time). The same number can give you an automated referral to the three housing counseling agencies located closest to you.
Statement from Secretary Alphonso Jackson
March 29, 2007
I want to offer my full support for "The Expanding American Homeownership Act" which was introduced in the U. S. House of Representatives today by Congresswoman Judy Biggert and Congressman Spencer Bachus. I appreciate their leadership as well as the ongoing efforts of Chairman Barney Frank and Chairwoman Maxine Waters to modernize the Federal Housing Administration (FHA). I urge prompt House consideration of this priority legislation.
At a time when so many families are being steered toward risky exotic mortgages, it is incumbent upon the federal government to provide a user-friendly FHA alternative. This far-reaching proposal to modernize the FHA will make it a more important financing option in today's housing market. American families need to know there is a safe, fair, and more affordable alternative.
As our economy grows, FHA modernization will give millions more low- and moderate-income families safe access to the credit they need to achieve the American dream of homeownership. The Expanding American Homeownership Act is identical to legislation passed by a 415 - 7 vote in the House of Representatives last year (H.R. 5121).
FHA was created in 1934 to give homebuyers access to reasonably priced mortgages under fair terms. Over the years, it has been able to help more than 34 million families become homeowners and now it needs to be able to adapt to today's marketplace. This important legislation would bring FHA into the 21st Century and offer hard-working Americans a variety of safe homeownership options at a fair price.
The Expanding American Homeownership Act would:
Eliminate the current statutory three percent minimum down payment, reducing a significant barrier to homeownership. FHA's existing down payment requirement does not meet the demands of today's marketplace, where most first-time homebuyers put down two percent or less. The "new" FHA would offer a variety of down payment options.
Create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the borrower. It would replace the current structure, in which there is standard premium amount for all borrowers, while still protecting the soundness of its Insurance Fund. FHA would have the flexibility to charge a lower premium for low-risk borrowers, and to charge higher-risk borrowers a slightly higher premium.
Increase and simplify FHA's loan limits. FHA's loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit. This change is crucial in today's housing market. In many areas of the country, the existing FHA limits are lower than the cost of new construction, eliminating FHA financing as an option for buyers of new homes in those markets. FHA has simply been priced out of the market in other areas, such as California, where FHA insured only about 5,000 home mortgages in all of 2005, down 95 percent from 109,000 in 2000.
HUD No. 07-029 Steve O'Halloran (202) 708-0980 For Release Thursday March 15, 2007
FHA COMMISSIONER: HOMEOWNERS NEED A SAFER ALTERNATIVE TO RISKY MORTGAGES Montgomery says time is ripe for FHA modernization
WASHINGTON - Concerned that high-priced, high-risk mortgages are hurting low- to moderate-income borrowers, Assistant Secretary for Housing - Federal Housing Commissioner Brian Montgomery today reaffirmed the need to modernize the Federal Housing Administration (FHA) and give homeowners a better alternative to exotic high-cost mortgages. Speaking at a U.S. Senate Appropriations Subcommittee hearing, Montgomery urged Congress to pass legislation that enhances the FHA's government-insured mortgage products and "provides lower-income families safe, secure homeownership opportunities."
"Many first time and minority homebuyers face significant challenges when trying to purchase a home. In recent years, such difficulties have resulted in many of these individuals assuming risky, adjustable-rate, subprime loans. The impact on African American and Latino borrowers has been particularly profound," said Montgomery at a hearing of the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies.
According to 2004 HMDA (Home Mortgage Disclosure Act) Data 40 percent of African Americans and 23 percent of Hispanics pay an interest rate three percent higher than the market rate. The Center for Responsible Lending reports that 51 percent of refinancing transitions in African American neighborhoods are sub-prime loans.
"There needs to be a mortgage alternative which will qualify a wide swath of borrowers and simultaneously provide them with the loan options they require...enter a modernized and reinvigorated FHA. Everyone should have access to a safe, affordable mortgage product; and this should not change just because that person is a first-time homebuyer, a minority homebuyer, or a homebuyer with troubled credit history," added Montgomery.
Created in 1934 to stimulate the housing market during the Depression, the FHA has helped more than 34 million families over the past 73 years become homeowners. But as lending practices have evolved and modernized, the FHA has been slow to do so, and reforms must be made for this critical mortgage insurance program to adapt to today's marketplace.
The National Association of Realtors reports that last year 43 percent of first-time homebuyers purchased their homes with no downpayment. Of those who did make a downpayment, the majority put down two percent or less. Modernization legislation, which overwhelmingly passed the House last year, would replace the FHA's stringent three percent minimum cash investment requirement with a flexible plan that allows homeowners to put down almost no money down, one, two or even ten percent.
To prevent the FHA from being priced out of many housing markets, the FHA's modernization legislation would also increase loan limits. Today, few buyers of homes in California or much of the Northeast have been able to use FHA financing because FHA's loan limits aren't high enough to meet the cost of most homes in those regions. By increasing and simplifying loan limits, FHA would once again be a major player in high-cost areas.
FHA modernization legislation would also create a new, risk-based insurance premium structure that would match the premium amount with the credit profile of the borrower. It would replace the current structure, in which there is standard premium amount for all borrowers, while still protecting the soundness of its Insurance Fund.
"I believe that FHA should play a stronger role in the national mortgage market...Homebuyers deserve better, and our goal - through this Modernization proposal - is to provide them just that," concluded Montgomery.
HUD No. 07-018 Steve O'Halloran (202) 708-0980 For Release Friday February 23, 2007
JACKSON ANNOUNCES NEW PARTNERSHIP WITH NATIONAL ASSOCIATION OF REAL ESTATE BROKERS TO INCREASE AFRICAN AMERICAN HOMEOWNERSHIP Partnership underscores importance of Black History Month and Bush Administration's efforts to help more minority families become homeowners
LAS VEGAS, NV - U.S. Housing and Urban Development Secretary Alphonso Jackson and the National Association of Real Estate Brokers (NAREB) today highlighted Black History Month by pledging to work together to increase minority homeownership, particularly among African Americans. This partnership is another step towards achieving President Bush's goal of 5.5 million new minority homeowners by the end of the decade.
After addressing NAREB's 60th annual mid winter conference, Jackson and NAREB President Clifford Turner signed a Memorandum of Understanding (MOU) that demonstrates HUD's support for NAREB's Rebuilding America Initiative. This initiative reaffirms the Department's efforts to help more African American families share in the dream of homeownership.
"Our partnership will help millions of Americans to purchase homes. It will operate in concert with the Bush Administration's efforts to provide rapid and inclusive home buying within America's minority communities," Jackson is expected to say in remarks tonight.
The Bush Administration continues to make steady progress toward closing the minority homeownership gap. We are more than half way to the President's goal of adding 5.5 million new minority homeowners by 2010, and the minority homeownership rate exceeds 51 percent -- its highest level ever. According the Census Bureau's homeownership rate report for the fourth quarter of 2006, nearly 6.5 million African Americans are homeowners, up 13,000 from the third quarter and up 120,000 from the fourth quarter of 2005.
Still there is a significant homeownership gap between non-Hispanic whites and minorities. HUD and NAREB are working together to close that gap. The Rebuilding America Initiative MOU signed by HUD and NAREB establishes a mutual partnership that is committed to helping more African-Americans become homeowners by:
Helping prospective African-American homebuyers work with fair lending institutions that offer mortgages at affordable rates;
Providing African-Americans with counseling services that financially prepare them to buy a home;
Helping African-Americans who already own a home to make their mortgage payments and avoid foreclosure; and
Better educating NAREB members about the importance of helping their clients fully understand the homebuying process.
"All of this will help minorities and others who have historically been excluded from the housing market find new opportunities and options. Homeownership is empowerment. It is freedom. It represents a step toward financial security. It is the American Dream," Jackson will add tonight.
President Bush's Fiscal Year 2008 proposed budget takes significant strides to build an Ownership Society that helps more minority families own and maintain a home, including:
Modernizing the Federal Housing Administration (FHA), which would give homebuyers who do not qualify for prime financing a better alternative to high-cost, high-risk loan products. The President's Budget continues the legislative proposal to modernize the FHA's mortgage insurance program so that tens of thousands of potential homebuyers - many of whom are minority families - have access to a safer financing tool.
Providing $50 million for housing counseling, an $8.4 million increase over 2006, which offers a wide array of counseling services to prepare families to buy their first home, to avoid predatory lending practices, and assist current homeowners facing default.
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