Safeguard Properties

Consumers Not Ready to Move on Housing Despite Improved Outlook on Economy

Posted on by Safeguard

On January 7, Fannie Mae issued a news release outlining results from its December 2014 National Housing Survey.

Consumers Not Ready to Move on Housing Despite Improved Outlook on Economy

WASHINGTON, DC – Americans are becoming more optimistic about the economy, but consumer confidence toward the housing market is lagging, according to results from Fannie Mae’s December 2014 National Housing Survey™.  Likely bolstered by a strengthening employment sector, the share of consumers who believe the economy is headed in the right direction improved by 5 percentage points to 41 percent.  Those citing that the economy is heading in the wrong direction declined to 51 percent, the fifth consecutive monthly decrease.  However, although the share of respondents who think it would be easy to get a mortgage today increased to 52 percent, tying the all-time survey high, the share who say their household income is significantly higher than it was 12 months ago has remained flat at 25 percent.

“Despite consistent and robust job growth in recent months, consumer attitudes toward housing remained cautious in the final month of 2014,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.  “Our survey results show that consumer housing sentiment has, on average, been moving sideways amid some improvement in the general view of the economy.  It is not surprising that the housing sector continues to lag behind the rest of the economy given the long-term financial commitment that getting a mortgage represents.  Many prospective homebuyers want to be certain that their personal finances can withstand potential downside risks to the economy.”

“One notable result in the December survey is that the share of consumers believing that it would be easy to get a mortgage exceeds those saying it would be more difficult to get a mortgage by the widest amount in the survey’s history,” said Duncan.  “While this is a welcome signal, softness in consumer attitudes that drive housing demand will make for a subdued recovery and should persist absent more meaningful and sustained gains in household income.”

SURVEY HIGHLIGHTS

Homeownership and Renting

  • The average 12-month home price change expectation fell to 2.3 percent.
  • The share of respondents who say home prices will go up in the next 12 months rose to 46 percent. The share who say home prices will go down increased to 8 percent.
  • The share of respondents who say mortgage rates will go up in the next 12 months rose by 3 percentage points to 48 percent.
  • Those who say it is a good time to buy a house fell to 64 percent. Those who say it is a good time to sell increased by 1 percentage point to 40 percent.
  • The average 12-month rental price change expectation increased to 4.1 percent.
  • The percentage of respondents who expect home rental prices to go up in the next 12 months remained at 53 percent.
  • The share of respondents who think it would be easy to get a home mortgage today increased to 52 percent—equaling an all-time survey high—while the share saying it would be difficult to get a mortgage dropped to 44 percent—a survey low.
  • The share who say they would buy if they were going to move fell to 61 percent—an all-time survey low—while the share who would rent increased 3 percentage points to 34 percent.

The Economy and Household Finances

  • The share of respondents who say the economy is on the right track increased by 5 percentage points to 41 percent.
  • The percentage of respondents who expect their personal financial situation to get better over the next 12 months decreased to 45 percent.
  • The share of respondents who say their household income is significantly higher than it was 12 months ago remained at 25 percent.
  • The share of respondents who say their household expenses are significantly higher than they were 12 months decreased to 34 percent. 

The most detailed consumer attitudinal survey of its kind, Fannie Mae’s National Housing Survey polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence.  Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010).  To reflect the growing share of households with a cell phone but no landline, the National Housing Survey has increased its cell phone dialing rate to 60 percent as of October 2014.  For more information, please see the Technical Notes.  Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.

For detailed findings from the December 2014 survey, as well as technical notes on survey methodology and questions asked of respondents associated with each monthly indicator, please visit Fannie Mae’s Monthly National Housing Survey page on fanniemae.com.  Also available on the site are in-depth topic analyses, which provide a detailed assessment of combined data results from three monthly studies.  The December 2014 Fannie Mae National Housing Survey was conducted between December 1, 2014 and December 14, 2014.  Most of the data collection occurred during the first two weeks of this period.  Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

Please click here to view the December 2014 National Housing Survey Data Release [pdf].

Please click here to view the news release online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

CFPB Prepared Remarks of Richard Cordray

Posted on by Safeguard

On January 16, the Consumer Financial Protection Bureau published a news release containing the prepared remarks of Richard Cordray at Operation HOPE.

Prepared Remarks of CFPB Director Richard Cordray at Operation HOPE

Thank you for your kind words. I also want to express my appreciation to the indefatigable John Hope Bryant, his advisor Jena Roscoe, and the entire Operation HOPE team. We are deeply grateful for their invaluable support of our work at the Consumer Financial Protection Bureau and for all they do to help those who struggle with their finances.
 
Cesar Chavez once said, “We need to help students and parents cherish and preserve the ethnic and cultural diversity that nourishes and strengthens this community – and this nation.” I believe that statement applies not only to individuals and organizations, but also to the entire consumer financial marketplace. Operation HOPE’s “silver rights” empowerment, which is dedicated to making free enterprise work for everyone, is fundamentally grounded in a mission that reflects our own. That harmony provides the basis for a successful partnership, and together we have seized the opportunity to create one.
 
We share your commitment to ensuring that all communities can access safe and affordable credit. Indeed, last year we implemented important new mortgage rules that make sure lenders offer only mortgages that consumers can actually afford. Our Ability-to-Repay rule, also known as the Qualified Mortgage rule, created new protections for consumers. These rules put in place guardrails to make sure lenders do not stray into dangerous areas. They will ensure that the reckless lending that became so commonplace leading up to the financial crisis does not happen again. As memories of the crisis may fade over time, we are taking important steps to ensure that history will not repeat itself.
 
A core purpose of this work has been to help restore reliability to the mortgage market. When people take out a loan to buy a home, they deserve to have confidence that they are not being set up to fail. With such confidence, they can be more actively engaged in the process of seeking a good outcome. This brings me to my topic for today.
 
At the Consumer Bureau, we have been working with the Federal Housing Finance Agency to find out about new mortgage borrowers. Our first survey, at the beginning of last year, found that nearly half of all consumers do not shop around for a mortgage when buying a home. So this week we released a new “Know Before You Owe” initiative called Owning a Home. It is designed to empower consumers with the information they need to shop for one of the biggest financial purchases they will make in their lifetime: their mortgage.
 
Our report this week is based on results from the National Survey of Mortgage Borrowers. Fundamentally, it found that almost half of consumers seriously considered only a single lender or broker before making their mortgage decision. That is too many consumers, given what is at stake, and it is of great concern to us.
 
Just think about the effort most consumers put into considering what house to buy. They weigh the most basic questions, such as what town to live in, how many bedrooms or bathrooms they think they will need, do they want to have a yard to enjoy and care for. Given the importance of this major purchase, almost nobody looks only at one house and decides to stop right there. The same should be true of choosing a mortgage. Consumers should ask themselves what down payment they can afford and what terms fit their unique financial needs. But consumers do not seem to be as careful or as confident in weighing this decision.
 
Our study found that consumers get much of their information about mortgages from sources that have a vested interest in the outcome. For example, 70 percent report relying on their lender or broker “a lot” to get information about mortgages, while only 20 percent rely “a lot” on websites and only 2 percent rely “a lot” on housing counselors. Certainly lenders and brokers can be valuable resources. But it is worth recognizing that they also have an important personal stake in selling the mortgage. What is best for them is not always going to be best for the consumer.
 
People may well put more time and effort into shopping for smaller products such as TVs and computers than they do in shopping for the right mortgage. This failure to look around can mean real money lost for consumers. For example, on a conventional mortgage for borrowers with a good credit rating and a 20 percent down payment, the range of interest rates can span a half-percent or even more.
 
When you are spending a lot of money, you are literally betting the house on the choices you are making, and it can be highly beneficial to shop around. For a borrower taking out a 30-year fixed-rate loan for $200,000, getting an interest rate of 4 percent instead of 4.5 percent translates into $60 in savings per month. Over the first five years, the borrower would save about $3,500 in mortgage payments. In addition, the lower interest rate means the borrower would pay off more principal in the first five years, even while making lower payments. By not shopping around, consumers often are throwing good money down the drain.
 
An important and interesting finding from our survey was that consumers with more confidence in their knowledge about the mortgage process were more likely to shop. This was especially true for those who said they were very familiar with available interest rates. They were almost twice as likely to shop as those who were unfamiliar. So clearly we need to try to instill more confidence in consumers. We need to empower them to shop.
 
At the Consumer Bureau, we are working to reduce the information gap between lenders, who understand mortgage pricing inside out, and consumers, to whom the process can often feel like a mystery. It is time to start changing the culture of how people obtain their mortgages. We need to change the process from one of “getting a mortgage” to one of “shopping for a mortgage.” Consumers have much more power than they may realize. They can use that power to take control of their financial outcomes.
 
To help consumers become better and more informed shoppers, we are improving mortgage disclosures. This summer our Know Before You Owe forms will become the new reality in the mortgage market, helping consumers to understand their options, choose the best deal, and avoid costly surprises at the closing table. We also will soon be bringing out a more consumer-friendly edition of the booklet people receive when they apply for a mortgage to buy a home.
 
Although our new regulations limit various risky products, mortgages can still have different terms and features. Key components of a loan include the loan term, loan type, and interest rate. Loan terms typically vary between 15 and 30 years. Loan types include conventional loans, among others. Interest rates can be fixed or adjustable, and the upfront costs for mortgages often vary across lenders, even for the same consumer on the same kind of loan.
 
Shopping for a mortgage can occur at different points in the process, but consumers are well advised to cast a wide net early on. The consumer may begin by researching different loan options. Once the consumer knows more, she may be ready to meet with lenders and ask questions about the products they offer. Then she is ready to apply for a loan from different lenders. Finding the best deal depends on comparing the available offers, which may vary based not only on the interest rates but also on other costs and terms.
 
Our Owning a Home initiative has great new tools to help consumers throughout the home buying experience, from the very start all the way to the closing table. They include a guide to loan options and a closing checklist, written in plain language. If consumers need help understanding the difference between a fixed-rate and adjustable-rate mortgage, our tools will be able to assist. If people need help deciding how much they can borrow, our tools will be able to help with the calculations. Or if they need help understanding the new mortgage disclosure forms, Owning a Home will be able to explain all that. We are working to add these and other tools over the course of the year to give people a comprehensive and comprehensible picture of the entire home buying process.
 
One critical feature contained in Owning a Home is the Rate Checker, a tool currently in beta release that helps consumers understand what interest rates may be available to them. It incorporates information from lenders’ internal rate sheets, information they use to calculate what interest rate is available for a particular consumer. In other words, we are giving consumers direct access to the same type of information that the lenders themselves have.
 
Borrowers looking to buy a single-family home can use the Rate Checker to input their own information and find out what interest rates they are likely to be offered from lenders in their area. By plugging in their credit score, their location, and information about the loan they are seeking, they can see the rates that lenders are offering to borrowers like them. This is different from other websites that usually quote potential rates based on averages for borrowers with great credit and a large down payment. That can be misleading because of course not all consumers have high credit scores or can afford a large down payment. The result is that many consumers go to lenders and are quoted surprisingly different rates, which can leave them confused and uncertain about whether the quoted rates make sense.
 
And, of course, many of those websites focus primarily on soliciting prospective customers. Thus they require people to surrender their personal information, perhaps an email address but often much more – sensitive information that may be used for marketing or sales purposes. Owning a Home has no hidden agendas and the Bureau does not retain any personal identifying information. Instead, it simply enables consumers to be savvy shoppers and get the best deals they can.
 
Our new set of tools also offers an understanding of how lower rates translate into dollars saved. It can be hard to know what an extra quarter or half percent of interest means in real money. So our tool makes it easy to compare different interest rates and to see how much they will cost.
 
Consumers will be able to go to our website and plug in information, as often as they like, whenever they like, to become more familiar with their options. Understanding what rates they can expect to be quoted will help them see the value of shopping. They will gain more confidence about the crucial decisions they need to make about which mortgage to choose. And it is worth noting again from our survey findings that as consumers gain more confidence about the process, they become more likely to shop for a mortgage.
 
When consumers actively shop for a mortgage, they will be in a better position to make the best decision they can about what is probably the single largest financial transaction of their lives. The set of tools contained in Owning a Home, complete with the critical Rate Checker feature, will help consumers do that more effectively.
 
I know Operation HOPE works hard to help consumers improve their credit scores. So let me take a second to debunk a popular myth: You can shop around for a mortgage and it will not hurt your credit score. Within a certain window of time – generally between 14 and 45 days – multiple credit checks from mortgage lenders or brokers are treated as a single inquiry. This is because other creditors realize that you are only going to buy one home at a time. You can shop around and even submit multiple applications to obtain multiple initial estimates. The effect on your credit will be the same no matter how many lenders you consult.
 
For these reasons, it is vital that consumers meet with several lenders early on and ask lots of questions. And, they should wait until they receive official loan offers to make a final selection.
 
By demystifying the jargon and bringing in a layer of transparency, we are making it possible for consumers to have conversations with lenders that are better informed and more productive. This will build their confidence and ultimately empower them to make the right decisions for themselves and their families.
 
Maya Angelou once said, “I’ve learned that you shouldn’t go through life with a catcher’s mitt on both hands; you need to be able to throw something back.” This work is all about throwing something back for consumers so they are in a better position to improve their financial lives. At the Consumer Bureau, we want to help consumers protect themselves. We want consumers to be informed, to take control. And we want consumers to be given all the tools possible to make the right decisions. So we urge you to check out consumerfinance.gov/owning-a-home.
 
Consumers are now better protected from the pitfalls that hurt so many of them, and that led to the financial crisis. But when people fail to shop because they are intimidated by the process, they are putting themselves in harm’s way. At the Consumer Bureau, we are seeking to change the culture of how consumers go about obtaining mortgages in this country. People should walk away from the mortgage process feeling secure that they have made a sound and sustainable decision about their future, and they should be right to feel that way.
 
We also urge you to let people know that anyone who believes they have been mistreated can submit a complaint with us about consumer financial products or services, including mortgages, credit cards, student loans, auto loans, bank accounts, credit reporting, debt collection, payday loans, and more. They can do so on our website or by calling 855-411-CFPB, where they can receive assistance in many different languages. It is quite an easy and fast process, and more than 500,000 people have done it so far. In appropriate cases, we are able to get people some monetary relief; in other cases, they may get an error fixed on their credit report or relief from harassing debt collectors. Bringing us these complaints helps us see the pattern of what consumers are saying to us, in real time, all over the country, which is very valuable to our work.
 
Also on our website, consumers can tell their stories – either positive or negative – about a consumer financial product or service. They can find more than one thousand answers to frequently asked questions about consumer finance, through a feature called “Ask CFPB.” They can view our Spanish language website, analyze our public database of complaints, learn how to prevent financial fraud against the elderly, find out about options when it comes to student loan debt, see new remittance rights, and much more.
 
We are building a fairer marketplace characterized by responsible business practices. Your engagement with us helps improve our work to protect consumers. So thank you again for having me here, and for all you do. And let me close by quoting President Theodore Roosevelt, who said something we all should take to heart: “More and more it seems to me that about the best thing in life is to have a piece of work worth doing and then to do it well.” Much remains to be done before we can say that about ourselves, but together we can dedicate our efforts to that worthy aspiration. Thank you.
 
###

Please click here to view the prepared remarks online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com. 

CFPB Prepared Remarks of Richard Cordray

Posted on by Safeguard

On January 13, the Consumer Financial Protection Bureau published a news release containing the prepared remarks of Richard Cordray at the Brookings Institution.

Prepared Remarks of CFPB Director Richard Cordray at the Brookings Institution

Thank you for having me today and I bring you best wishes for the New Year. I can also offer sage counsel from humorist Ogden Nash, who once advised about the new year, “Ring Out the Old, Ring in the New, But Don’t Get Caught in Between.” For myself, every January has marked a significant personal development at the Consumer Financial Protection Bureau. Four years ago, that was when I first joined the Bureau. Three years ago, President Obama named me as the first director by means of a recess appointment. Two years ago, we finalized our first set of important new rules to improve the mortgage market. Last year, those rules went into effect all across the country. And this year, this January, we are continuing that ongoing work by helping consumers gain greater control over the mortgage process.
 
The American mortgage market remains the single largest consumer financial market in the world. And as we all know too well, in the run-up to the financial crisis, our mortgage market was deeply damaged by reckless lending. That damage caused the broader economy to crash, and while the housing market has been gradually recovering, it has lagged the pace of recovery in many other sectors over the past five years. As directed by Congress, our Ability-to-Repay rule that took effect last year was designed to ensure that lenders will offer only mortgages that consumers can actually afford. That rule, also known as the Qualified Mortgage or QM rule, put in place new protections for consumers to strengthen the housing market by rooting out reckless lending, while enabling and protecting responsible lending that is sounder and more sustainable.
 
Since the time our mortgage rules were implemented almost exactly one year ago today, we have not seen dramatic changes as some had feared. I recall seeing some rash predictions, such as that the price of mortgages would double and the volume of mortgages could be halved. But by the time these rules went into effect, lenders had already retreated from the worst sorts of lending that took us into the financial crisis, such as NINJA loans – loans so called because they could be made even to people with no income, no job, and no assets. Loans with negative amortization – often made to borrowers who could not afford even the interest accruing on the mortgage – also dried up in the immediate aftermath of the financial crisis. Our rules put further measures in place to make sure that irresponsible lending would never be allowed to reappear.
 
At the same time, however, we did not anticipate that our rules would affect the broader market in an intense or abrupt fashion. Instead, we included a provision so that loans backed by Fannie Mae and Freddie Mac as well as FHA, the VA, and the Department of Agriculture would be protected under the new rules. Another special provision ensures that thousands of small creditors, such as community banks and credit unions, can continue to do the responsible lending they have always done to serve their markets. In these ways, we protected key elements of the current mortgage market, even as we installed new guardrails to prevent irresponsible lending long after memories of the crisis may have faded. The mortgage market continues to heal from the great damage done by the financial crisis, with foreclosure rates and delinquencies continuing to fall. Home values have been improving and the volume of homes that are underwater – with more owed on the mortgage than the home is worth – remains on an encouraging downward trajectory. There are also growing signs of pent-up demand among first-time homebuyers, which has been a slow segment of the market in recent years but would give it a definite boost.
 
So a core purpose of the rule was to help restore reliability to the mortgage market. When people take out a loan to buy a home, they deserve to have confidence that they are not being set up to fail. With such confidence, they can be more actively engaged in the process of seeking a good outcome. They can choose the lender and the product with the terms best suited to their budget and their vision of what they want for themselves and their families. Making these choices effectively will depend on people being actively engaged in weighing their options and understanding how to shop around.
 
But we know it can be difficult to shop for a mortgage. It is hard to understand how to shop and the process can be intimidating, especially with all the paperwork. At the Consumer Bureau, we have been working with the Federal Housing Finance Agency on ongoing surveys of new mortgage borrowers. Our first survey, performed at the beginning of last year, found that nearly half of all consumers do not shop around for a mortgage when buying a home. That is why today we are releasing our “Know Before You Owe” initiative called Owning a Home. It is designed to empower consumers with the information they need to make good decisions and talk to lenders with confidence. Consumers will be able to gain greater control over the outcomes of the mortgage process and maximize the benefits of this major transaction.

Today’s report is based on results from new data in the National Survey of Mortgage Borrowers. When we say that almost half of consumers who take out a mortgage to buy a home fail to shop before applying for a mortgage, this means they seriously considered only a single lender or broker before making their decision.
 
By contrast, most consumers put substantial effort into considering their differing housing needs. They routinely weigh the most basic questions about which house to buy, such as where they want to live, and how many bedrooms or bathrooms they think they will need. But they do not seem to be as careful or as confident in weighing the economic aspects of the mortgage decision, such as what down payment they can afford or what mortgage terms fit their unique financial needs. Given the importance of this major purchase, almost nobody looks only at one house and decides to stop right there. Consumers spend considerable time looking at different neighborhoods and at different homes for sale. The same should be true of choosing among possible mortgage loans. When you are spending a lot of money, you are literally betting the house on the choices you are making, and it can be highly beneficial to shop around.
 
Our study also found that consumers are getting much of their information about mortgages from sources that have a vested interest in the outcome. For example, 70 percent report relying on their lender or broker “a lot” to get information about mortgages, while only 20 percent rely heavily on websites and only 2 percent rely heavily on housing counselors. Certainly lenders and brokers can be valuable resources. But it is worth recognizing that they also have an important personal stake in selling the mortgage. What is best for them is not always going to be best for the consumer. And because lenders and brokers have different business models, they may make money in different ways to stay competitive. So it is in the consumer’s best interest to ask questions and get as much information as possible from several lenders or brokers before making a decision.
 
People may well put more time and effort into shopping for smaller products such as appliances and televisions than they do in shopping for the right mortgage. The failure to look around can mean real money lost for consumers. For example, on a conventional mortgage for borrowers with a good credit rating and a 20 percent down payment, the range of potential interest rates can span a half-percent or even more.
 
For a borrower taking out a 30-year fixed-rate loan for $200,000, getting an interest rate of 4 percent instead of 4.5 percent translates into approximately $60 in savings per month. Over the first five years, the borrower would save about $3,500 in mortgage payments. In addition, the lower interest rate means that the borrower would pay off an additional $1,400 in principal in the first five years, even while making lower payments. By not shopping around, consumers often are throwing good money down the drain.
 
An important and interesting finding from our survey was that consumers with more confidence in their knowledge about the mortgage process were more likely to shop. This was especially true for those who said they were very familiar with available interest rates. They were almost twice as likely to shop as those unfamiliar. Clearly we need to try to instill more confidence in consumers – and by empowering them we can help them make the most of this process.

At the Consumer Bureau, we are working to reduce the information gap between lenders, who understand mortgage pricing inside out, and consumers, to whom the process can often feel like a mystery. It is time to start changing the culture of how people obtain their mortgages. We need to change the process from one of “getting a mortgage” to one of “shopping for a mortgage.” Consumers have much more power than they may realize. They can use that power to take control of their financial outcomes.
 
To help consumers become better and more informed shoppers, we are improving mortgage disclosures. This summer our Know Before You Owe forms will become the new reality in the mortgage market, helping consumers understand their options, choose the best deal they can, and avoid costly surprises at the closing table. The forms are consumer-tested to be more readily accessible and user-friendly, which will ease the process of applying for and closing on a loan. We also will soon be bringing out a more consumer-friendly edition of the booklet people receive when they apply for a mortgage to buy a home.
 
Although our new mortgage regulations limit various risky product features, mortgages can still have very different terms and features for consumers to understand. Key components of a loan include the loan term, loan type, and interest rate. Loan terms typically vary between 15 and 30 years. Loan types include conventional loans as well as those offered by the FHA or VA, among others. Interest rates can be fixed or adjustable, and the upfront costs for mortgages often vary across lenders, even for the same consumer on loans with otherwise identical product features.
 
Shopping for a mortgage can occur at different points in the process, but consumers are well advised to cast a wide net early on. The consumer may begin by researching different loan options. Once the consumer knows more, she may be ready to meet with lenders and ask questions about the products they offer and the application process. Once the consumer has made an offer on a home, she is ready to apply for a loan from different lenders. Finding the best deal depends on comparing the available offers, which may vary based not only on the interest rates but also on other costs and terms.
 
Owning a Home has great new tools to help consumers throughout the home buying experience, from the very start of the process all the way to the closing table. These tools can be found on our website at consumerfinance.gov/owning-a-home. The set of tools includes a guide to loan options and a closing checklist, written in plain language. If consumers need help understanding the difference between a fixed-rate and adjustable-rate mortgage, our tools will be able to assist. If people need help deciding how much they can borrow, our tools will be able to help with the calculations. Or if they need help understanding the new mortgage disclosure forms, Owning a Home will be able to explain all that. We are working to add these and other tools over the course of the year to give people a comprehensive and comprehensible picture of the entire home buying process.
 
One critical feature contained in Owning a Home is the Rate Checker, a tool currently in beta release that helps consumers understand what interest rates may be available to them. It incorporates information from lenders’ internal rate sheets, information they use to calculate what interest rate is available for a particular consumer. In other words, we are giving consumers direct access to the same type of information that the lenders themselves have.
 
Borrowers looking to buy a single-family home can use the Rate Checker to input their own information and find out what interest rates they are likely to be offered from lenders in their area. By plugging in their credit score, their location, and information about the loan they are seeking, they can see the rates that lenders are offering to borrowers like them. This is different from other websites that usually quote potential rates based on averages for borrowers with great credit and a large down payment. That can be misleading because of course not all consumers have high credit scores or can afford a large down payment. The result is that many consumers go to lenders and are quoted surprisingly different rates, which can leave them confused and uncertain about whether the quoted rates make sense.
 
And, of course, many of those websites focus primarily on soliciting prospective customers. Thus they require people to surrender their personal information, perhaps an email address but often much more – information that may be used for marketing or sales purposes. By contrast, Owning a Home has no hidden agendas and the Bureau does not retain any personal identifying information. Instead, it simply enables consumers to have more of the information they need to be savvy shoppers and get the best deals they can.

Our new set of tools also offers an understanding of how lower rates translate into dollars saved. It can be hard to understand what an extra quarter or half percent of interest amounts to in actual dollars. So our tool makes it easy to compare different interest rates and to see how much they will cost.
 
Consumers will be able to go to our website and plug in information, as often as they like, to become more familiar with their options. Understanding what rates they can expect to be quoted in the market will help them see the value of shopping and gain more confidence about the crucial decisions they need to make about which mortgage to choose. And it is worth noting again from our survey findings that as consumers gain more confidence about the process, they become more likely to shop for a mortgage in the first place.

When consumers actively shop for a mortgage, they will be in a better position to make the best decision they can about what is probably the single largest financial transaction of their lives. The set of tools contained in Owning a Home, complete with the critical Rate Checker feature, will help consumers do that more effectively.

And let me take a second to debunk a popular myth: You can shop around for a mortgage and it will not hurt your credit score. Within a certain window of time – generally between 14 and 45 days – multiple credit checks from mortgage lenders or brokers are treated as a single inquiry. This is because other creditors realize that you are only going to buy one home at a time. You can shop around and even submit multiple applications to obtain multiple initial estimates. The effect on your credit will be the same no matter how many lenders you consult.

For these reasons, it is vital that consumers meet with several lenders early on and ask lots of questions, but wait until they receive official loan offers to make their final selection. Starting this summer, those official loan offers will be communicated on our Know Before You Owe Loan Estimate form, which will summarize the key loan terms as well as the estimated loan costs and closing costs. By demystifying the jargon, we are making it possible for consumers to have conversations with lenders that are better informed and more productive. In addition, consumers will have a reliable estimate that can change only in limited ways between the application and the closing. This will build their confidence and ultimately empower them to make the right decisions for themselves and their families.
 
The central purpose of the Consumer Bureau is to assure that empowered consumers have access to markets that are fair, transparent, and competitive. This is good for consumers, for the honest businesses that seek to serve them, and for the American economy as a whole.
 
Our important new set of mortgage rules is creating a cleaner mortgage market. Consumers are better protected from the pitfalls and booby traps that hurt so many people and led to the financial crisis. But when people fail to shop because they are intimidated by the process, they are putting themselves in harm’s way. One of our duties at the Consumer Bureau is to educate and empower them. We are seeking to change the culture of how consumers go about obtaining mortgages in this country by making it more possible and more fruitful for them to shop around. People should walk away from the mortgage process feeling secure that they have made a sound and sustainable decision about their future, and they should be right to feel that way.
 
We have seen all too clearly that when consumer financial products are misunderstood or misused, they can do real damage to people’s lives. Consumers need to make the best choices that fit their circumstances – nobody can do that for them – and they need to be responsible for the choices they make. At the Consumer Bureau, we are seeking and finding ways to help them get exactly where they want to go in improving their financial futures. Please join us in supporting this important and exciting work. Thank you.
 
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Please click here to view the prepared remarks online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

CFPB Issues Supervisory Compliance Bulletin

Posted on by Safeguard

On January 27, the Consumer Financial Protection Bureau (CFPB) issued a press release titled CFPB Issues Supervisory Compliance Bulletin. 

CFPB Issues Supervisory Compliance Bulletin

Bulletin Reminds Companies of Existing Legal Responsibilities Regarding Treatment of Confidential Supervisory Information
 
WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) issued a bulletin today to remind supervised financial institutions, including nonbank companies that may be unfamiliar with federal supervision, of existing regulatory requirements regarding confidential supervisory information. The CFPB supervises companies to determine their compliance with federal consumer financial laws, to assess risks to consumers, and to help ensure a fair and transparent marketplace for consumers.
 
“The CFPB’s supervision program holds companies accountable for how they treat consumers,” said CFPB Director Richard Cordray. “The Bureau’s oversight of banks and nonbanks alike helps to level the playing field for all companies, and to ensure a fair and transparent marketplace for consumers.”
 
The CFPB has supervisory authority over banks and credit unions with assets over $10 billion, and their affiliates. The Bureau is also the first federal agency with supervisory authority over certain nonbank financial companies such as mortgage lenders and servicers, payday lenders, and private student lenders, as well certain large debt collectors, consumer reporting agencies, student loan servicers, and international remittance providers.

The bulletin issued today provides guidance on what types of information constitute confidential supervisory information. The bulletin also explains that disclosure of confidential supervisory information is not allowed, with limited exceptions.

The CFPB is aware that some supervised financial institutions may have entered into non-disclosure agreements that purport to restrict the institution from sharing information with a regulator, or to require the institution to notify a third party when it shares information. However, the bulletin explains that provisions in non-disclosure agreements do not alter or limit the Bureau’s existing supervisory authority or the supervised financial institution’s obligations relating to confidential supervisory information.

The compliance bulletin is available at:
http://files.consumerfinance.gov/f/201501_cfpb_compliance-bulletin_treatment-of-confidential-supervisory-information.pdf

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Please click here to view the press release online.

Please click here to view media coverage (DS News 1/27/15) of the bulletin.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

CFPB Finalizes Minor Changes to ?Know Before You Owe? Mortgage Rules

Posted on by Safeguard

On January 20, the Consumer Financial Protection Bureau (CFPB) issued a press release titled CFPB Finalizes Minor Changes to “Know Before You Owe” Mortgage Rules.

CFPB Finalizes Minor Changes to “Know Before You Owe” Mortgage Rules

Tweaks Address Mortgage Disclosures After Locking Interest Rates and Information on Construction Loans
 
WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today finalized two minor modifications to the “Know Before You Owe” mortgage disclosure rules. The changes finalized today, which were proposed in October 2014, address when consumers will receive updated disclosures after locking in an interest rate, and how consumers receive information regarding certain construction loans.
 
“The new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. “Today’s minor changes will make it easier for creditors to comply with the disclosure rules while maintaining these important new consumer protections.”
 
For more than 30 years, federal law has generally required that mortgage lenders deliver two different, overlapping disclosures to consumers within three business days after receiving a mortgage application. At the closing stage, federal law again generally requires two forms. All of these forms contain duplicative and sometimes confusing information. The Dodd-Frank Wall Street Reform and Consumer Protection Act recognized the need to simplify and streamline this information for consumers and transferred responsibility for the forms to the CFPB. In 2013, the CFPB introduced new mortgage disclosure forms that will replace the existing federal forms and help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.
 
Under the rule finalized today, creditors are required to provide a revised Loan Estimate within three business days after a consumer locks in a floating interest rate. The original rule required creditors to provide the revised Loan Estimate on the date the rate is locked. After hearing feedback from stakeholders, the Bureau determined that the short turnaround could potentially pose challenges for creditors that currently allow consumers to lock interest rates late in the day or after business hours. That could result in creditors only allowing consumers to lock interest rates during business hours or even early in the day. Allowing three business days for the new Loan Estimate will give creditors enough time to provide new disclosures without having to reduce flexibility that consumers may have today in locking their rates.

The second change being finalized today is a minor addition on the Loan Estimate form for loans that involve new home construction. These construction loans often take longer to settle than other loans, and the estimated charges can change. Today’s change creates a space on the Loan Estimate form where creditors could include language informing consumers that they may receive a revised Loan Estimate for a construction loan that is expected to take more than 60 days to settle.
 
The “Know Before You Owe” mortgage disclosure rule, including the changes finalized today, is effective August 1, 2015. The CFPB does not anticipate that today’s minor modifications will affect the industry’s ability to come into compliance with the rules within the 20 month implementation period.
 
The CFPB has online implementation resources available, including compliance guides, sample Loan Estimate and Closing Disclosure forms, and a calendar showing timing requirements based on a sample real estate transaction.

The rule will be effective on August 1, 2015, and is available at: http://files.consumerfinance.gov/f/201501_cfpb_final-rule_trid.pdf
 
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Please click here to view the press release online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

Castro: It?s Time to ?Remove the Stigma? Promoting Homeownership

Posted on by Safeguard

On January 13, DS News published an article outlining a speech made by U.S. Department of Housing and Urban Development (HUD) Secretary Julian Castro at the National Press Club.

Castro: It’s Time to ‘Remove the Stigma’ Promoting Homeownership

Secretary for the U.S. Department of Housing and Urban Development (HUD) Julián Castro told the audience at the National Press Club Tuesday afternoon that it was time for the nation to “remove the stigma” promoting homeownership.

During his hour-long speech at the Press Club in Washington, D.C., which included a question and answer session, Castro spoke of the economic progress the nation made in 2014, such as experiencing the fastest job growth rate in 15 years, and he addressed HUD’s initiatives which are aimed at promoting, increasing, and expanding opportunities for Americans to own a home.

“Homeownership is still the cornerstone of the American Dream — a fact you can see in the lives of everyday folks,” he said. “It’s a source of pride.  It’s a source of wealth, providing both a nest and a nest egg. And it strengthens communities and fuels growth in the overall economy.”

Castro addressed last week’s announcement that the Federal Housing Administration (FHA) would lower its mortgage insurance premiums down by 50 basis points to 0.85 percent. He said the National Association of Realtors (NAR) estimated that high premiums prevented nearly 400,000 creditworthy borrowers from purchasing homes in 2013, and that the administration expects about two million homeowners to save an average of about $900 a year on premiums. He said he estimates the lowering of the premiums will help about 250,000 new borrowers purchase their first home.

“This is a common sense step — FHA’s premiums will still be 50 percent higher than pre-crisis levels,” Castro said. “This premium change only makes an FHA loan more affordable for qualified families. All other FHA requirements will remain the same, including verification of a person’s ability to pay.  Families still have to qualify for an FHA loan – but when they do, they will find a more affordable path to homeownership waiting for them.”

Critics of the Obama Administration’s initiatives to increase homeownership, particularly relaxing lending standards, say that these initiatives will result in another housing bust and financial crisis similar to the one the nation experienced in 2007-08.

“Some have been surprised by this focus,” Castro said, referring to the administration’s focus of expanding homeownership. “A few have even suggested that this is a return to the mania that fueled the crisis.  It’s not. Our nation is smart enough to heed the lessons of the past without forsaking our future. The answer isn’t to deny responsible Americans homeownership — it’s to do it right.”

The administration doesn’t believe that taxpayers should foot the bill when mortgage loans default, as they have been forced to in the past, Castro said. Government-sponsored entities Fannie Mae and Freddie Mac remain under conservatorship of the FHFA, as they have been since 2008, which in recent months has become a subject of heated debate as the two GSEs continue to roll in profits.

“The administration supports housing finance reform that gets the taxpayers off the hook, were we ever to experience the kind of housing crisis that we did a few years ago,” he said. “We believe there is a sensible way to accomplish that.”

On the subject of today’s tight lending standards, which have also been a source of debate, Castro said he believes there is room for them to loosen up.

“Underwriting standards are too strict,” he said. “We went from one extreme, where it was too easy to get a home loan, to another extreme today, where it is too difficult to get a home loan. Strong, sensible middle ground where we have good safeguards in place so we don’t slide back to the past, but at the same time, folks who are ready and responsible to own a home can get access to credit. “

Castro said the administration’s focus on expanding homeownership is part of improving the lives of Americans.

“This is what we’re about — we’re about people,” he said. “We’re about making their lives a bit better and giving them the chance to thrive, and that’s why we’re so focused on homeownership. . .HUD is ready to help and to make 2015 a year of housing opportunity.”

Please click here to view the article online.

Please click here to view the Remarks of Secretary Julian Castro at the National Press Club in their entirety.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

VALERI Servicer Newsflash

Posted on by Safeguard

On December 3, the U.S. Department of Veterans Affairs (VA) released a VALERI Servicer Newsflash.

VALERI Servicer Newsflash

IMPORTANT INFORMATION
Fee Cost Schedule Update – The Fee Cost Schedule has been updated with new expense amounts, effective December 1, 2014.  The most recent changes concern title expenses for Georgia, North Carolina, South Carolina and Tennessee.  In addition, winterization expenses and dates for Hawaii, Guam, American Samoa, Puerto Rico and the Virgin Islands have been updated to zero to coincide with VA Circular 26-09-12, Property Preservation Requirements and Fees.

Roanoke Appraisal Fee Increase – The Roanoke Regional Loan Center (RLC) increased the appraisal fee for Kentucky, Maryland, Virginia, West Virginia and Washington D.C.  The change is effective for appraisals ordered on or after August 1, 2014.  The VALERI application and Fee Cost Schedule has been updated to reflect the increased fees.  Servicers will need to appeal for the increased appraisal fee if it was originally denied on the Basic Claim.

REMINDER
Property Preservation – Property preservation questions regarding claims should be addressed to the VA assigned Loan Technician.  In addition, preservation requirements and specific guidelines are found in VA Circular 26-09-12, Property Preservation Requirements and Fees.

Title Follow-ups – It is very important for servicers to follow-up on title packages that have been submitted to Vender Resource Management (VRM).  Servicers are responsible for validating the title package has been sent and is acceptable to prevent reconveyance of properties.  Incomplete and unacceptable title packages or non-receipt of a title package by the due date are the most common reasons for returning custody to a servicer.  If additional time is needed to submit a title package, the extension request must be received by VRM prior to the original title package due date.

DEVELOPMENT UPDATES
On Saturday, December 6, 2014, VALERI Manifest 3.1 will be deployed.  The following VALERI application enhancement will be included:

CQ 10673 – Security Acknowledgement page – the Security Notice, Privacy Act, and Respondent Burden notices will be visible on the VALERI log-in screen.  Users will need to click the “I agree” button as an acknowledgement of the notices each time they log-in to gain access to the VALERI application.

Please click here to view the newsflash online.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.
Website: www.safeguardproperties.com.

USDA New Regulation, Technical Handbook and Respective Forms Published: 7 CFR Part 3555

Posted on by Safeguard

On December 2, the U.S. Department of Agriculture (USDA) released a single family housing servicing update titled New Regulation, Technical Handbook and Respective Forms Published: 7 CFR Part 3555.

NEW REGULATION, TECHNICAL HANDBOOK AND RESPECTIVE FORMS PUBLISHED:  7 CFR Part 3555 

On December 1, 2014 the 7 Code of Federal Regulations (CFR) Part 3555, “Single Family Housing Guaranteed Loan Program” (SFHGLP) became effective, replacing 7 CFR 1980 Subpart D.  The Regulation, Technical Handbook, and respective Forms can be found at the USDA Rural Development’s Regulation and Guidance page.

7 CFR Part 3555 sets forth policies for the SFHGLP.  It addresses the requirements of Section 502(h) of the Housing Act of 1949, as amended, and includes policies regarding the origination, servicing, holding and liquidation of SFHGLP loans. 

All new loan applications received by USDA on or after December 1, 2014 are subject to the requirements of 7 CFR 3555. 

Origination and Servicing training sessions have been recorded and can be found at
https://www.webcaster4.com/Webcast/ListenPage?companyId=694&webcastId=6596 and https://www.webcaster4.com/Webcast/ListenPage?companyId=694&webcastId=6630 respectively.  Future training opportunities will be announced through electronic Listserv notifications. 

Should you have any questions, please contact the Single Family Housing Guaranteed Loan Division at 202-720-1452 or the Centralized Servicing Center at 866-550-5887.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.
Website: www.safeguardproperties.com.

Statement of the Federal Housing Finance Agency on Certain Super Priority Liens

Posted on by Safeguard

On December 22, the Federal Housing Finance Agency (FHFA) released a statement titled Statement of the Federal Housing Finance Agency on Certain Super Priority Liens. 

Statement of the Federal Housing Finance Agency on Certain Super Priority Liens

FOR IMMEDIATE RELEASE

Today, the Federal Housing Finance Agency (FHFA) is alerting homeowners, financial institutions, and state authorities of the agency’s concerns with state-level actions that threaten the first-lien status of single-family loans owned or guaranteed by Fannie Mae and Freddie Mac.  In particular, FHFA is concerned about state actions to create super-priority liens in two instances: 1) through certain energy retrofit financing programs structured as tax assessments and 2) through granting priority rights in foreclosure proceedings for homeowner associations.  In issuing this statement, FHFA is acting in furtherance of its statutory obligations as regulator and conservator of Fannie Mae and Freddie Mac.

The existence of these super-priority liens increases the risk of losses to taxpayers.  Fannie Mae and Freddie Mac, while operating in conservatorship, currently support the housing finance market by purchasing, guaranteeing, and securitizing single-family mortgages.  One of the bedrock principles in this process is that the mortgages supported by Fannie Mae and Freddie Mac must remain in first-lien position, meaning that they have first priority in receiving the proceeds from selling a house in foreclosure.  As a result, any lien from a loan added after origination should not be able to jump in line ahead of a Fannie Mae or Freddie Mac mortgage to collect the proceeds of the sale of a foreclosed property.  However, as is detailed below, FHFA is concerned by some liens being advanced to “super-priority” status over Fannie Mae and Freddie Mac first-lien mortgages.

Energy Retrofit Financing Programs Structured as Tax Assessments

While FHFA fully supports energy retrofit financing programs to allow homeowners to improve energy efficiency, these programs must be structured to ensure protection of the core financing for the home and, therefore, cannot undermine the first-lien status of Fannie Mae and Freddie Mac mortgages.  Some entities and localities are advancing the argument that single-family energy retrofit financing programs that are structured to make loans through the homeowner’s property tax assessment and require that borrowers repay their loans as part of their property tax bill should have priority over all other loans, including pre-existing Fannie Mae and Freddie Mac mortgages.1   One such program is known as the Property Assessed Clean Energy (PACE) program, which often provides loans as first-liens and is offered in California and in some other states.  Localities offering these PACE loans threaten to move existing Fannie Mae and Freddie Mac mortgages to a second lien position and increase the risk of loss to the Enterprises and, by extension, to taxpayers. 
?
In issuing this statement, FHFA wants to make clear to homeowners, lenders, other financial institutions, state officials, and the public that Fannie Mae and Freddie Mac’s policies prohibit the purchase of a mortgage where the property has a first-lien PACE loan attached to it.  This restriction has two potential implications for borrowers.  First, a homeowner with a first-lien PACE loan cannot refinance their existing mortgage with a Fannie Mae or Freddie Mac mortgage.  Second, anyone wanting to buy a home that already has a first-lien PACE loan cannot use a Fannie Mae or Freddie Mac loan for the purchase.  These restrictions may reduce the marketability of the house or require the homeowner to pay off the PACE loan before selling the house.

?FHFA believes it is important for states and municipalities to understand these restrictions before continuing to offer the programs.  Additionally, FHFA believes that borrowers should fully understand these restrictions prior to taking out a first-lien PACE loan.

In addition to aggressive enforcement of these existing policies, FHFA is continuing to explore other possible remedies and legal actions to protect the Enterprises’ lien position in response to first-lien PACE programs.

Homeowner Association Priority Status

FHFA is aware that, in certain jurisdictions, liens for unpaid homeowner association (“HOA”) dues may be deemed to be senior to preexisting mortgage liens on a homeowner’s property.  As a result, on December 5, 2014, FHFA and Fannie Mae filed an action in federal court in Nevada, seeking a determination that a HOA’s foreclosure sale is invalid and contrary to federal law to the extent that it purports to extinguish Fannie Mae’s property rights.  Federal National Mortgage Association v. SFR Investments Pool 1, LLC, No. 2:14-cv-02046 (D. Nev. December 5, 2014).  FHFA has also intervened in Saticoy Bay, LLC Series 1702 Empire Mine v. Federal National Mortgage Assoc., No. 2:14-cv-01975 (D. Nev.), seeking a declaration that a prior HOA foreclosure sale is invalid to the extent that it purports to extinguish Fannie Mae’s property interests.  

??These FHFA actions are based on federal law which precludes involuntary extinguishment of liens held by Fannie Mae or Freddie Mac while they are operating in conservatorships and bars holders of other liens, including HOAs, from taking any action that would extinguish a Fannie Mae or Freddie Mac lien, security interest or other property interest. Specifically, Title 12 USC Section 4617(j)(3) states that “[no] property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency, nor shall any involuntary lien attach to the property of the Agency.”  FHFA is authorized, as conservator, to bring this suit because Enterprise lien interests in collateral constitute property protected by this provision.

FHFA has an obligation to protect Fannie Mae’s and Freddie Mac’s rights, and will aggressively do so by bringing actions to void foreclosures that purport to extinguish Enterprise property interests in a manner that contravenes federal law.

1 PACE financing programs can be structured as secondary liens that stand behind the original mortgage and do not threaten the priority status of Enterprise loans.

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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.

Contacts:

Stefanie Johnson (202) 649-3030? / Corinne Russell (202) 649-3032?

Please click here to view the statement online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

Senators Ask FHFA to Revisit FHLBank Membership Requirements

Posted on by Safeguard

On December 18, DS News published an article discussing a signed letter by U.S. Senators to Federal Housing Finance Agency (FHFA) Director Mel Watt concerning stricter membership requirements for Federal Home Loan Banks.

Senators Ask FHFA to Revisit FHLBank Membership Requirements

Twenty-seven senators have signed a letter addressed to Federal Housing Finance Agency (FHFA) Director Mel Watt asking him to reconsider the stricter membership requirements for the Federal Home Loan Banks the Agency proposed in September.

The changes to membership requirements outlined by Watt in a speech at the FHLBank Director’s Conference on September 2 require members to hold 1 percent of their assets in home mortgage loans (HML) on an ongoing basis, whereas the previous rule requires members to demonstrate this only at the time of their application and not at any time afterward. Another proposed change requires members to adhere to the 10 percent residential mortgage loan (RML) requirement on an ongoing basis as opposed to just at the time of application.

The senators’ letter, dated December 15 and co-authored by Senators Joe Manchin (D-West Virginia) and Mark Kirk (R-Illinois), states that “(t)he proposed rule affects long-standing membership rules for the Federal Home Loan Bank system and will negatively affect new and current members in the system.” Twenty-five other senators signed the letter.

“Under the current regulations, if a member does not have assets that meet the system’s statutory and regulatory requirements for eligible collateral, it cannot borrow,” Manchin and Kirk wrote in the letter. “Under the proposed regulation, however, even if a member has assets that meet this test, a member could be expelled from membership if the member cannot meet the new – and unprecedented – mortgage asset tests for continued membership. The consequences are harsh and the terms of the proposed rule are inconsistent with the explicit terms of the FHLBank Act.”

The letter states that in the 80 years since it was created, the FHLBank system has been a key partner in the success of smaller institutions, and the authors pointed out that Watt has stated the importance of these institutions in housing finance. The authors of the letter also pointed out the value of the cooperative FHLBank model was demonstrated by the stability the FHLBanks provided during the 2008 financial crisis.

“Given their success and importance, we are concerned the proposed rule could jeopardize the ability of FHLBanks to provide liquidity to community financial institutions when they need it most,” the letter said.

Manchin and Kirk also asked Watt in the letter to “consult further with other agencies before finalizing any rule that affects these much needed financial institutions,” since the FHLBank system is currently operating “safely and successfully.”

“In light of these concerns, we urge you to reconsider this proposal and consult with Congress, which is where these important policy decisions should be made,” the letter said.

The senators who signed the letter were (alphabetically): Ayotte (R-New Hampshire), Baldwin (D-Wisconsin), Blunt (R-Missouri), Cardin (D-Maryland), Chambliss (R-Georgia), Coburn (R-Oklahoma), Cochran (R-Mississippi), Coats (R-Indiana), Donnelly (D-Indiana), Fischer (R-Nebraska), Hirono (D-Hawaii), Hoeven (R-North Dakota), Inhofe (R-Oklahoma), Isakson (R-Georgia), Ron Johnson (R-Wisconsin), Johanns (R-Nebraska), King (I-Maine), Kirk (R-Illinois), Manchin (D-West Virginia), Moran (R-Kansas), Portman (R-Ohio), Roberts (R-Kanas), Rubio (R-Florida), Scott (R-South Carolina), Tester (D-Montana), Thune (R-South Dakota), and Wicker (R-Mississippi).

Last month, a bipartisan group of 68 house members signed a letter to Watt, authored by Spencer Bachus (R-Alabama) and David Scott (D-Georgia), expressing the same sentiments regarding the proposed FHLBank membership rule. The National Association of Federal Credit Unions (NAFCU) voiced similar concerns in November.

Please click here to view the article online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.