Safeguard Properties

Trulia Economist: 2014 is ‘Year of the Repeat Homebuyer’

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On December 30, DSNews published an article titled Trulia Economist Sees 2014 as ‘Year of the Repeat Homebuyer.’

Trulia Economist Sees 2014 as ‘Year of the Repeat Homebuyer’

As prices continue rising in the new year—albeit at a slower pace—investors will begin to ease back from the purchase market, but repeat homebuyers will be there to pick up the slack, according to Trulia’s predictions for the housing market in 2014.

“2013 was the year of the investor, but 2014 will be the year of the repeat homebuyer,” said Jed Kolko, chief economist at Trulia, in his 2014 forecast.

Other changes to the market in the new year include lower affordability, “less frenzied” home-buying, and a shift in the rental market from single-family homes to urban apartments, according to Kolko.

While first-time buyers continue to face major hurdles to purchasing a home, repeat buyers will have an easier time, especially those who have equity in their current homes.

The biggest obstacle for potential homebuyers is saving enough money for a down payment, according to Trulia. This hurdle is was the most commonly cited challenge in a Trulia survey of current renters wishing to own their own home.

Fifty-five percent of survey respondents cited this obstacle, and among young adults (ages 18 to 34) the rate was even higher at 58 percent.

The second most common barrier to homeownership is lack of stable employment—cited among 36 percent of all survey respondents and 43 percent of young adults.
However, repeat buyers may be in a better position to purchase, and “they’re less discouraged by rising prices than either investors or first-time buyers because the home they already own has also risen in value,” according to Kolko.

The pace of home price appreciation will slow in the new year, but rising prices, combined with rising mortgage rates, will take a toll on affordability.

“Nonetheless, buying will remain cheaper than renting,” Kolko said, referencing a Trulia report from September, which determined buying is 35 percent less expensive than renting nationally.

“However, prices and mortgage rates might rise enough to tip the math in favor of renting in a couple of housing markets,” Kolko said.

Continued price increases will likely lead more homeowners to list their homes for sale, leading to an increase in inventory in 2014, according to Trulia. Inventory will also get a small boost from new construction.

At the same time, traditional homebuyers will face less competition from investors, and mortgages “should be easier to get” as the new regulatory environment takes shape removing the uncertainty that has made lenders wary. Together these factors will make the homebuying process “less frenzied” in the new year, according to Kolko.

Lastly, Kolko predicts the rental market will shift from its recent heavy focus on single-family homes back to urban apartments.

During the recession, single-family home rentals increased 32 percent, but several factors will lead to a decline in this trend next year, according to Kolko. Fewer foreclosures, fewer investor purchases, and loosening credit standards will all contribute to the decline.

Also, “[u]rban apartments will be the first stop for many of the young adults who find jobs and move out of their parents’ homes,” according to Kolko.

Please click here to view the online article.

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.

The Reverse Eminent Domain Movement

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On December 23, Huffington Post published a blog titled Our Most Powerful Weapon Against Wall Street?  The Reverse Eminent Domain Movement.

Our Most Powerful Weapon Against Wall Street?  The Reverse Eminent Domain Movement

Wall Street tore the heart out of our economy. It profited wildly by puffing up the housing bubble. It profited wildly again when the federal government provided more than $10 trillion worth of bailout money and loans. And right now, 95 percent of the economic growth of our so-called recovery is going to the top 1 percent — the very bankers, traders and mortgage moguls who wrecked the economy in the first place. Meanwhile, Wall Street’s reckless gambling caused more than 8 million workers to lose their jobs in a matter of months.

Today — five long years after the collapse — we face a sustained unemployment rate higher than anytime since the Great Depression. In addition, housing values have plummeted. For many, the value of their homes has fallen by half. Even with the recent uptick in housing prices, 10.8 million homeowners are still underwater — meaning that their homes are worth less than their mortgages. The total amount of negative equity stands at $805 billion as of October, 2013.

Being underwater is a big, big problem brought to us by Wall Street’s predatory profiteering. If you’re underwater and need to move, you’ll still owe the bank after you sell your home (called a short sale). Or you could just walk away from your home and let the bank foreclose, which means you’ll lose whatever equity you had and see your credit rating crash. Further, if you’re underwater it probably means that you’re living in a neighborhood with many foreclosures, which often leads to safety concerns and further downward pressure on the value of your home as well as raising the costs of local policing and sanitation services. And of course, if you lose your job, you are in great danger of losing your home as well.

Please click here to view the blog in its entirety.

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.

Senators Warn HUD, Treasury About Eminent Domain

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On December 2, HousingWire published an article titled Senators Warn HUD, Treasury About Lingering Eminent Domain Proposals.

Senators warn HUD, Treasury about lingering eminent domain proposals

Richmond, Calif., has already offered to buy loans from mortgage holders

The eminent domain controversy in Richmond, Calif., continues with several U.S. senators publicly asking housing regulators to push back at any proposal that would allow municipalities to offer principal write-downs to underwater borrowers by acquiring their mortgages through eminent domain.  

So what prompted the strongly worded letter four Senators mailed to Department of Housing and Urban Development Secretary Shaun Donovan and Treasury Secretary Jack Lew?

The answer apparently is an eminent domain rescue plan that made it a little too far for the Senators’ liking. 

The city of Richmond, Calif., has gone as far as mailing letters to mortgage holders, asking them if the city can buy out their interests in underwater mortgages at a discount.

In the same letter, the city reportedly threatens to takeover the mortgages using eminent domain if a deal is not reached. 

This particular action prompted four U.S. Senators to send a strongly worded letter to Department of Housing and Urban Development Secretary Shaun Donovan and Treasury Secretary Jack Lew, advising them that the Obama administration has been relatively silent on the issue and should give the mortgage market back-up.

While the Senators noted the Federal Housing Finance Agency (FHFA) has publicly voiced its opposition to eminent domain, saying it could “negatively affect the extension of credit to borrowers seeking to become homeowners,” the Senators believe the Obama administration “has been largely silent on the subject.”

The four Senators, Pat Toomey (R-Pa.), John Boozman (R-Ark.), Mark Begich (D-AK) and Heidi Heitkamp (D-ND) told Lew and Donovan they want more answers from the Obama administration after a HUD representative told them the housing agency is monitoring the situation, but failed to specify what actions need to be taken.

Fearing eminent domain in Richmond will send shockwaves through the housing market, the Senators mailed the letter, warning regulators of a dire impact on the entire mortgage lending space if eminent domain fully takes root.

To address the issue, the Senators want HUD to use its existing authority to prevent the FHA from insuring mortgages on any properties affected by an eminent domain proposal.

Please click here to view the online article.
Please click here to view the Senator’s Letter to HUD.

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.

Richmond, CA Votes for Foreclosure Prevention Plan

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On December 18, ABC Local News published an article titled Richmond City Council Votes for Foreclosure Prevention Plan.

Richmond City Council votes for foreclosure prevention plan

RICHMOND, Calif. — Richmond is moving forward with an attention-getting program designed to prevent struggling local homeowners from losing their homes.

The Richmond City Council voted 4-2 at its meeting Tuesday night to adopt a resolution to advance Richmond Community Action to Restore Equality and Stability, or Richmond CARES, and to focus on the neighborhoods and homes that have been hardest hit by the housing crisis.

Dozens of people, including financially embattled homeowners, spoke in support of the plan at the meeting.

Richmond CARES is a plan to buy underwater mortgages from lenders and to invoke the city’s municipal power of eminent domain to seize the mortgages if lenders don’t accept the purchase offer. Eminent domain is a power typically used by governments to seize land for public use like parks or sidewalks.

Once the city has purchased a mortgage with the financial backing of San Francisco Investment firm Mortgage Resolution Partners, or MRP, homeowners can refinance for a more affordable monthly payment.

The resolution approved on Tuesday night emphasizes the city’s commitment to prioritize the neighborhoods of the city that are struggling most when it comes time to implement the program.

“We’re not going to use this to bail out a million-dollar house in Point Richmond,” Councilman Tom Butt said. “It’s going to be used in communities that have significant challenges.”

The resolution also includes direction to city staff to boost its efforts to partner with other interested cities to form a Joint Powers Authority.

Other cities that agree to partner with MRP to buy underwater mortgages in their communities could form a JPA with Richmond and act as one entity in court cases, according to city officials.

One lawsuit already filed against the city by Deutsche Bank and Wells Fargo over the plan was dismissed by a federal judge in September.

Aside from legal challenges, the foreclosure prevention plan could face a number of obstacles, Butt said.

With three councilmembers already voicing their opposition to using eminent domain, the council would not have the supermajority required to invoke the power.

Councilmembers Corky Booze and Jim Rogers both voted no on the resolution Tuesday and Councilman Nat Bates, who was absent, has said he would not support the use of eminent domain under the plan.

“There’s a lot of things that could sidetrack it … I still think this is a good thing and it’s something the city should be involved in,” Butt said.

Please click here to view the online article.

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.

Richmond, CA Eminent Domain Battle Expanding

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On December 8, SFGate published an article titled Richmond Mortgage Eminent Domain Battle Expanding.

Richmond mortgage eminent domain battle expanding

For Patti and Robert Castillo of Richmond, using eminent domain to prevent foreclosures boils down to a simple reality.

“We are living paycheck to paycheck just to pay the mortgage,” Patti Castillo said. Reducing their principal through eminent domain “would help keep money in our pockets and let us stay in our house.”

Their mortgage on a modest house now worth half of the $420,000 they paid for it in 2005 is among 624 home loans that the city of Richmond has threatened to seize via eminent domain in an effort to restructure them to be more affordable.

While homeowners like the Castillos welcome the idea, the banking industry loathes the idea of municipalities forcibly seizing mortgages and is vigorously fighting the effort. Last week, the American Civil Liberties Union filed a lawsuit against the nation’s top housing regulator, seeking information on whether it’s been unduly influenced by the banking industry.

The Federal Housing Finance Agency in August threatened possible legal action against localities that pursue eminent domain for mortgages, and said it might bar Fannie Mae and Freddie Mac from backing new home loans in those areas.

Now the ACLU’s lawsuit seeks to uncover “the nature of (the FHFA’s) relationship with the financial industry,” said Linda Lye, a staff attorney at the ACLU of Northern California. “Its unusual and very aggressive stance raises potential questions of governmental integrity.”

An FHFA representative declined to comment.

The eminent domain plan, in which cities would forcibly acquire mortgages at discounts, then help homeowners refinance into smaller, more affordable home loans, is at heart a form of principal reduction, Lye said.

“Principal reduction is very mainstream; there have been calls for it from entities including the secretary of the Treasury,” she said. “Communities like Richmond particularly interested in principal reduction are disproportionately minority. The FHFA should be treading very carefully and looking at whether its conduct has an extra impact on communities of color. The general concern is that they would be effectively red-lined.”

Banks filed lawsuits in August seeking to stop Richmond from mortgage seizures, but a federal judge dismissed them as premature. Richmond is the city furthest along in pursuing eminent domain for mortgages, but remains one City Council vote short of the supermajority needed to exert that municipal authority.

However, if Richmond or another city exercises eminent domain for mortgages, banks have signaled that they will rush to court seeking an injunction.

Growing interest
And banks may soon have other cities to fend off.

The City Council in Newark, N.J., last week unanimously voted to study eminent domain for mortgages. That followed a November move by fellow New Jersey town Irvington to conduct a similar study.

Steven Gluckstern, founder and chairman of Mortgage Resolution Partners, the private San Francisco firm that is providing funding and advice on Richmond’s eminent domain quest, said MRP does not have a formal relationship with those cities but is sharing information with them about how the plan would work.

“These efforts are bubbling up from the grass roots,” he said.

Several other California towns, including El Monte, Baldwin Park and Pomona (all in Los Angeles County), are considering the idea, he said.

A polarizing issue
However, both financial and political pressures continue to mount. In August, Richmond failed to find buyers when it tried to refinance some municipal bonds, an unusual snub that experts said was related to its eminent domain quest. Richmond will return to market with those bonds in January, said City Manager Bill Lindsay.

“The eminent domain program doesn’t affect our credit-worthiness or ability to pay debt service, but the fact that there are headlines about it makes it more expensive for us to borrow money.”

The expected cost of a higher interest rate is likely to be slightly more than $1 million over the 15-year span of the bond, he said. About a quarter of that would impact the city’s general fund; the rest affects various agencies.

Richmond sold $12.1 million of annual tax revenue anticipation notes, a standard way that cities get cash flow for operating expenses, on Wall Street last week. The city’s financial adviser said about $13,000 in additional interest costs might have been caused by “other factors including the headline risk associated with the mortgage risk reduction program,” Lindsay said.

In moves that could presage a congressional showdown, four U.S. senators last month wrote a strongly worded letter asking the administration to oppose mortgage seizures, while 10 U.S. representatives wrote letters supporting the plan.

Eminent domain for mortgages could “scare off private capital, dry up new mortgage credit, and harm investors and taxpayers,” said the opposition letter from senators Pat Toomey, R-Pa., John Boozman, R-Ark., Mark Begich, D-Alaska, and Heidi Heitkamp, D-N.D. “We are prepared to pursue a legislative solution.”

The support letter raised similar points as the ACLU lawsuit, saying refusal by government agencies to insure loans changed by eminent domain would constitute discrimination.

Meanwhile, for the Castillo family, staying put carries extra urgency, as their 24-year-old son, Leon, is severely autistic. Renting was difficult, with neighbors complaining about his vocal outbursts.

They can just swing the mortgage with Robert’s income as a diesel mechanic and the money Patti gets from In-Home Supportive Services for caring for Leon.

After seeing five neighbors lose their homes to foreclosure in recent years, the Castillos hope the city’s plan will work for them.

“If eminent domain doesn’t go through, we’re not going to be able to stay here,” Patti Castillo said. “We already feel the stress of raising a child with special needs. Losing our house would ruin our credit, and we’d lose our down payment. It would benefit Richmond to help keep people in their homes.”

Please click here to view the online article.

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.

NY Governor Gives Second Chance to Underwater Borrowers

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On December 10, National Mortgage News published an article titled N.Y. Governor Opts to Give Second Chance to Underwater Borrowers.

N.Y. Governor Opts to Give Second Chance to Underwater Borrowers

The New York Department of Financial Services is working on new legislation that would authorize and encourage “shared appreciation” mortgage modifications throughout the state.

DFS regulations would give a second chance to homeowners who may have been previously turned down for relief assistance.

Under the proposed shared appreciation modification, banks and mortgage servicers reduce the amount of principal outstanding on a borrower’s mortgage in exchange for a share of the future increase in the value of the home, DFS says.

“We will continue to explore new options to reach as many homeowners as possible and deliver relief to struggling families facing foreclosure,” says Benjamin Lawsky, superintendent of financial services, who along with Gov. Andrew Cuomo sees principal reduction as a win-win solution for homeowners “trapped in underwater mortgages” at much greater risk of losing their homes, the surrounding neighborhoods impacted by blight and investors.

Cuomo’s new regulations encourage banks and mortgage servicers to offer shared appreciation mortgage modifications to underwater homeowners facing foreclosure including those who are not eligible for existing federal and private foreclosure prevention programs.

Banks and mortgage servicers “must provide clear and prominent disclosures” to borrowers about the terms of the modification. Investors’ share of the appreciation will be limited to the lesser amount of the reduction in principal, plus interest or 50% of the amount of appreciation in market value.

Please click here to view the online article.

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.

NJ, ACLU, and Others Sue FHFA Over Eminent Domain Controversy

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On December 5, nj.com published an article titled N.J. ACLU, Others Sue Federal Agency in Brewing Eminent Domain Controversy.

Link to lawsuit.  Following is the aforementioned article.

N.J. ACLU, others sue federal agency in brewing eminent domain controversy

Irvington officials are considering using eminent domain to help residents stay in their homes. A March 2012 Star-Ledger file photo of a boarded up home.
 
IRVINGTON — The American Civil Liberties Union of New Jersey and the Brooklyn-based Center for Popular Democracy filed suit today against the Federal Housing Finance Agency in a growing battle for towns seeking to use eminent domain to seize underwater mortgages.

Last month, Irvington’s mayor announced plans to conduct a legal study of using eminent domain to help residents facing more than 1,700 homes foreclosures.

If town officials decide to proceed, Irvington would become the second town in the nation, after Richmond, Calif., to employ a tactic that’s drawn fire from Wall Street, according to Executive Director Udi Ofer of the ACLU of New Jersey, which endorsed Irvington’s announcement.

The 17-page suit, filed today in the U.S. District Court for the Northern District of California, demands that the FHFA disclose details about its relationship with banks and other financial institutions. The agency has threatened legal action against Richmond and other cities planning to use the eminent domain tactic and may deny credit to locals seeking mortgages, the suit says.

Corinne Russell, an FHFA spokeswoman, declined comment on the lawsuit saying the agency does not discuss pending legal matters.

The novel approach, dubbed as “friendly condemnations,” allows municipalities to use the power of eminent domain to seize mortgages, rather than homes, where homeowners owe more than the current value of the house.

Using money from private investors, Ofer said towns would pay the mortgage holders’ fair market value and then restructure mortgages into lower principal payments that are more favorable for homeowners. About 700 to 1,000 homes in Irvington could potentially benefit from eminent domain takeovers, according to Irvington Mayor Wayne Smith.

“For years, communities of color across the nation have been targeted by banks peddling toxic, subprime mortgages,” Ofer said. “This greatly contributed to the foreclosure crisis.” The FHFA “is suppose to help struggling homeowners who are attempting to stay in their homes and is not suppose to stand in the way,” he said.

On Wednesday, Newark’s city council voted unanimously for the city to conduct legal research and policy analysis as a step towards adopting a similar eminent domain strategy.

Filed under the Freedom of Information Act, which compels the government to provide copies of federal records, the lawsuit argues that the federal agency is trying to block municipalities from using eminent domain to prevent foreclosures. The FHFA regulates the mortgage giants Fannie Mae and Freddie Mac. The lending agencies control most mortgages in the U.S.

“We need to have imagination and we need to take proactive steps to save these people in their homes. It’s the American dream to have a home,” Wayne Bradley, Irvington’s business administrator, said. The township is still in a fact-finding phase in considering use of eminent domain authority to stem foreclosures, he said.

The suit says the FHFA never responded to an Oct. 1 FOIA request seeking information between the federal agency and members of the financial industry, including the Securities Industry and Financial Markets Association, American Securitization Forum, American Bankers Association and the Association of Institutional Investors.

The lack of response to the FOIA request prompted the lawsuit, which was filed by the Center for Popular Democracy and ACLU, as well as chapters in New Jersey and northern California. Those chapters filed on behalf of: New Jersey Communities United, New York Communities for Change, Alliance for Californians for Community Empowerment, the Housing and Economic Rights Advocates, Urban Revival Inc., The Colorado Foreclosure Resistance Coalition and the Home Defenders League.

The FOIA request also targets “correspondence, phone messages, emails, calendar entries, and notes or memoranda” between leaders of the Federal Housing and Finance Agency and representatives of several banks including Wells Fargo, Deustche Bank, Bank of America, Chase Citigroup and Ally Bank.

On July 31, the city of Richmond offered to purchase 624 underwater mortgages. In August, the suit says several banks filed suit against Richmond and the FHFA released a statement citing “serious concerns on the use of eminent domain to restructure existing financial contracts.”

Also, the financial industry and powerful lobbying groups have “vigorously opposed” the use of eminent domain, according to the suit.

The suit says that publicly revealing “the priorities and opinions of high-ranking FHFA officials, and the nature and substance of their exchanges with the financial industry” is an urgent concern.

Other cities considering the use of eminent domain to address foreclosures include San Francisco, El Monte, Calif., Seattle and Yonkers, N.Y.

Please click here to view the online article.

RELATED COVERAGE

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.

Newark, NJ Advances Eminent Domain to Slow Foreclosures

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On December 5, National Mortgage News published an article titled Newark Advances Eminent Domain Plan to Slow Foreclosures.

Please click here for prior reporting.  Following is the aforementioned article.

Newark Advances Eminent Domain Plan to Slow Foreclosures

Newark, New Jersey’s most populous city, is moving forward with a plan that could use government power to seize underwater mortgages to help homeowners reduce debt and avoid foreclosure.

The Newark City Council voted unanimously Wednesday to begin legal research toward a program of making market-value offers on the most toxic loans and reissuing them to homeowners at the lowered amount.

Governments have long used the power of eminent domain to force landowners to sell property for public uses such as highways, and for economic development. Cities in about a dozen states from California and Washington to New York and New Jersey are considering deploying it to help homeowners who owe more than their houses are worth, says Robert Hockett, a Cornell University law professor who advised local governments.

“It encourages banks and trusts that own some of these toxic mortgages to get them off their books,” says Paul Karr, a spokesman for New Jersey Communities United, an advocacy group for troubled homeowners. “In one sense, having the actual cash on hand at fair-market value is more valuable than having an underwater mortgage that’s probably going to go into foreclosure.”

Richmond, Calif., is furthest along in implementing the idea, which is also being worked on in Yonkers, N.Y.; Irvington, N.J.; and Seattle. Asset managers including BlackRock Inc. and Pacific Investment Management Co. and groups representing banks, real-estate agents and builders have objected, saying the move would unfairly hurt investors in the mortgages and damage communities by drying up lending.

In September, a judge dismissed a lawsuit by Bank of New York Mellon and Wilmington Trust Co. that sought to stop Richmond’s program, saying the case came too early to evaluate the legal merits. Bondholders of mortgage loans that Richmond threatened to seize asked a federal appeals court in October review the ruling.

In Newark, a city of 277,000 where one-in-four people live in poverty, there have been nearly 7,000 foreclosures since the housing crisis began in 2008, according to an April report from Karr’s group. Those homes have cost Newark an estimated $56 million for such activities as increased fire and police calls, trash removal and maintenance of abandoned and vacant homes.

“The fact that we, as a City Council, now have to consider this approach speaks volumes about the uncaring tone-deafness of the banks,” Councilman Darrin Sharif says in a statement.

Four U.S. senators, including Pat Toomey, R-Pa., have urged the Departments of Housing and Urban Development and Treasury to oppose the use of eminent domain to lower principle. In a letter to Secretary Shaun Donovan and Treasury Secretary Jacob J. Lew, the group said they should block the Federal Housing Administration from insuring the purchased mortgages.

“Eminent domain may be a local matter, but in the context of seizing mortgages, its use would have national consequences,” the lawmakers wrote in the Nov. 27 letter. “These local decisions could undermine the broad goals, shared by many in Congress and the Obama administration, of stabilizing our nation’s housing markets and drawing more private capital into the housing finance system.”

Please click here to view the online article.

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.

MI SB 35 Revises Fines and Penalties to Property Blight Violations

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In December, Michigan Senate Bill 35 was enacted, revising civil fines and penalties relative to property blight violations.  Servicers are exempt from the additional sanctions under SB 35.

Link to SB 35

Please click here for an analysis as passed by the Senate.

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.

MBA President: Resisting the Seduction of Housing Speculation

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On December 12, The Washington Times published an article titled STEVENS: Resisting the Seduction of Housing Speculation.

STEVENS: Resisting the seduction of housing speculation
Despite the recent revival of Fannie and Freddie, the market still needs reform

Capitol Hill has been awash recently with various ways to reform Fannie Mae and Freddie Mac, the government-sponsored enterprises, or GSEs. From Corker-Warner in the Senate to Financial Services Committee Chairman Jeb Hensarling’s Path Act in the House, there has been no shortage of ideas when it comes to determining the future of the secondary-mortgage market and the government’s role in housing.

This substantive debate about housing reform by Washington stakeholders comes on the heels of the GSEs making substantial profits and, as a result, private investors (namely, hedge funds) jockeying to benefit by buying large amounts of stock in both companies. Despite the intent and hope of these investors, reform of the GSE model is still needed now more than ever to ensure a healthy future for the real estate markets. The notion that long-term transformation should be avoided because a select few in the private sector have placed a bet on Washington’s inability to come together on substantive reform is foolhardy at best.

When the government was forced to put the GSEs into government conservatorship in 2008 or face unspeakable global economic meltdown, not many would have expected that five years later we’d still be discussing the preservation of all aspects of the failed GSE model. With nearly 90 percent of newly originated loans backed by either one of the GSEs or by the Federal Housing Administration (FHA), this current model of government dominance of the mortgage market is ultimately unsustainable.

Let’s face it: whether by congressional action or through the Federal Housing Finance Agency‘s ongoing efforts to shrink Fannie and Freddie, change is inevitable.

A successful secondary-mortgage market needs to produce a more stable and competitive system for all lenders. Transition to an improved system must retain and redeploy key aspects of the GSEs’ existing infrastructures, including certain operational functions, systems, people and business processes that have proven essential to smooth operation.

Specifically included in this new system must be an explicit government guarantee for mortgage securities, backed by a well-defined class of high-quality, single-family and multifamily mortgages; protection for taxpayers through deep credit enhancement that puts private capital in a first-loss position, with no institution too big to fail; and fair and transparent guarantee fees to create an FDIC-like federal insurance fund to serve as a backstop in the event of catastrophic losses.

There also must be a realization that in order to prevent disruptions to the day-to-day business activities of lenders and to ensure a fair, competitive and efficient secondary-mortgage market that ultimately benefits consumers, any new proposal must be carefully phased in.

All this discussion of reform should not discount what Congress and the Obama administration have done to protect consumers and provide more transparency in real estate finance transactions. The Dodd-Frank Act was successful in ending the abusive era of no documentation, no down payment and unsustainable products, as well as eliminating troublesome and predatory subprime lending from the system.

There are still concerns, though. Uncertainty and conflicting regulations continue to plague the real estate finance system. As a result, hardworking families who saved for years to afford a down payment still cannot obtain a loan, credit is tight unless you are a high-income earner with an immaculate credit history, and the American dream of homeownership is quickly becoming a hope rather than reality for millions of middle-class families.

Reform is often met with skepticism. However, we are at a critical juncture in our nation’s history. We’ve braved this last recession with great alacrity and are well positioned for what lies ahead. As we forge onward, let us create an economy and real estate finance system that protects taxpayers, consumers and investors, and offers the dream of prosperity for decades to come.

David H. Stevens is president and CEO of the Mortgage Bankers Association.

Please click here to view the online article.

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.