Senate Approves Measure to Reduce Home Foreclosures

May 7, 2009 - Today the New York Times reported that once again the Bankruptcy Reform Bill was tossed away - but the Senate did vote to approve the foreclosure situation somewhat with new legislation. Did anyone make note of the results of the last legislative efforts from last summer and called, "Hope for Homeowners"?

It's somewhat buried within the following article, but I quote here: "Only one mortgage was modified (emphasis added) under the program, which lawmakers had hoped would help as many as 400,000 homeowners." HELLO! Please read more below. Thank you New York Times for the report. Found at http://www.nytimes.com/2009/05/07/us/politics/07housing

Senate Approves Measure to Reduce Home Foreclosures
By DAVID M. HERSZENHORN

WASHINGTON — The Senate on Wednesday approved a bill that would expand federal efforts to prevent mortgage foreclosures, shield mortgage service companies from lawsuits if they participate in federal loan modification programs, and give renters of foreclosed properties at least 90 days’ notice before eviction.

The bill included an expansion of federal efforts to combat homelessness, which has risen during the economic downturn.

The Senate bill, however, did not include Democrats’ most ambitious proposal to aid troubled homeowners: a provision that would have allowed bankruptcy judges to modify the terms of primary mortgages. That provision, championed by Senator Richard J. Durbin, Democrat of Illinois, failed last week to get the 60 votes needed to advance.

The broader housing measure, which the Senate approved on Wednesday, 91 to 5, must now be reconciled with similar legislation approved by the House in March. The House version included the bankruptcy provision but the speaker, Nancy Pelosi, said it would be removed.

So far, the federal programs to reduce foreclosures have largely fallen flat, particularly the Hope for Homeowners program approved by Congress last summer. Only one mortgage was modified under the program, which lawmakers had hoped would help as many as 400,000 homeowners.

The new Senate bill does not include additional money to aid mortgage borrowers, but it does draw $2.3 billion from the Treasury’s $700 billion financial bailout fund for various provisions.

The bill also would increase the borrowing authority for the Federal Deposit Insurance Corporation to $100 billion from $30 billion, a move that will save banks billions of dollars by reducing the extra premiums that they would have had to pay to shore up the deposit insurance fund.

The bill also extends through 2013 the $250,000 maximum value of deposits insured by the F.D.I.C. Before the financial crisis, the maximum amount insured had been $100,000.

“This bill is principally designed to provide that long sought-for relief for people who are facing foreclosure,” Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, said at a news conference after the vote. “The bill does other things, but certainly, a major target is to deal with peoples’ housing issues and try to stem the tide.”

Senator Jack Reed, Democrat of Rhode Island, a main proponent of the bill, had a strong role in the homeless prevention provisions and others that would give the Treasury secretary more latitude in deciding when to use taxpayer money to buy stock in financial institutions receiving bailout assistance.

Mr. Reed, at the news conference with Mr. Dodd, stressed the effort to fight homelessness. “We’re facing the greatest crisis in homelessness since the Great Depression,” he said, citing news accounts of tent cities appearing.
The Senate bill would provide $2.2 billion for homelessness assistance and up to $440million for prevention.

NYC Budget Update - As reported by NYSAR

City budget update
On April 1, 2009, City Council Speaker Christine Quinn released the council’s Fiscal Year 2010 Preliminary Budget Response. This document is a result of a month of testimony by city agencies and the public.

The council projects an even bleaker fiscal picture for New York City, forecasting tax revenue in the current and next fiscal year to be $438 million lower than the mayor’s estimates. The council also projects that revenues from the real property transfer tax and mortgage recording tax will decrease 43.4 percent and 48.6 percent, respectively, in the current fiscal year with further declines anticipated in Fiscal Year 2010.

The mayor will release his executive budget by April 30, 2009, whereupon the city council will hold another series of public hearings. The fiscal year 2010 budget must be passed by June 30, 2009.

Latest Bankruptcy Conference in New Jersey

So Friday found me blurry eyed having worked all night prior at my Manhattan office - driving to a nine a.m. bankruptcy conference to learn what's new and exciting.

OK, I can think of a hundred at least other ways of spending my time - no less working on something else - than attending another bankruptcy conference. But I seem to never stop having to know more about what is going on. What if anything is changing in this market? How can I learn something else that can be of use...

So - a few things to report. The Third Circuit is sypathetic to debtors. That's the good news. The bad news - take a look at the means test requirements. That's enough to make anyone take pause, no less an attorney as to why and how a person can qualify to file bankruptcy. The link I've given here to the New Jersey Bankruptcy Court page has some valuable information for homeowners and others who find themselves distressed by their current economic problems.
http://www.njb.uscourts.gov/ The bankruptcy legislation that I spoke about in my last post is still of the utmost importance to be passed. Please read - write, call, e-mail your representatives in support of this legislation.

On another subject - somewhat related - what about just walking away from real estate property that can no longer be afforded?

I am frankly amazed at the number of phone calls I receive from people thinking that the bad investments they have made in real estate should somehow just be forgiven and forgot by everyone involved in them. I imagine that folks think that how easy it was for them to be wrongly qualified to purchase - it should be just as easy for them to walk away from it. Something akin to - you thought I could afford this - well I can't - so here, take it back and don't bother me again.

It isn't so easy. So....if you find yourself in that situation - please call my office and let's talk about what options may be available...212.461.4240.

Let's talk soon.

TELL YOUR SENATORS TO SUPPORT SENATE BILL 61; THE HELPING FAMILIES SAVE THEIR HOMES IN BANKRUPTCY ACT OF 2009

Over 6,600 American families a day are losing their homes to foreclosure. In the next five years, over 8,000,000 American family homes will be lost to foreclosure, unless we do something now. If we don’t, the value of all of our homes will keep going down and our neighborhoods will suffer.

DON’T LET THE BANKS BLOCK THIS NO-COST ACTION TO SAVE FAMILY HOMES AND OUR COMMUNITIES AND HELP RESTORE OUR NATION’S ECONOMY

Our Senators have the opportunity to pass legislation that would allow courts to change bad mortgages so struggling homeowners can save their homes from foreclosure. The result? Fewer foreclosures and more stable home prices for all of us.

Tell your Senators to support Senate Bill 61 - the Helping Families Save Their Homes in Bankruptcy Act of 2009. Reduce home foreclosures at no cost to taxpayers.

Call your United States Senators toll free: 877.354.4958
Or email them at: www.nacba.org/TellCongress

The mortgage modification proposal has been endorsed by leading economists, 22 state Attorneys General, state and local elected officials, newspaper editorial boards from around the country and nearly 100 leading national organizations representing seniors, consumers, religious affiliations, financial professionals, working families, and civil rights and housing groups.

Provided for by the National Association of Consumer Bankruptcy Attorneys, Inc., a nationwide organization dedicated to protecting the rights of honest, hard-working, financially distressed Americans. Go to www.nacba.org/S61 for more information about the bill and how you can help get it passed.

In today’s Wall Street Journal, http://online.wsj.com/home-page there is a superb article by Nick Timiraos titled, “Mortgage-Assistance Program Offers Disparate Treatment Depending on Goals and Circumstances”.

With respect to the full article, I am excerpting a small section of it because it details important components of the program. Mr. Timiraos writes:
….
The program has two main components. One provision will allow diligent borrowers who are current on their mortgage payments but have little or no equity in their homes to refinance their first mortgage to take advantage of current interest rates, which have fallen to near record lows. That is designed to allow responsible borrowers -- mainly those who have been hurt by falling home prices -- to benefit from the current climate. Lenders won't refinance borrowers who don't have equity in their homes.

The second component involves modifying mortgage loans to lower monthly payments to 31% of the borrowers' gross monthly income, mainly by reducing the interest rate on the loan. This effort would target borrowers who are falling behind on their mortgage payments or who are in danger of falling behind. The government will provide financial incentives to lenders and mortgage servicing companies to encourage them to offer the reduced payment plans, which last for five years.

But as with any broad effort, homeowners are treated unevenly in the programs. The refinance provision is open only to borrowers who have loans that are owned by Fannie Mae or Freddie Mac. That excludes large numbers of borrowers with subprime and other exotic mortgages sold to investors; and borrowers with so-called "jumbo" loans that are too large for government backing. Those groups will be eligible for the modification part of the plan, but only for loans up to $729,750.

Borrowers who owe more than 105% of the current value of their home also won't be eligible for refinancing. That means that fewer borrowers in the nation's most over-heated housing markets, including California and Florida, and in some of the most depressed market in the Midwest can take advantage of the program. "Most of the people we serve are too far underwater to take advantage of this," says Dan Elsea, a mortgage broker in Detroit.

Nationally, 25% of mortgage holders have conforming loans that are within the 80% to 105% loan-to-value ratio needed to qualify for the program, according to real estate Web site Zillow.com. But that number falls in certain high-cost housing markets that have seen big price declines. In Los Angeles, for example, just 9% of mortgage holders are eligible to refinance, while 8% of conforming borrowers are too far underwater, according to Zillow.com.
….

Open Letter to our Legislators

As my elected official, you should know that I strongly support President Obama's initiatives to help millions of American homeowners and reduce the massive wave of home foreclosures that are fueling today's national economic crisis. I urge you to adopt the President's plan to prevent home foreclosures that do not need to happen. A key part of the Obama plan would permit distressed homeowners to seek home loan modifications in bankruptcy court.

I do not think that what has been tried so far to stop the foreclosure crisis is working. If families are going to stay in their homes and avoid foreclosure, it seems clear that court-supervised mortgage modifications are necessary. We have wasted too much time already on half measures and other dead-end efforts that have done nothing to slow down the runaway foreclosure crisis.

I particularly like the judicial modification approach because it can prevent hundreds of thousands of foreclosures without spending one penny of taxpayer money. Is it too much to ask that you take this no-cost action for homeowners? After all, you have seen fit to spend billions of dollars on bailing out banks, car companies, brokerage firms and other corporate giants. It's time that we face facts: We can't end the financial crisis without ending the rising tide of foreclosures.

At a time when an estimated 6,600 families are losing their home to foreclosure each and every day, there is no time for delay. I urge you in the strongest possible terms to support this urgently needed legislation.

American families are reeling under the weight of the recession today. At a point where you can help lighten that load and save the homes of many Americans, I am asking you to support judicial modification of mortgages. This nation needs to put the housing crisis behind it.

As my elected official, you can be assured that I will be watching with great interest to see how you come down on this issue of great importance to my family, my neighborhood and my community.

Please keep me informed about how you vote on this important issue.

Sincerely,

Michele A. Peters, Esq.

Partying on with our money!

Another bailout pays for their party. Did you know?

The Northern Trust Company has recently received $1.6 billion from the citizens of the United States as part of the government's bailout program.
Recently, the Northern Trust spent millions of dollars to sponsor a golf tournament (The Northern Trust Open at the Riviera Country Club in Los Angeles). In connection therewith, the company incurred the following expenses:

• Airfare for hundreds of clients and employees to Los Angeles.
• Hotel rooms, including rooms at very upscale properties, for hundreds of people.
• Dinner and cocktail parties.
• Chicago concert.
• Earth, Wind, & Fire concert.
• Sheryl Crow concert.

Northern Trust responded that it did not ask for the $1.6 billion but took it only to help the government reach its goal of having the participation of all major banks. It should be noted that Northern Trust is also current with its repayment plan. See Bailout Bank Blows Millions Partying in L.A., TMZ.com, Feb. 24, 2009; Stephen Bernard, Northern Trust faces scrutiny for event spending, AP, Feb. 25, 2009; and Northern Trust, An Open Letter to Northern Trust Shareholders, Clients and Staff, Feb. 24, 2009.

Why do I post this? Because I RESENT my tax dollars going to these institutions. If any corporation is in need of our "bail out" dollars - they should be in bankruptcy and under the supervision of the court and the U.S. Trustees who will ensure that the money goes to the proper places.

6 things to know about the Economic Stimulus package

Here are six things you need to know about the Economic Stimulus package which includes the much discussed - $8,000 first-time home buyer tax credit.

1. Eight grand, new first-time home buyers: The tax credit included in the economic stimulus legislation is much narrower than the original proposed amount. This credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. It does not have to be repaid.

2. First time buyers defined: For the purpose of legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before purchasing a house. (The date of purchase is considered the day that title is transferred.) If you have owned a vacation home--but not a principal residence--within the past three years, you would still qualify for the credit. You would have to prove where your principal residence has been during that time.

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability.

6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

What a Difference 4 Months Make

On this very historical Martin Luther King Jr. Day - the eve of Barack Obama's inauguration, the feeling in the City is optimistic for the first time in many, many months.

The snow is falling and still there is a smile on so many New Yorkers' faces. We can all use a good dose of optimism and I welcome our new administration with open arms.

Crashing into Christmas

I love the day after Christmas where I'm usually found hanging around the house in my slippers and robe. I can quietly enjoy the day after all the whirlwind of festivities and take the time to reflect on what has happened and what may happen in the new year.

Manhattan real estate has been absolutely amazing over the past three months. It's as if - again - "the sky is falling" syndrome has returned. I love taking the time to think how to restructure and organize our business so we can change with the market. Because that is afterall the key to success - be changeable with the times.

By my side is Charleston (my faithful dog), who is essentially sleeping off the doggie treats he has been enjoying. He's encouraging me to do the same.

I wish everyone a wonderful holiday and I look forward to learning more in the new year.