Saturday 07-09-11

Mortgage Aid for Unemployed Expanded

The Obama administration will require mortgage companies to extend more generous mortgage relief to help certain unemployed borrowers from losing their homes to foreclosure.

Under policy changes announced Thursday, mortgage companies that collect payments on loans backed by the Federal Housing Administration will be required to offer 12 months of forbearance for qualified unemployed borrowers. Currently, out-of-work borrowers with these loans can receive a minimum of four months without mortgage payments.

Firms that participate in the Obama administration’s Home Affordable Modification Program will also be pressed to offer up to 12 months of forbearance for unemployed borrowers, though that effort could be stymied by regulatory or contractual rules.

Housing officials said the changes could help tens of thousands of borrowers. Housing Secretary Shaun Donovan said he hoped it would “push the mortgage industry” to amend their offerings.

The foreclosure crisis was initially driven by adjustable-rate mortgages that were resetting to sharply higher payments, but over the past three years, far more homeowners have faced foreclosure because they have lost their jobs or seen their income fall. Many of those borrowers can’t easily sell their homes if they get in trouble because they owe more than the properties are now worth.

Officials said the change was prompted by a slow economic recovery that has seen longer stretches of unemployment than in past downturns. “We’ve been looking for ways we can go farther to help borrowers,” said Mr. Donovan.

Around 3,500 borrowers with FHA-backed mortgages fall behind on their payments every month due to unemployment, housing officials said, and around 17,000 borrowers last year had been offered some type of forbearance. HAMP offers a three-month break in loan payments for unemployed borrowers and has helped around 10,000 homeowners since the program began last August.

Borrowers who receive loan forbearance, where principal and interest payments are temporarily suspended, will ultimately have to pay back the past-due balance after the forbearance period ends.

At a White House town hall event on Wednesday, President Barack Obama conceded that housing has become the “most stubborn” economic problem facing policy makers. “We’ve had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up,” he said.

The program won’t apply to loans backed by housing-finance giants Fannie Mae and Freddie Mac, which are under government control but answer to a separate, independent regulator. The firms offer their own forbearance programs and own or guarantee nearly half of all U.S. home loans. The FHA, by contrast, backs less than 10% of all outstanding mortgages.

The Obama administration has separately committed $7.6 billion in funds from the $700 billion Troubled Asset Relief Program to target housing relief in 18 of the “hardest hit” states. Most states have used some of that money to provide bridge loans so that unemployed borrowers can make mortgage payments.

A separate program, funded with $1 billion through the Dodd-Frank financial-overhaul law, allows unemployed borrowers in 27 other states to receive interest-free loans to help make mortgage payments worth up to $50,000 for up to two years. Applications for that program are due July 22.

http://blogs.wsj.com/developments/2011/07/07/mortgage-aid-for-unemployed-expanded/

Administration to propose steps on gun safety

Six months after Rep. Gabrielle Giffords was shot, the White House is preparing to propose some new steps on gun safety, though they're likely to fall short of the bold measures activists would like to see.

Spokesman Jay Carney said that the new steps would be made public "in the near future." He didn't offer details, but people involved in talks at the Justice Department to craft the new measures said they expected to see something in the next several weeks. Whatever is proposed is not expected to involve legislation or take on major issues, like banning assault weapons, but could include executive action to strengthen the background check system or other steps.

"The president directed the attorney general to form working groups with key stakeholders to identify common-sense measures that would improve American safety and security while fully respecting Second Amendment rights," Carney said Thursday. "That process is well under way at the Department of Justice, with stakeholders on all sides working through these complex issues, and we expect to have some more specific announcements in the near future."

Anti-gun groups have been disappointed to see no action so far from President Barack Obama, who supported tough gun control measures earlier in his career but fell largely silent upon becoming president. Some activists were using the opportunity of the six-month anniversary of the Giffords shooting on Friday to speak up.

The shooting rampage in Tucson, Ariz., killed six people and wounded more than a dozen others, including Giffords. Two months later, Obama wrote an opinion piece in Giffords' local paper, the Arizona Daily Star, calling for "sound and effective steps" to keep guns out of the hands of criminals, including strengthening background checks. So far the president has done nothing and administration officials have signaled that no major steps should be expected, given the climate in Congress against gun legislation of any kind.

That's not stopping activists from pushing Obama. The group Mayors Against Illegal Guns, headed by Boston Mayor Thomas Menino and New York Mayor Michael Bloomberg, sent Obama a letter calling him to act.

"To prevent the next Tucson, we need a comprehensive background check system, which is what the president called for in April," said the director of the mayors' group, Mark Glaze. "That said, there are many steps the president can take on his own authority, without new laws, that could make a very real difference."

The group's suggestions included enforcing reporting laws that could have stopped the Tucson shooter from getting a weapon.

http://wtop.com/?nid=209&sid=2429735