Week in Review - Congresswoman Susan Davis

Week In Review – What’s Going on Now

1) Last week I helped teach a Loan Modification Seminar at the San Diego Association of Realtors. My class outline was uploaded to macplan.blogspot.com

2) Last Saturday I, along with Janelle Riella the San Diego Association of Realtors Director of Government Affairs and a couple of others, met with Congresswoman Susan Davis in her San Diego Office. Here are the results of the meeting:

A) I told her about how self-employed people are being left out of the buying and refinancing market because the Federal Reserve Rule and other federal and state legislation that include the Ability to Repay provisions, meaning the only way self-employed people can get a loan is if they don’t write off any business expenses so that their gross income is the same as their net. These underwriting guidelines are a de facto tax against the small business person and takes the self-employed person out of the potential buyers pool.

B) I explained to her that the effects of not having loan programs available to upside down borrowers. Those people are generally stuck with no good options right now, except short sales, foreclosures or loan modifications which in most cases don’t make sense. People that are upside down have effectively lost their freedom to move about….they in most cases cannot buy another property. This, along with the inability of self-employed borrowers to quailify, shrinks the potential pool of buyers which is ultimately bad for the market. She said that she, along with Barbara Boxer, has written a letter to the appropriate people to get the 105% LTV limit in the Obama plan raised to 125%. I told her that that was a good start, however the Obama plan will have a hard time working in the first place because of mortgage insurance issues.
The bottom line is that I suggested some solutions to the problems such as having the GSE’s provide warehouse lines to the non-bank lenders, developing a program that would allow upside down borrowers to buy another property but carry their other debt with them so that their will be no moral hazard but that would allow potential upside down sellers to get out of their homes without bad marks or foreclosures on their records, institute a mortgage insurance premium program within the GSE’s (much like FHA MIP or the VA Funding Fee) to make up the difference and the slack that the currently under-capitalized Mortgage Insurance companies are causing and unable to pickup, institute a program to roll the non GSE Loans into Fannie and Freddie on a Streamline program based on previous mortgage payment history (the loan is a performing asset).
Congresswoman Davis was very sincere about us putting these and other solutions down in writing and said that although she was not on the House Financial Services Committee she knew people that were and she said that she would make sure they got our list.


3) Status of the MACPLAN – Real Mortgage Reform: We gave Susan Davis the initial draft of the plan and are working on another version with all of the solutions that I have collected. There obviously has been a lot going on with the Treasury, Fed and Administration so any plan that we finalize will have to work under the current political and regulatory climate. I hope to have something by the end of this week…then have a meeting to discuss it….vet it out….then proceed with the final version.

4) Yesterday I was invited to a Real Estate Roundtable hosted by George Chamberlin at the San Diego Daily Transcript with economist Dr. Alan Gin, economist Alan Nevin, and one of our own mortgage brokers in San Diego Mark Goldman, among others. For more on that go to www.sddt.com. It was an honor being invited and participating with that group of people.

That is all I have for you now. Have a good one!

Loan Modification Seminar Notes

Spoke to: the Deputy Commissioner of the DRE, All local congressional staffs, the DA's office and the FBI regarding the modification issues and overall mortgage fraud.
1) Federal and National Level –
A. Current Atmosphere surrounding Obama’s Plan and the Industry:
1) Lawmakers getting calls off the hook about bad modification companies
2) Lawmakers: some understand there is a problem but don’t know how deep, some understand the problem and how deep but don’t know what to do, some understand the problem and think they have solutions but don’t know how to sell them to their colleagues.
3)Anti-California Attitude More Prevalent than ever - We caused the collapse of their 401ks….why should they help us out
4) Foreclosure issue is mainly in 43 states but centered in 3 CA, NV and Florida
5) There will be a further backlash against people and the states that are getting bailed out as the moral hazard issue becomes more prevalent. In the form of new laws.
6) SAFE Act making level of financial responsiblity to stringent....if licensed revoked for loan mods no chance of doing loans again
B. Obama’s Plan - is the result of compromise with the 47 other states and government agencies and is made up of at least 2 parts: Loan Modifications and Refinancing, in addition to the Treasury activity of monetization.. It is only the 1st step.
2) State Level -
A) Sacramento Capitol workers work in Foreclosure Atmosphere, brokers, lenders, Realtors and builders are all targeted for new legislation
B) 81 new bills mentioning mortgages
C) SB 94 if passed would outlaw all upfront fee agreements
D) SB 239 would make it a felony with automatic 2-4 years prison sentence for borrowers and industry participants who commit loan fraud. No Wobble rule and is due to growing moral hazard backlash.
E) AB 260/1830 would prohibit realtors from getting a listing they did a bpo on and prohibit brokers from soliciting their clients for refinances for a period of 1 year.
NOW KNOWING THIS ENVIRONMENT
STILL WANT TO DO LOAN MOD's

Per the DRE Commissioner- Foreclosure Rescue Fraud and Loan Mod Fraud on Top:
1)About 300 companies have received No Objection letters to do loan mods, published on DRE Website (watch the advertising)
2)DRE has looked at over 1200 applications (brokers filling them out incorrectly)
3) Task force of DRE, District Atty's, State Attorney General, and HUD are closing down loan modification shops (Lodi)
4)Any Broker or Attorney taking upfront fees for loan modifications has to be DRE approved
5) All upfront fees have to be deposited into a trust fund...not an escrow
6)Brokers who have approved upfront fee agreements will recieve surveys asking for info on fees collected, disbursed, customer name, outcome, trust fund documents. This survey must match trust fund.
7)DOC Brokers cannot do loan mods
8)Approximately 1700 attorney's being investigated by the state bar per another source
Rules of Professional Conduct Codes 1-310, 1-320 in regards to fee splitting and running and camping ,3-110 attorney's have to be competent in performing legal services
9) If an attorney hires a realtor or broker to do loan mods they have to be on salary...not per transaction
10) NOD Filed - Only an attorney can get an upfront fee
11)State Bar Association - Ethics Alerts...for more info
12) brokers not accepting upfront fees can be paid at the end of the transaction...some attorney's my differ with that opinion by instituting installment plans, but that is a risky proposition.
KNOWING THIS, STILL WANT TO DO LOAN MODS?
Per the OCC, 37% of loan mods defaulted within 3 months, 55% after 6 months and 58% after 8 months. Thus another reason for no upfront fee agreements and the crackdown on them. At the end of 2008 91.47 (92%) of all loans were current or performing.
STEP-BY-STEP WHAT WOULD I DO FOR A DISTRESSED CUSTOMER
1) Have a ready list of attorney's that are experienced with loan forensic issues, bankruptcy law, and tax laws. Have a list of CPA's and financial planners readily available for any fallout that may occur. Depending on the results of my first meeting with the customers, I would not take on a loan modification, short sale or deed in lieu of foreclosure without having the customers consult with those professionals first before I proceed.
2) Get copies of original loan documents- check for any loan potential loan fraud or misrepresentation for the loan in question. If you don't know how to check...stop...and don't go forward with the loan mod or short sale on your own. The advice yout give your clients could put them at risk if you don't know the ramifications.
3)Based on the documents you recieve there are several options:
A) Foreclosure
B) Short Sale
C) Deed in Lieu of Foreclosure
D) Loan Modifications
E) Possibly staying and renting after foreclosure
F) Refinancing
Ramifications of Choices:
Once A-E are introduced, a case is opened with the lender. Whatever information the borrower gives the lender at the point could be potentially used against the borrower at a later date by both the lender and other authorities. That is why any decision to proceed for any borrower whose lender could potentially have a case for misrepresentation needs to be backed up, in my opinion, by other professionals such as attorney's and accountants. Going into whatever transaction is deemed appropriate, everyone needs to be on the same page....up until the timing of the bankruptcy if necesary.
4) Implementing Obama's Modification and Refinancing Plan:
A) Get copies of original loan documents and accumulate all of the facts about the customer' situation.
B) Find out if the customer's loan is FNMA or Freddie Mac Owned or guaranteed
1) Have customers call their loan servicers with the phone number on their billing statements
2) go to makinghomeaffordable.gov...this can walk you through the whole process
http://www.fanniemae.com/loanlookup
http://www.freddiemac.com/mymortgage
C)If the loan is GSE related have the customer ask if their loan is eligible thru their servicer for the Home Affordable Refinance and ask for a rate quote. Most lenders should start rolling out the program around April 4th and enhancements will continue until May 2nd. Some lenders won't offer it.
D)After getting a rate quote from the servicer don't necesarily think that is the best deal, shop around. Remember, the program will take take time to impleemtn will every lender
E) If the loan is FNMA or Freddie Mac owned, serviced, or guaranteed it has a chance to be modified or refinanced under the Obama Plan. If the loan is not GSE related then as of now the only option is to do a loan modification with the current servicer
F) If the loan is GSE related, try for the refinance 1st and if it doesn't qualify consider the loan modification
G) Refinance issues to think about -
1) some lenders may not participate, it is a voluntary program
2) mortgage insurance issues can be a road block
3) 105% LTV is just the start....probably will be increased after initial implementation, most people in San Diego that bought in the since 2005 are far more upside down. Per NAR 43% of US Homebuyers in 2005 put no money down.
4)only good for owner-occupied (investors are bad?)
5) 36% DTI may be too low although the program does allow for exceptions
H) Loan Modification Plan
Goal is to get to a 31% piti debt ratio to prevent re-defaults:
1) reduce rate at 1% intervals until it reaches a low of 2%
2) if that doesn't work spread the payments out to a 40 year fixed
3) if that doesn't work reduce the principal
4) Lenders Come up with Net Present Value to see what is best for them(foreclosure, short sale, loan modification, refinancing, selling the note individually or in bulk, selling property in a bulk REO sale, auction). They will go with what they think limits their losses the most. Every lender is different and there is movement to have one formula to figure NPV. Most NPV's are figured by loss mitigation people that are out of the area and may not have the local expertise to come up with a legitimate NPV. Give them as much supporting info as you can that would help your case. They also will look to see if their has been any initial loan misrepresentation....if they think there was then theycould try to recoup losses in other ways.
Issues with this plan and other Modifications:
1) Still Voluntary with lenders
2) Delays the inevitable in most cases
3) Prohibits Freedom Of Movement - Less Transactions, bad for the economy. Any debt deferred by this plan is payable at a later time...in the form of a balloon payment or higher rates or payments after a certian amount of time.
4) Only good for owner-occupied
5) Moral Hazard....could put neighbors against each other
6) The 31% DTI level for the piti in California will be hard to reach....and if fully implemented for loans going forwarded could help drive down the real estate values further
7) Could make one lose his security clearance
I) If you don't feel comfortable send them to the Hope Now Alliance or Community Housing Works
Conclusion: Be good and focus on Real Estate or Loans...stay away from modifications!


WEBSITES
makinghomeaffordable.gov (loan refinance and modification eligibility)
www.fanniemae.com/loanlookup
www.freddiemac.com/mymortgage
www.efanniemae.com(loan and modification guidelines)
www.freddiemac.com
www.dre.ca.gov
http://www.dre.ca.gov/mlb_adv_fees_list.html (list of No Objection Letter companies)
www.995hope.org
www.chworks.org (Community Housing Works)
macplan.blogspot.com

The MacPlan - Real Mortgage Reform (In Process)

1) We need loan products that are made available to people that are currently making their payments on time but are upside down by more than the 105% that the Obama plan has in store…the people that are upside further than that need access to the lower rates for several reason including giving them some incentive to stay in the property.
2) We need to make the $697,500 loan limit permanent and so that borrower’s, banks, the bond traders and the GSE’s can all plan long term. We suggest making these limits consistent nationwide so that it the higher loan amounts can be easier to administer….rather than having different loan limits in 250 different metropolitan areas.
3) The higher loan limits have to be implemented in a way borrowers can actually utilize them. The program, underwriting guidelines and rates should be the same for $697500 as they are for $417,000 and below
4) I suggest even higher loan limits for Super Jumbo loans that would bring liquidity back to the high end market thus hopefully prevent some preventable foreclosures. This could be a tiered system with the $697500 being the 1st tier, followed by Tier 2 $697,500-1,000,000, followed by Tier 3 which would be 1-2 Million Dollars. Each tier would have tougher guidelines and higher rates…but at least those borrower would have something to better their positions long term. They are, for the most part, stuck with what they have right now.
5) Loan Modifications are a good idea but only if they provide long term solutions. Currently most loan modifications are written from 1-5 years. I believe that the best loan modifications would be for 30, 40 or 50 year terms while taking advantage of today’s low long term treasury prices. Without long term loan modifications we will be re-visiting our current problems….we will be just postponing the inevitable….and the pain will be a lot worse later than it is now.
6) Most stated income or low documentation programs have been banned which is killing the small businessman and self-employed borrowers across the board. We need to bring back low documentation programs for self-employed borrowers that are based on good credit, good assets, and a good Loan to Value of 80%. This will allow more self-employed people to go out and buy new homes, and will also allow self-employed people that currently own a property an opportunity to better their financial position by taking advantage of the low interest rates by refinancing. Currently self-employed people are stuck because the stated and low income documentation loans they used to purchase their properties are no longer available. So there is no way for them to better their position…or buy new a new property….which in turn takes the self-employed out of any buyer pool which makes it harder to sell a property.
7) We should recognize the difference between a real estate investor and speculator and make programs available for the real estate investors to have them also be able to take advantage of the lower rates. Most speculators basically got into the market in the recent past with no real knowledge of the art of real estate investing and they tried to flip properties and got stuck. Many real estate investors are just mom and pop, husband and wife and have 1 or 2 properties…and probably have owned the properties for years….however they are being made into villains in this whole mess. They should be afforded the same access to low rates or loan modifications that are currently only being worked on only for owner-occupied properties.
8) The FHFA, HUD, Treasury, The Fed and Congress all have to work better together. It doesn’t make sense for the Treasury to be using TARP money to buy Mortgage Backed Securities with the goal of lowering interest rates while at the same time FHFA (the GSE’s of FNMA and Freddie Mac) are increasing their loan fees which effectively offset the lower rates that the Treasury is trying to accomplish.

One last point, the mortgage insurance companies either need to be re-capitalized so that FNMA and Freddie Mac loans can be made for over 80% LTV in San Diego….and if they can’t get capitalized I suggest that the FHFA develop its own insurance that could be passed onto the borrowers much like the FHA insurance model or even how VA Loans have been insured in the past. FNMA and Freddie Mac can utilize this insurance for loans higher than 80% LTV in the absence of the other more traditional mortgage insurance companies. This would help to stabilize the market and give more options to the customers other than just the FHA Product which would have different qualifications than the FHFA products.

CAMB Economic Forecast

There are over 2000 CAMB mortgage professionals all over the State of California. As a result, they provide a grass-roots view of the real estate and mortgage markets. Here is a summary of member opinions about these markets:

50% do not expect stabilization of their real estate markets until 2010
54% expect sales concessions to increase
77% expect an increase in foreclosures
64% expect an increase in housing affordability
50% expect no increase in the types of loan products offered this year, with the vast majority expecting FNMA and FHA 30 year fixed loans to be prevalent
62% think that the Obama administration will have a positive effect on the real estate market and stabilization of the real estate industry

Integrity in the lending process: CAMB members speak out
The overwhelming majority of respondents to our survey have been in the mortgage business for more than 10 years and own their businesses. Hence, they have a long-term perspective on the industry and a vested interest in the health of the mortgage financing system.
69% feel that loan modifications should be heavily regulated
Respondents call for tougher licensing and screening requirements for those who wish to be in the mortgage industry
Respondents call for better reporting mechanisms for industry members who commit fraud or engage in unethical behavior
Most respondents think that the return of simpler loan products and more stringent underwriting standards will prevent many of the abuses that have occurred in the recent past
Respondents emphasize the need for more consumer education and strict enforcement of existing consumer protection laws

A Drinker's View of the Financial Crisis

Heidi is the proprietor of a bar in Berlin. In order to increase
sales, she decides to allow her loyal customers - most of whom are
unemployed alcoholics - to drink now but pay later. She keeps track of the drinks
consumed on a ledger (thereby granting the customers loans).


Word gets around and as a result increasing numbers of customers flood
into Heidi's bar.

Taking advantage of her customers' freedom from immediate payment
constraints, Heidi increases her prices for wine and beer, the most-consumed
beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank
recognizes these customer debts as valuable future assets and increases
Heidi's borrowing limit.

He sees no reason for undue concern since he has the debts of the
alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these
customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These
securities are then traded on markets worldwide. No one really
understands what these abbreviations mean and how the securities are guaranteed.

Nevertheless, as their prices continuously climb, the securities
become top-selling items.

One day, although the prices are still climbing, a risk manager
(subsequently of course fired due his negativity) of the bank decides that slowly
the time has come to demand payment of the debts incurred by the drinkers at
Heidi's bar.


However they cannot pay back the debts.

Heidi cannot fulfill her loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better,
stabilizing in price after dropping by 80 %.

The suppliers of Heidi's bar, having granted her generous payment due
dates and having invested in the securities are faced with a new situation.

Her wine supplier claims bankruptcy, her beer supplier is taken over by a
competitor.

The bank is saved by the Government following dramatic round-the-clock
consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on
the non-drinkers.

Finally an explanation I understand .. . ..

Open Letter To The President from NAMB

The Banks and Lenders that “prey” together, stay together. An open letter to the President of the United States.

Dear Mr. President:

I represent tens of thousands of small business mortgage professionals, who are being forced out of business, by some of the nation’s largest national banks, lenders and mortgage insurance companies.

As you are well aware, this country is experiencing the worst financial crisis since the Great Depression. While your administration and Congress search to find a solution to our economic troubles, others are conducting a campaign of blame, with the goal of eliminating competition and controlling all aspects of mortgage financing.

From the very moment mainstream media first used the words “mortgage meltdown,” mortgage brokers were labeled as the group that inflicted the predatory practices that gave rise to record foreclosures. As a result, mortgage brokers have been subjected to intense scrutiny and consequently over regulation. Moreover, some of our former wholesale lenders and private mortgage insurance outlets have cut off our source of funds to operate, all under the guise of consumer protection. Make no mistake about it; this campaign to eliminate our profession has absolutely nothing to do with consumer protection. It’s all about market share!

Let’s examine the facts: Brokers have been blamed for putting consumers into predatory loan programs. False! Mortgage brokers never developed one single loan product or program. However, some lenders and banks did, aided by Fannie Mae, Freddie Mac and Wall Street. These same institutions set the guidelines for such programs, without any broker input. Most importantly, mortgage brokers didn’t underwrite or approve any of these loans. The responsibility for approving loans was that of the banks and lenders.

If we didn’t develop the programs, set the guidelines or approve loans, how could this be our fault?

Another favorite target of the media is the “Yield Spread Premium” (YSP). This form of legal and legitimate industry compensation has been called kickbacks and bribes. YSP has been vilified, when it should be praised for helping home owners. For example, most consumers today seek financing without “points.” YSP allows them to finance all or part of their origination costs. This practice has existed for years and is used by many State Housing Agencies, along with banks, lenders, credit unions and others, who call it “Service Release Premiums” (SRP). It’s the exact same type of compensation, other than having a different name. The only difference between a broker’s YSP and a lender’s SRP, is that brokers fully disclose this compensation to consumers. Besides not having the same disclosure requirement as brokers, lenders have often denied receiving this payment.

The media has often depicted YSP, as a fee brokers receive for increasing a consumer’s interest rate. The truth is consumers are always given a choice with rates and points. They may elect to pay a discount point(s) and receive a lower rate, or pay no points and finance their origination costs by a slightly higher interest rate. Most consumers choose the latter.

In this climate of full disclosure and transparency, Congress should replace the terms YSP and SRP with “in direct compensation” and require all originators to disclose to consumers. Brokers have been disclosing every dime of compensation for the past 17 years. It’s time for lenders and banks to do the same and level the playing field for consumers.

It has also been reported, brokers are unregulated. Once again, false! Brokers are regulated in every state. Furthermore, we supported passage of the Safe Act in July 2008. This Act establishes uniform federal licensing standards for mortgage originators and a national registry of originators. The National Association of Mortgage Brokers first proposed these standards in 2001. Unlike brokers, loan officers that originate for banks and lenders are unregulated. It’s time to regulate bank employees too.

The final push to eliminate competition and control the entire housing market is now underway. Lenders and banks are exiting wholesale lending; claiming brokered loans perform worse than their retail branches. Again, who developed the programs, set the guidelines and APPROVED every loan?

Mortgage insurance companies are now joining the banks and lenders. Some have completely cut off brokers, while others have set different guidelines for banks and brokers. Why? The reason is simple, banks and lenders call the shots. For years, some banks and lenders have intimidated mortgage insurance companies to insure loans they knew would eventually have a high default rate. The MI companies had a choice, insure the loans, or risk being cut off.

Until approximately ten years ago, brokers and other originators would submit loans for underwriting (approval), to both a wholesale lender and a mortgage insurance company.

This long established practice gave every file with less than a 20% down payment, a second set of eyes. Having two underwriters independently examine every submission for approval protected both consumers and industry. In my opinion, this practice was eliminated out of greed. Some banks and lenders saw an opportunity to increase their profits at the expense of quality control. Some banks and lenders made “deals” with mortgage insurance companies. The agreements called for the lenders taking control of underwriting. Once a lender approved a file, that file was also considered approved with an MI company. The second part of the deal consisted of a kickback. Since lenders and banks were now in control of who ordered the private mortgage insurance, they could steer business and demand a percentage of the consumer’s premium. These kickbacks averaged 25% of the premiums. They were also never disclosed to the consumer.

This type of lender control is again taking place with appraisals. Lenders have established their own Appraisal Management Companies, which allow them to have complete authority over all aspects of the “independent” appraisal process.

It’s important to note, not all banks and lenders have engaged in these practices. Many are honest and reputable institutions. However, the fact remains many are preying on the consumer and small business.

Mr. President, if the actions mentioned above are allowed to continue, the costs of mortgage financing will increase as a result of less competition. State shortfalls will increase too. Furthermore, the country will see a sharp and prolonged rise in unemployment and foreclosures, due to the elimination of our profession.

Everyday, more and more small business brokers and their support staff are going out of business. We urgently need your guidance and support. I would appreciate meeting with you as soon as possible to discuss this ongoing tragedy.

Respectfully,

Marc S. Savitt, President

National Association of Mortgage Brokers

A Story of Morals

One day a farmer's donkey fell down into a well. The animal cried piteously for hours as the farmer tried to figure out what to do.

Finally, he decided the animal was old, and the well needed to be covered up anyway;
it just wasn't worth it to retrieve the donkey.

He invited all his neighbors to come over and help him. They all grabbed a shovel and began to shovel dirt into the well. At first, the donkey realized what was happening and cried horribly. Then, to everyone's amazement he quieted down.

A few shovel loads later, the farmer finally looked down the well. He was astonished at what he saw. With each shovel of dirt that hit his back, the donkey was doing something amazing. He would shake it off and take a step up.

As the farmer's neighbors continued to shovel dirt on top of the animal, he would shake it
off and take a step up. Pretty soon, everyone was amazed as the donkey stepped up over the edge of the well and happily trotted off!

Life is going to shovel dirt on you, all kinds
of dirt. The trick to getting out of the well
is to shake it off and take a step up. Each of
our troubles is a steppingstone. We can get out
of the deepest wells just by not stopping,
never giving up! Shake it off and take a step up.



MORAL #1 (You choose, 1 or 2)

Remember the five simple rules to be happy:

Free your heart from hatred - Forgive..

Free your mind from worries - Most never happen.
Live simply and appreciate what you have.
Give more.

Expect less

or MORAL #2::



Enough of that crap .. . . The donkey later came back,and bit the farmer who had tried to bury him. The gash from the bite got infected and the farmer eventually died in agony from septic shock. Soooo,



When you do something wrong, and try to cover your ass, it always comes back to bite you.

Response From Senator Feinstein

Dear Dr. McDonald:



Thank you for contacting me to express your support for including housing market reforms and foreclosure prevention measures in the recently enacted economic recovery bill. I certainly appreciate hearing your suggestions and would like to share with you what was included in the final version of this legislation.



Like you, I am extremely concerned about this severe economic crisis, which has been caused in part by the declining housing market. Last year, there were 837,665 foreclosures filed in California alone, an increase of more than 100 percent over 2007.



As you know, on February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (H.R. 1) into law. This important legislation represents a significant investment by the Federal Government in an effort to create jobs and improve our Nation's aging infrastructure. The bill also makes a major commitment to stabilizing the housing market and assisting hardworking Americans. Specifically, the bill will:



oAllow first-time homebuyers to receive a tax credit worth up to $8,000 for homes purchased after January 1, 2009. Recipients of this credit will not have to repay it.



oProvide the Public Housing Capital Fund with $4 billion to help local public housing agencies address a $32 billion backlog in capital needs.



oProvide the HOME Investment fund with $2.25 billion for state and local governments to acquire, construct, and rehabilitate affordable housing.



oInvest $2 billion in the Neighborhood Stabilization Program to allow state and local governments to purchase and rehabilitate foreclosed properties to reduce blight in communities.



You may be interested to learn that I joined Senator Mel Martinez (R-FL) in introducing an amendment to the Senate-version of the American Recovery and Reinvestment Act of 2009 that would have extended the $729,750 maximum conforming loan limits through 2010. However, this amendment was not included in the final version of the bill passed by the Senate.



It is critical that Congress work with the new Administration to restore the American dream of home ownership and this bill is part of that effort. Please know that I will keep your comments and suggestions in mind should further legislation to address our country's housing crisis come before the Senate.



Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.




Sincerely yours,

Dianne Feinstein
United States Senator


Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.