Volume 3, Issue 1 January 2008
P A R T N E R S H I P F O R H O M E O W N E R S H I P
T r e a s u r y D e p a r t m e n t O u t l i n e s
S P E C I A L P O I N T S M o r t g a g e A i d P l a n
O F I N TE R E S T :
• IHDA’s interest rates for the Rural Details of the Bush admini- The lack of details has made it have seen at least a 7 percent
Guarantee Housing Initiative are stration's mortgage-relief plan hard to know how many decline in housing prices from
6.075% with $1500 in closing cost
include a proposal that would homeowners the plan would the beginning of the summer; it
assistance; 5.95% with $1000 in
closing cost assistance or 5.70% grant new powers to local gov- help. In the past two years, is possible that a 20 percent
with no closing cost assistance. ernments to refinance the about 2 million credit- decline overall is could affect
( This applies to NEW reservations mortgages of struggling home- challenged, or subprime bor- the worst hit by early 2009.
owners. rowers bought houses with
Illinois Housing Development Authority mortgages that typically had The Treasury Department’s
401 N. Michigan Ave., Suite 700 The strategy would temporar- interest rates of 7 to 8 percent. plan also faces a daunting task
Chicago, IL 60611
ily freeze interest rates for The rates on those adjustable of figuring out who is eligible
many troubled homeowners or loans are set to jump to as high for mortgage relief, because
• Partnership for HomeOwnership’s help them refinance, a plan as 11 percent by the end of many loans have little docu-
headquarters have moved! Please
change our contact information to: that is gaining momentum next year. While some owners mentation of a homeowner's
among federal regulators, lead- have refinanced, others have income. Congress would need
522 South Fifth Street
ers of the mortgage and hous- fallen into foreclosure. Gov- to act quickly to fund a $170
Springfield, Illinois, 62701 ing industries, and lawmakers ernment agencies say that as million mortgage-counseling
of both parties as the mortgage many as 1.2 million homeown- initiative that would beef up a
crisis worsens. ers still need help, though in- national hotline where finan-
I N S I D E TH I S dependent research groups say cially troubled mortgage own-
I S S U E : The impact of the mortgage the number is lower. ers could talk to credit counsel-
crisis is widening. Municipal ors.
Home Lending Practices 2 housing authorities now offer Either way, more assistance
mortgages at lower-than- will be needed to overcome Whatever the plan, they are
average rates to credit-worthy, the mortgage crisis than just going to need the nonprofit
Stolen Cards?? 2
first-time buyers whose earn- the administration's plan, Community. As a result, coun-
ings are at or below the aver- which focuses largely on sub- seling service NeighborWorks
Aid for Identity Theft 3 age household income levels, prime borrowers. And it is not America expects to double its
which vary by region. Cities just subprime mortgage hold- staff of 65 counselors by next
and states can provide such ers who could lose their month. Many counselors are
Websites of the Month 3
advantageous loans because homes. People with home- already in training. The group is
they sell tax-exempt bonds equity loans and some holders part of the Hope Now Alliance
Tax Tips 3 backing the mortgages to in- of "prime" mortgages, those of nonprofits and lenders,
vestors at lower rates, passing given to borrowers with good which is scaling up a hotline for
on the savings to homeowners. credit, have begun defaulting. homeowners concerned about
2008 Board of Directors 4
The Treasury Department their mortgages. The hotline has
wants to expand the authori- The country is experiencing seen a spike to 3,000 calls a
ties' reach to include sub- the worst housing decline month from 300 almost a year
prime-mortgage holders who since the Great Depression ago. Its number is 888-995-
want to refinance with a fixed- when measured by three key 4673.
rate loan rather than an adjust- data points: home sales, prices
able-rate loan. and housing starts. Many areas Edited from an article by
David Cho and Neil Irwin
V o l u m e 3 , I s s u e 1 P a g e 2
Fed Takes Aim at Deceptive Home Lending Practices
The Federal Reserve has new regulations to clean up a broad leased yesterday showed that the construction of single-family
array of deceptive mortgage lending practices, a move that homes slid to its lowest level in more than 16 years as demand
represents the central bank's most significant response to the for new houses wilts.
nation's housing tumult. The proposed rules signify a shift by
the Fed toward an active regulatory role over the mortgage The Fed's role is seen as vital because it can act quickly and
business and would affect a wide range of borrowers, lenders, because its rules, which could be finalized after a 90-day public
banks and brokers. Home buyers would have to provide proof comment period, would apply to all lenders. Legislation by
of income to ensure that they are not taking on more debt than Congress would trump the Fed's authority but may take more
they can handle. Mortgage ads could not promote only low time to enact. While a measure on mortgage reform has passed
"teaser" rates. Victims of predatory lending would be empow- the House, a Senate bill is likely not to get a full-chamber vote
ered to sue their mortgage providers. until next year. The versions also have to be reconciled.
The Fed can unilaterally impose the rules on mortgage lenders Consumer advocates said they will continue to push for stricter
based on its authority to police lending practices, but the cen- legislation on Capitol Hill. Although a lot of attention was cast
tral bank has been wary of using this power. Lawmakers have on the Bush administration's plan to offer a five-year rate
criticized the Fed for not acting sooner. freeze to some holders of subprime adjustable-rate mortgages,
Chairman Bernanke said it took time to write regulations that Fed researchers found that many homeowners are defaulting
are balanced. They "were carefully crafted with an eye toward not because the rates on their mortgages are increasing but be-
deterring improper lending and advertising practices without cause they did not realize their payments would be so high
unduly restricting mortgage credit availability," he said. when the cost of home insurance and property taxes is tacked
on to the monthly cost. Many home buyers, especially the poor
Consumer advocates credited the Fed for its effort to protect and immigrants, were confused by the massive stack of docu-
ordinary homeowners but said the rules would not go far ments they had to sign at closing.
enough. The Fed is not seeking to ban several practices that
were widely used to coax unsuspecting borrowers into high- As a result, Fed officials crafted rules that would require lend-
interest loans, the advocates said. ers to establish an escrow account for insurance and taxes for
holders of subprime loans and to provide better and clearer
Congressional Democrats were more vociferous, accusing the documentation on what home buyers would pay on a monthly
Fed of putting the interests of the banking system before those basis. Fed officials also noted that mortgage default rates were
of homeowners. They noted that the central bank is seeking to highest for homeowners who had provided little or no docu-
curb -- but not eliminate -- the compensation that mortgage mentation. Under the new rules, borrowers would have to pro-
brokers receive from lenders for selling high-interest loans to vide independent proof of their income, though some flexibility
borrowers. And it seeks to restrict -- rather than ban -- the use is given to the self-employed.
of prepayment penalties, which discourage holders of subprime
adjustable-rate mortgages from refinancing their loans before On Capitol Hill, the House voted to prevent forgiven mortgage
the rates jump. Congress wants to outlaw these practices alto- debt from being taxed as income. The Senate has already
gether. passed the bill, which can spare homeowners from taxes as
high as 35 percent on canceled mortgage debt. White House
The debate over how the Fed should tackle the mortgage mess press secretary Dana Perino told Bloomberg News that Presi-
is intensifying as the crisis continues to roil Wall Street and dent Bush would sign it.
threatens to bring down the economy. The number of people
who are losing their homes or have failed to make their Edited from an article By David Cho
monthly payments has reached record levels. Fresh data re- Washington Post
Stolen Debit or Credit card?
Follow these steps if you do find yourself with a stolen debit or credit card:
* File a police report.
* Review your credit reports and place a fraud alert on them.
* Close the accounts that have been compromised.
* File a complaint with the Federal Trade Commission.
V o l u m e 3 , I s s u e 1 P a g e 3
Online records may aid identity theft
In an era when government officials from ity in how access to the private informa- Identity fraud has been around for centu-
President Bush to local sheriffs warn of tion in these records is controlled. ries. But widespread use of credit cards
the growing dangers of identity theft, the and the growth of the Internet have fueled
full Social Security numbers of untold A recent spot-check found the nine-digit a plague that costs businesses and con-
numbers of Americans can be found in numbers, introduced in 1936 to track em- sumers billions of dollars a year.
file rooms and on Web sites run by gov- ployee earnings and benefits, on hundreds
ernments. of land deeds, death certificates, traffic The problem took a giant leap in the pub-
tickets, creditors' filings and other docu- lic consciousness after the Sept. 11, 2001,
A Social Security number is the finger- ments related to civil and criminal court terrorist attacks, when it was revealed that
print to somebody's identification.The cases. several hijackers had used fraudulently
Federal Trade Commission has estimated obtained IDs to open bank accounts, rent
that 8.3 million Americans were victims Federal courts have banned the numbers apartments and board planes.
of identity theft in 2005, the most recent from appearing on public documents
data available. But the crown jewel in since 2001. And in recent years, many The federal government responded with a
identity theft,the Social Security num- jurisdictions have enacted laws or made law in 2004 that mandated prison sen-
ber,can be mined easily in the govern- rules barring various types of personal tences for people who use identity theft to
ment's own records, creating a measure of information from being filed with courts commit other crimes and prohibited So-
social insecurity for millions, identity or government agencies. cial Security numbers from being dis-
experts say. played on newly issued driver's licenses.
However, millions of paper records were A presidential task force called on federal
Social Security numbers are readily avail- filed across the United States before the agencies last spring to "reduce the unnec-
able in many courthouses,in land records laws and rules took effect. Generally, essary use" of Social Security numbers,
and criminal and civil case files, as well such records are not covered by the prohi- which it called "the most valuable com-
as on many government Web sites that bitions. And court clerks said it would be modity for an identity thief."
serve up public documents with a few virtually impossible to redact all of the
clicks of a mouse. From state to state, and Social Security numbers in them. Edited from an article By Bill Brubaker
even within states, there is little uniform- Washington Post
Websites of the month
For a list of HUD-Approved Counseling Agencies visit:
For listings of MBA National Consumer Foreclosure Prevention Workshops visit:
For advice on 12 Things to Know when Calling Your Lender visit:
Taxes: more tips from the irs
Here's some more tips from the Internal Revenue Service on how to find a professional to help you with your tax return:
• Avoid preparers who claim they can obtain larger refunds than other preparers, or those who guarantee a refund or
base fees on a percentage of the amount of the refund. Don't fall for people who claim they have some fancy way for
you to avoid paying your proper taxes.
• Choose a preparer you will be able to contact after the return is filed and one who will be responsive to your needs.
• Get references from a few clients who have used the tax professional before.
• Check to see if the preparer has any questionable history with the Better Business Bureau, the state's board of accoun-
tancy for CPAs or the state's bar association for attorneys. Find out if the preparer belongs to a professional organiza-
tion that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
WE ARE ON THE WEB!
The Partnership for HomeOwnership, Inc. is a
nonprofit organization established by the
Illinois Association of REALTORS in 1996 to
help low-income first-time buyers achieve
P A R T N E R S H I P F O R homeownership in Illinois. The foundation
H O M E O W N E R S H I P
received a 2005 National HOPE (Home Own-
ership Participation for Everyone) Award for
it’s innovative Quincy, Illinois Initiative, which
522 South Fifth Street
Springfield, Illinois 62701 now serves as a model for employer-assisted
housing programs administered by IHDA.
Phone: 1-800-370-6697 or 217-391-4848
Website: www.pfho.org For more information contact
Beth Llewellyn or Laurie Van Houten at:
Providing Resources to Reach the firstname.lastname@example.org
2008 Board of Directors
Sue Wiskowski-Fair, Realty Executives
• Donna Thomas, Past President • Jean Webber, Broker, Dawn-Webb & Associates
• John Kretchmar, Chicago Exclusive Properties • Paul Lopez, Park Federal Savings Bank
• Roger Morsch, IHDA Single Family Programs • Robin Benson, Coalition for People with Disablities
• Jean Garrison, Genworth Mortgage Insurance Co. • Leo Sheridan, Broker
• Elaine Davis, Three Rivers Workforce • Tracey Taylor, GRI, Keller Williams Realty
• Carol Menendez, Illinois National Bank • Peter Stojic, National City Mortgage
• Pam Krieter, EVP, Mainstreet Organization of • Dale Taylor, Chairman, Housing Opportunity WG
REALTORS • Barry Ramsey, USDA-RD, Ex-Officio