Carmen Petrinca Hirciag, Membership Development Manager
Jeff Keller, Public Policy Analyst
I. Call to Order / Introductions – Cathlyne Scharetg
II. Legal Update – Gov Hutchinson, Assistant General
Counsel / Staff VP
III. Political Update – Jeff Keller
1. Making Homes Affordable On March 4, 2009, the
Obama Administration released detailed guidelines for homeowners to help
them determine if they qualify for the Administration’s new Making Home
Affordable plan (HAMP). HAMP sought to help homeowners struggling
with payments and who are underwater on their homes by giving incentives to
lenders to rework loans though reduced interest, principle forgiveness,
extensions of loans, and moving adjustable loans into fixed rate
loans. It also sought to help homeowners not yet underwater refinance
into more affordable loans to reduce the risk of them falling underwater or
behind on their payments.
About 85% of loans in the market are eligible for possible participation in
the HAMP plan, although nowhere close to that number have been submitted or
reworked. So far there have been over 360,000 trial modifications
entered into while there have been over 1,300,000 applications made.
The administration sees this as a start, but as a slow success. Many
analysts are worried that these reworking of the loans are just delaying
foreclosure as most of them do not include a principle reduction, which
most see as vital to helping homeowners who are underwater.
Additionally, analysts have testified to Congress that “even if HAMP is a
total success, we should still expect millions of foreclosures”.
2. Homebuyer Tax Credit
The current First-time Homebuyer Tax Credit (HTC) expires on November 30,
2009; meaning that in order to be eligible for the HTC the escrow cannot
close past November 30, 2009. The current HTC is:
If the home was purchased between January 1, 2009 and November 30,
- The tax credit is 10% of the purchase price, capped at
- The tax credit does not need to be repaid – the only exception
being if the property is sold within 3-years of purchase.
- You can get the credit if the property is financed by a tax exempt
qualified mortgage issue/bond.
C.A.R. and NAR are working diligently on both expanding and extending the
HTC. C.A.R and NAR want to see the tax credit expanded to all
homebuyers and extended until the end of 2010.
The HTC has accomplished its primary goal; it has helped create homeowners
and has helped stabilize housing prices. C.A.R’s research on the use
of the tax credit in California showed that 39% of homebuyers said that
they would not have purchased a home without the tax credit. 52% of
homebuyers making under $100,000/year said that they would not have
purchased a home without the tax credit. Additionally, of those
first-time homebuyers who planned to apply for the tax credit 40% of
respondents said it was the “most important” factor in their purchasing of
3. Servicer Fees May Deter Loan Modifications Many
industry insiders are saying that one of the main stumbling blocks to
helping homeowners modify their loans and avoid foreclosure is the
incentive that servicers have to drag the process out and collect their
fees. Even when a homeowner stops paying, mortgage servicers collect
fees out of the proceeds when homes are ultimately sold in
foreclosure. This means that the longer a borrower remains
delinquent, the greater the opportunity for these servicers to collect fees
for insurance, appraisals, title searches, and legal services.
This is also an issue because many lenders and servicers are reluctant to
modify loans because these modifications can hurt their bottom line and
they are hopeful that the economy will improve and borrowers will be able
to resume payments.
IV. California Housing Finance Agency (CalHFA) Programs - Leah
Pears, Homeownership Leads Program & Ourtreach Manager, CalHFA
V. Popular Homeownership Programs in Local Communities - Cathlyne