Equal Opportunity – Cultural Diversity Committee
Almaden Room I/II
Hilton Hotel
San Jose, California
Thursday, October 8, 2009
2:00 PM – 3:30 PM

Presiding:
Cathlyne Scharetg, Chair
Miguel Garcia, Vice Chair
Denise Smith, Vice Chair
LeFrancis Arnold, Executive Committee Liaison

Staff Coordinators:
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

REPORT/DISCUSSION ITEMS

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, 2009
 - The tax credit is 10% of the purchase price, capped at $8,000.
 - 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 a home. 

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 Scharetg

VI. Other Business j- Cathlyne Scharetg 

A. NAR Update- Winnie Davis, NAR Representative

VII. Adjournment -- Cathlyne Scharetg