This bill will drastically change the ability of some buyers to obtain lending for their new homes. In this bill seller contributed down payment programs like Nehemiah and Genesis will be eliminated. With these programs soon to be gone and current market conditions, there has never been a better time to buy or move up. If you or anyone you know are considering buying or selling a home, please give me a call immediately.
AP Article.....
President Bush Signs Housing Bill to Provide Mortgage Relief, Stabilize Markets
Wednesday, July 30, 2008
WASHINGTON — President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.
Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the president.
Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not wait — and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.
The bill takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.
It goes far beyond addressing the current crisis, however.
The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.
Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.
Wednesday, July 30, 2008
Get to know Fannie Mae, Freddie Mac
Great AP Article.....
Get to know Fannie Mae, Freddie Mac
They hold, guarantee nearly half the total U.S. mortgage debt
Sunday, Jul 27, 2008 - 12:06 AM
By DAVE CARPENTER
THE ASSOCIATED PRESS
Behind their down-home names, Fannie Mae and Freddie Mac are so vital to the economy that the government scrambled to offer them a lifeline.
But what exactly are they, and what do they do?
They are the engines behind a complex process of buying, bundling, slicing and selling mortgages that remains a mystery even to millions of Americans whose home debt passes through their hands.
They were set up by the federal government - Fannie in 1938, Freddie in 1970 - to help more Americans buy and keep their homes. Today, both are public companies, and their stock is traded on the open market.
But Fannie and Freddie don't deal directly with homeowners.
Instead, they buy mortgages away from the banks that already hold them, providing cash that allows banks to make more home loans and take on more debt.
. . .
Then Fannie and Freddie bundle the loans together and sell pieces of the whole to investors as what are called mortgage-backed securities. They pay a guaranteed rate of return - like Treasury bonds, but more lucrative for investors.
Although they have not carried the explicit backing of the federal government for decades (Fannie became private in 1968, while Freddie was set up that way), each has a $2.25 billion line of credit with the government.
And the implicit presence of Uncle Sam helped the pair grow fast.
As more and more Americans sought to buy homes, Fannie and Freddie's portfolios grew more than 10 times from 1991 to 2003. Today, they hold or guarantee about $5 trillion in mortgage debt, nearly half of what is outstanding in the United States.
The two were immensely profitable even as the explosive growth in home values slowed, then home prices began to fall. Borrowers were stuck with payments they couldn't afford. Thus began a wave of foreclosures.
Fannie and Freddie were mostly unaffected by the subprime lending crisis that has grabbed so many headlines. But even foreclosures on more desirable mortgages took their toll.
Stock in each company has plummeted more than 80 percent in the past year as investors worried about the fallout. And the actual holdings of Fannie and Freddie dwindled.
Compounding the danger, the two companies, aided by high-powered lobbying, are allowed by the government to keep much smaller cushions of capital to fall back on than other companies.
. . .
Banks are required to hold a reserve of cash and other investments equal to about 10 percent of the dollar amount of loans they make. The cushion is intended to keep them solvent in case some of the loans go bad.
But because of special regulatory rules passed by Congress, Fannie and Freddie were able to grow their combined liabilities to more than $5 trillion that are now backed by only $81 billion in capital.
Seems like a lot of money until you realize that Fannie and Freddie have lost a combined $11 billion in the past year, and analysts are forecasting billions more in losses in the quarters to come.
"When house prices fall very dramatically . . . Fannie and Freddie have very little capital to protect themselves from those losses," said Deborah Lucas, a professor of finance at Northwestern University's Kellogg School of Management.
Enter the federal government and its rescue package: additional, unlimited lines of credit, plus the option for the government to invest directly in the companies.
The top budget analyst for Congress said last week that the rescue package could cost taxpayers as much as $25 billion.
But the analyst told lawmakers in a letter that the odds were better than ever that the government would not have to step in to prop up Fannie and Freddie by lending them money or buying stock.
Treasury Secretary Henry M. Paulson said keeping the pair in business is "central to the speed with which we emerge from this housing correction."
He really had little choice in offering the lifeline: A collapse of Fannie and Freddie and big write-downs in the value of the debt they sold could cripple the U.S. banking system because almost all banks have some Fannie and Freddie securities as part of their core holdings.
Fannie and Freddie like to portray themselves as successors to the tradition of George Bailey's savings and loan in the classic film "It's a Wonderful Life," enabling more Americans to own homes by stabilizing the mortgage market.
If they failed, the result might less resemble Bedford Falls than the movie's envisioned slum of Pottersville.
Experts say it would become much harder for people to borrow money to buy homes. Mortgage rates would shoot up. Home sales would be stifled, and that could wreak additional havoc on the economy.
That is much less likely now that the government has offered a lifeline. But it's still possible Fannie and Freddie's troubles could make home loans more expensive and tougher to get, at least for the short run.
"I believe that we will still have mortgages with low down payments, but only for people with very strong credit," said John Vogel, professor of real estate at Dartmouth College's Tuck School of Business.
. . .
No one disputes Fannie and Freddie have been essential to the functioning of the U.S. housing market and have helped homeowners by pumping enough transactions through the market to lower interest rates. But critics say they are too dominant for the economy's good.
"But they're so big that when they run into difficulty like they have right now, it can create a lot of problems for the economy," said economist Patrick Newport of Global Insight.
And critics say they strayed from their original mission as they pushed to expand the scope of their mortgage businesses to churn out ever-higher earnings for their shareholders.
"They're not supposed to be trying to squeeze out the last penny of profit from every deal," said James Gaines, a real estate economist at Texas A&M University.
Get to know Fannie Mae, Freddie Mac
They hold, guarantee nearly half the total U.S. mortgage debt
Sunday, Jul 27, 2008 - 12:06 AM
By DAVE CARPENTER
THE ASSOCIATED PRESS
Behind their down-home names, Fannie Mae and Freddie Mac are so vital to the economy that the government scrambled to offer them a lifeline.
But what exactly are they, and what do they do?
They are the engines behind a complex process of buying, bundling, slicing and selling mortgages that remains a mystery even to millions of Americans whose home debt passes through their hands.
They were set up by the federal government - Fannie in 1938, Freddie in 1970 - to help more Americans buy and keep their homes. Today, both are public companies, and their stock is traded on the open market.
But Fannie and Freddie don't deal directly with homeowners.
Instead, they buy mortgages away from the banks that already hold them, providing cash that allows banks to make more home loans and take on more debt.
. . .
Then Fannie and Freddie bundle the loans together and sell pieces of the whole to investors as what are called mortgage-backed securities. They pay a guaranteed rate of return - like Treasury bonds, but more lucrative for investors.
Although they have not carried the explicit backing of the federal government for decades (Fannie became private in 1968, while Freddie was set up that way), each has a $2.25 billion line of credit with the government.
And the implicit presence of Uncle Sam helped the pair grow fast.
As more and more Americans sought to buy homes, Fannie and Freddie's portfolios grew more than 10 times from 1991 to 2003. Today, they hold or guarantee about $5 trillion in mortgage debt, nearly half of what is outstanding in the United States.
The two were immensely profitable even as the explosive growth in home values slowed, then home prices began to fall. Borrowers were stuck with payments they couldn't afford. Thus began a wave of foreclosures.
Fannie and Freddie were mostly unaffected by the subprime lending crisis that has grabbed so many headlines. But even foreclosures on more desirable mortgages took their toll.
Stock in each company has plummeted more than 80 percent in the past year as investors worried about the fallout. And the actual holdings of Fannie and Freddie dwindled.
Compounding the danger, the two companies, aided by high-powered lobbying, are allowed by the government to keep much smaller cushions of capital to fall back on than other companies.
. . .
Banks are required to hold a reserve of cash and other investments equal to about 10 percent of the dollar amount of loans they make. The cushion is intended to keep them solvent in case some of the loans go bad.
But because of special regulatory rules passed by Congress, Fannie and Freddie were able to grow their combined liabilities to more than $5 trillion that are now backed by only $81 billion in capital.
Seems like a lot of money until you realize that Fannie and Freddie have lost a combined $11 billion in the past year, and analysts are forecasting billions more in losses in the quarters to come.
"When house prices fall very dramatically . . . Fannie and Freddie have very little capital to protect themselves from those losses," said Deborah Lucas, a professor of finance at Northwestern University's Kellogg School of Management.
Enter the federal government and its rescue package: additional, unlimited lines of credit, plus the option for the government to invest directly in the companies.
The top budget analyst for Congress said last week that the rescue package could cost taxpayers as much as $25 billion.
But the analyst told lawmakers in a letter that the odds were better than ever that the government would not have to step in to prop up Fannie and Freddie by lending them money or buying stock.
Treasury Secretary Henry M. Paulson said keeping the pair in business is "central to the speed with which we emerge from this housing correction."
He really had little choice in offering the lifeline: A collapse of Fannie and Freddie and big write-downs in the value of the debt they sold could cripple the U.S. banking system because almost all banks have some Fannie and Freddie securities as part of their core holdings.
Fannie and Freddie like to portray themselves as successors to the tradition of George Bailey's savings and loan in the classic film "It's a Wonderful Life," enabling more Americans to own homes by stabilizing the mortgage market.
If they failed, the result might less resemble Bedford Falls than the movie's envisioned slum of Pottersville.
Experts say it would become much harder for people to borrow money to buy homes. Mortgage rates would shoot up. Home sales would be stifled, and that could wreak additional havoc on the economy.
That is much less likely now that the government has offered a lifeline. But it's still possible Fannie and Freddie's troubles could make home loans more expensive and tougher to get, at least for the short run.
"I believe that we will still have mortgages with low down payments, but only for people with very strong credit," said John Vogel, professor of real estate at Dartmouth College's Tuck School of Business.
. . .
No one disputes Fannie and Freddie have been essential to the functioning of the U.S. housing market and have helped homeowners by pumping enough transactions through the market to lower interest rates. But critics say they are too dominant for the economy's good.
"But they're so big that when they run into difficulty like they have right now, it can create a lot of problems for the economy," said economist Patrick Newport of Global Insight.
And critics say they strayed from their original mission as they pushed to expand the scope of their mortgage businesses to churn out ever-higher earnings for their shareholders.
"They're not supposed to be trying to squeeze out the last penny of profit from every deal," said James Gaines, a real estate economist at Texas A&M University.
Paulson backs new mortgage aid
Paulson backs new mortgage aid
By Martin Crutsginer
Associated Press
WASHINGTON — The Bush administration and federal banking regulators joined with the nation's four largest banks today to endorse a new way to pump money into the battered U.S. mortgage market.
Treasury Secretary Henry Paulson unveiled a set of best practices designed to encourage banks to issue a debt instrument known as a covered bond. The administration hopes these bonds will replace some of the mortgage financing that has disappeared as investors have incurred billions of dollars of losses on mortgage-backed securities.
"As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction," Paulson said in launching the new effort.
"We are at the early stages of what should be a promising path, where the nascent U.S. covered bond market can grow and provide a new source of mortgage financing," he said.
Paulson was joined at the news conference by officials from the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. All the agencies said they endorsed the new set of best practices compiled by Treasury.
Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, "We look forward to being leading issuers as the U.S. covered bond market develops." Private analysts said that the new initiative should help stabilize the U.S. mortgage market but they did not view the effort as a cure-all for all the problems facing the mortgage market now.
This effort to jump-start a U.S. market for covered bonds followed action earlier this month by the FDIC to approve new regulations for the bonds, which are a way of packaging mortgage investments similar to an approach that is used in Europe where the market for covered bonds approaches $3 trillion.
Covered bonds are issued by banks and backed by cash flows from mortgages or other types of debt. Under this approach, banks guarantee the bonds, thus providing an incentive for less risky lending practices. Unlike mortgage backed securities, covered bonds remain on the balance sheet of the bank that sells the bonds.
Encouraging such a market to grow could be one way to decrease the dominance that Fannie Mae and Freddie Mac wield in the U.S. mortgage market.
By Martin Crutsginer
Associated Press
WASHINGTON — The Bush administration and federal banking regulators joined with the nation's four largest banks today to endorse a new way to pump money into the battered U.S. mortgage market.
Treasury Secretary Henry Paulson unveiled a set of best practices designed to encourage banks to issue a debt instrument known as a covered bond. The administration hopes these bonds will replace some of the mortgage financing that has disappeared as investors have incurred billions of dollars of losses on mortgage-backed securities.
"As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction," Paulson said in launching the new effort.
"We are at the early stages of what should be a promising path, where the nascent U.S. covered bond market can grow and provide a new source of mortgage financing," he said.
Paulson was joined at the news conference by officials from the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. All the agencies said they endorsed the new set of best practices compiled by Treasury.
Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, "We look forward to being leading issuers as the U.S. covered bond market develops." Private analysts said that the new initiative should help stabilize the U.S. mortgage market but they did not view the effort as a cure-all for all the problems facing the mortgage market now.
This effort to jump-start a U.S. market for covered bonds followed action earlier this month by the FDIC to approve new regulations for the bonds, which are a way of packaging mortgage investments similar to an approach that is used in Europe where the market for covered bonds approaches $3 trillion.
Covered bonds are issued by banks and backed by cash flows from mortgages or other types of debt. Under this approach, banks guarantee the bonds, thus providing an incentive for less risky lending practices. Unlike mortgage backed securities, covered bonds remain on the balance sheet of the bank that sells the bonds.
Encouraging such a market to grow could be one way to decrease the dominance that Fannie Mae and Freddie Mac wield in the U.S. mortgage market.
Tuesday, July 29, 2008
More Info On The Bill
Sorry this is a little harder to read, but here is part of a letter I received from one of my lenders. Hope you will find the information use full.
NAR Summary of HR3221 from 7/24
As we know this bill is now passed and before President Bush.
HR3221, the Housing and Economic Recovery Act of 2008
National Association of REALTORS® Summary (as of 7/24/08)
H.R. 3221, the "Housing and Economic Recovery Act of 2008", passed the House on July 23rd by a vote of 272-152. The Senate must now approve the language adopted by the House. The Senate is expected to approve the bill on Friday, July 25th or Saturday, July 26th. The President has said he will sign the bill. It includes:
GSE Reform - including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
FHA Reform - including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
Homebuyer Tax Credit - a $7,500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA Foreclosure Rescue - development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
Seller-Funded Down Payment Assistance Programs - codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by non profits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
VA Loan Limits - temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
Risk-Based Pricing - puts a moratorium on FHA using risk-based pricing for one year. This provision will be effective from October 1, 2008 through September 30, 2009.
GSE Stabilization - includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority - authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund - Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding - Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC - Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements - Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker or other loan originator.
For more information, visit www.realtor.org/governmentaffairs
HR3221, the Housing and Economic Recovery Act of 2008
National Association of REALTORS® Summary (as of 7/24/08)
H.R. 3221, the "Housing and Economic Recovery Act of 2008", passed the House on July 23rd by a vote of 272-152. The Senate must now approve the language adopted by the House. The Senate is expected to approve the bill on Friday, July 25th or Saturday, July 26th. The President has said he will sign the bill. It includes:
GSE Reform - including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
FHA Reform - including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
Homebuyer Tax Credit - a $7,500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA Foreclosure Rescue - development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
Seller-Funded Down Payment Assistance Programs - codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by non profits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
VA Loan Limits - temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
Risk-Based Pricing - puts a moratorium on FHA using risk-based pricing for one year. This provision will be effective from October 1, 2008 through September 30, 2009.
GSE Stabilization - includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority - authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund - Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding - Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC - Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements - Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker or other loan originator.
For more information, visit www.realtor.org/governmentaffairs
Monday, July 28, 2008
Administration OKs new way to help mortgage market
Another AP Article
Administration OKs new way to help mortgage marketBy MARTIN CRUTSINGER, AP Economics Writer
Monday, July 28, 2008
(07-28) 11:54 PDT WASHINGTON (AP) --
The Bush administration and federal banking regulators joined with the nation's four largest banks Monday to endorse a new way to pump money into the battered U.S. mortgage market.
Treasury Secretary Henry Paulson unveiled a set of best practices designed to encourage banks to issue a debt instrument known as a covered bond. The administration hopes these bonds will replace some of the mortgage financing that has disappeared as investors have incurred billions of dollars of losses on mortgage-backed securities.
"As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction," Paulson said in launching the new effort.
"We are at the early stages of what should be a promising path, where the nascent U.S. covered bond market can grow and provide a new source of mortgage financing," he said.
Paulson was joined at the news conference by officials from the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. All the agencies said they endorsed the new set of best practices compiled by Treasury.
Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, "We look forward to being leading issuers as the U.S. covered bond market develops."
Private analysts said that the new initiative should help stabilize the U.S. mortgage market but they did not view the effort as a cure-all for all the problems facing the mortgage market now.
This effort to jump-start a U.S. market for covered bonds followed action earlier this month by the FDIC to approve new regulations for the bonds, which are a way of packaging mortgage investments similar to an approach that is used in Europe where the market for covered bonds approaches $3 trillion.
Covered bonds are issued by banks and backed by cash flows from mortgages or other types of debt. Under this approach, banks guarantee the bonds, thus providing an incentive for less risky lending practices. Unlike mortgage backed securities, covered bonds remain on the balance sheet of the bank that sells the bonds.
Encouraging such a market to grow could be one way to decrease the dominance that Fannie Mae and Freddie Mac wield in the U.S. mortgage market.
Administration OKs new way to help mortgage marketBy MARTIN CRUTSINGER, AP Economics Writer
Monday, July 28, 2008
(07-28) 11:54 PDT WASHINGTON (AP) --
The Bush administration and federal banking regulators joined with the nation's four largest banks Monday to endorse a new way to pump money into the battered U.S. mortgage market.
Treasury Secretary Henry Paulson unveiled a set of best practices designed to encourage banks to issue a debt instrument known as a covered bond. The administration hopes these bonds will replace some of the mortgage financing that has disappeared as investors have incurred billions of dollars of losses on mortgage-backed securities.
"As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction," Paulson said in launching the new effort.
"We are at the early stages of what should be a promising path, where the nascent U.S. covered bond market can grow and provide a new source of mortgage financing," he said.
Paulson was joined at the news conference by officials from the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. All the agencies said they endorsed the new set of best practices compiled by Treasury.
Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, "We look forward to being leading issuers as the U.S. covered bond market develops."
Private analysts said that the new initiative should help stabilize the U.S. mortgage market but they did not view the effort as a cure-all for all the problems facing the mortgage market now.
This effort to jump-start a U.S. market for covered bonds followed action earlier this month by the FDIC to approve new regulations for the bonds, which are a way of packaging mortgage investments similar to an approach that is used in Europe where the market for covered bonds approaches $3 trillion.
Covered bonds are issued by banks and backed by cash flows from mortgages or other types of debt. Under this approach, banks guarantee the bonds, thus providing an incentive for less risky lending practices. Unlike mortgage backed securities, covered bonds remain on the balance sheet of the bank that sells the bonds.
Encouraging such a market to grow could be one way to decrease the dominance that Fannie Mae and Freddie Mac wield in the U.S. mortgage market.
Provisions of housing-mortgage relief bill
AP Article
Provisions of housing-mortgage relief bill
By The Associated Press
Saturday, July 26, 2008
(07-26) 08:31 PDT , (AP) --
The housing bill that Congress passed Saturday and sent to President Bush would:
_Give the Federal Housing Administration $300 billion in new lending authority and relax standards to provide affordable, fixed-rate mortgages to an estimated 400,000 debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.
_Allow the Treasury Department temporary authority to lend money to Fannie and Freddie or buy their stock to avert a collapse of one or both of the mortgage giants. The authority would expire on Dec. 31, 2009.
_Create a new regulator and tighten controls on Fannie and Freddie, including power for the regulator to approve pay packages for company executives. Create a new affordable housing fund drawn from their profits. Permanently raise the limit on the loans they may buy to $625,000 in the highest-cost areas. Allow them to buy loans 15 percent higher than the median home price in certain cities.
_Provide $3.9 billion in grants to the hardest-hit communities for buying and fixing up foreclosed property.
_Modernize the FHA and allow it to back loans for riskier borrowers. Permanently increase the size of loans the agency may insure — currently set to revert to $362,790 by the end of the year — to $625,000 in the highest-cost areas. The agency could insure loans 15 percent higher than the median home price in certain cities.
_Forbid the FHA from insuring mortgages in which the borrower's down payment is paid by the seller, beginning on Oct. 1, 2008. Place a one-year moratorium forbidding the agency from charging premiums based on the riskiness of the homeowner, until Oct. 1, 2009.
_Provide $15 billion in housing tax breaks, including for low-income housing. Give a credit of up to $7,500 for first-time home buyers who purchase residences between April 9, 2008, and July 1, 2009. Allow people who don't itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes.
_Give states an additional $11 billion in tax-free municipal bond authority for low-interest loans to first-time home buyers, construction of low-income rental housing and refinancing subprime mortgages.
_Offer protection from investor lawsuits for mortgage holders that modify loans to borrowers who are in default or about to default.
_Provide $180 million for pre-foreclosure counseling and legal services for distressed borrowers.
___
The bill is H.R. 3221
Provisions of housing-mortgage relief bill
By The Associated Press
Saturday, July 26, 2008
(07-26) 08:31 PDT , (AP) --
The housing bill that Congress passed Saturday and sent to President Bush would:
_Give the Federal Housing Administration $300 billion in new lending authority and relax standards to provide affordable, fixed-rate mortgages to an estimated 400,000 debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.
_Allow the Treasury Department temporary authority to lend money to Fannie and Freddie or buy their stock to avert a collapse of one or both of the mortgage giants. The authority would expire on Dec. 31, 2009.
_Create a new regulator and tighten controls on Fannie and Freddie, including power for the regulator to approve pay packages for company executives. Create a new affordable housing fund drawn from their profits. Permanently raise the limit on the loans they may buy to $625,000 in the highest-cost areas. Allow them to buy loans 15 percent higher than the median home price in certain cities.
_Provide $3.9 billion in grants to the hardest-hit communities for buying and fixing up foreclosed property.
_Modernize the FHA and allow it to back loans for riskier borrowers. Permanently increase the size of loans the agency may insure — currently set to revert to $362,790 by the end of the year — to $625,000 in the highest-cost areas. The agency could insure loans 15 percent higher than the median home price in certain cities.
_Forbid the FHA from insuring mortgages in which the borrower's down payment is paid by the seller, beginning on Oct. 1, 2008. Place a one-year moratorium forbidding the agency from charging premiums based on the riskiness of the homeowner, until Oct. 1, 2009.
_Provide $15 billion in housing tax breaks, including for low-income housing. Give a credit of up to $7,500 for first-time home buyers who purchase residences between April 9, 2008, and July 1, 2009. Allow people who don't itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes.
_Give states an additional $11 billion in tax-free municipal bond authority for low-interest loans to first-time home buyers, construction of low-income rental housing and refinancing subprime mortgages.
_Offer protection from investor lawsuits for mortgage holders that modify loans to borrowers who are in default or about to default.
_Provide $180 million for pre-foreclosure counseling and legal services for distressed borrowers.
___
The bill is H.R. 3221
Friday, July 25, 2008
What Not To Do !!!
This was from the Associated Press:
Massive Housing Bill Passes Key Senate Vote
Friday, July 25, 2008
WASHINGTON — The Senate cleared the last hurdle Friday to passing a housing rescue aimed at sparing hundreds of thousands of homeowners from foreclosure and bolstering troubled mortgage giants Fannie Mae and Freddie Mac.
The 80-13 test vote showed broad support for the election-year package and put it on track to pass the Senate by Saturday. The White House says President Bush will sign it, having earlier dropped a threat to veto it over $3.9 billion in neighborhood grants.
The bill -- regarded as the most significant housing legislation in a generation -- is designed to help an estimated 400,000 homeowners escape foreclosure by letting them refinance into more affordable loans backed by the Federal Housing Administration.
It was set to clear Congress as a private company reported that the number of households facing the foreclosure process more than doubled in the second quarter of 2008 compared with a year ago. Irvine, Calif.-based RealtyTrac, Inc., said that 739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households.
"The American people can begin to see they're going to get some relief and some help from their Congress," said Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman.
The plan gives the Treasury Department power to spend unlimited amounts to prop up Fannie and Freddie, should they need it, to calm investor fears about their financial stability at a time of rising foreclosures and falling home values. Treasury Secretary Henry M. Paulson calls the authority a "backstop" which he has no intention of using.
Paulson's request for the emergency power helped forge a bipartisan deal on the legislation, which also creates a new regulator with tighter controls on the government-sponsored mortgage firms -- something Republicans have long sought.
Democrats also won key concessions as part of the compromise, including a permanent affordable housing program to be financed by Fannie and Freddie profits and the $3.9 billion in grants for buying and fixing up foreclosed properties in neighborhoods hit hardest by the housing crisis.
Many conservative Republicans are vehemently opposed to the foreclosure rescue, which they call a bailout of irresponsible homeowners and unscrupulous lenders. They are equally furious about the help for Fannie Mae and Freddie Mac, companies they say enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.
Sen. Jim DeMint, R-S.C., was single-handedly delaying a final vote on the package until Saturday because Democrats refused to allow a vote on his proposal barring the two firms from lobbying and making political contributions.
"These organizations that are now guaranteed by the American taxpayer should no longer be able to spend millions of dollars buying influence in Congress. That's a conflict of interest," DeMint said.
Dodd called Republican efforts to delay the measure's passage "tragic" given how many people are losing their homes each day.
More than three-quarters of Republicans voted against the measure when it passed the House on Wednesday.
Massive Housing Bill Passes Key Senate Vote
Friday, July 25, 2008
WASHINGTON — The Senate cleared the last hurdle Friday to passing a housing rescue aimed at sparing hundreds of thousands of homeowners from foreclosure and bolstering troubled mortgage giants Fannie Mae and Freddie Mac.
The 80-13 test vote showed broad support for the election-year package and put it on track to pass the Senate by Saturday. The White House says President Bush will sign it, having earlier dropped a threat to veto it over $3.9 billion in neighborhood grants.
The bill -- regarded as the most significant housing legislation in a generation -- is designed to help an estimated 400,000 homeowners escape foreclosure by letting them refinance into more affordable loans backed by the Federal Housing Administration.
It was set to clear Congress as a private company reported that the number of households facing the foreclosure process more than doubled in the second quarter of 2008 compared with a year ago. Irvine, Calif.-based RealtyTrac, Inc., said that 739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households.
"The American people can begin to see they're going to get some relief and some help from their Congress," said Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman.
The plan gives the Treasury Department power to spend unlimited amounts to prop up Fannie and Freddie, should they need it, to calm investor fears about their financial stability at a time of rising foreclosures and falling home values. Treasury Secretary Henry M. Paulson calls the authority a "backstop" which he has no intention of using.
Paulson's request for the emergency power helped forge a bipartisan deal on the legislation, which also creates a new regulator with tighter controls on the government-sponsored mortgage firms -- something Republicans have long sought.
Democrats also won key concessions as part of the compromise, including a permanent affordable housing program to be financed by Fannie and Freddie profits and the $3.9 billion in grants for buying and fixing up foreclosed properties in neighborhoods hit hardest by the housing crisis.
Many conservative Republicans are vehemently opposed to the foreclosure rescue, which they call a bailout of irresponsible homeowners and unscrupulous lenders. They are equally furious about the help for Fannie Mae and Freddie Mac, companies they say enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.
Sen. Jim DeMint, R-S.C., was single-handedly delaying a final vote on the package until Saturday because Democrats refused to allow a vote on his proposal barring the two firms from lobbying and making political contributions.
"These organizations that are now guaranteed by the American taxpayer should no longer be able to spend millions of dollars buying influence in Congress. That's a conflict of interest," DeMint said.
Dodd called Republican efforts to delay the measure's passage "tragic" given how many people are losing their homes each day.
More than three-quarters of Republicans voted against the measure when it passed the House on Wednesday.
Pending Legislation May Kill Off The First Time Home Buyer
With the good news coming out of today's market we are also seeing more tightening by lenders. This is part of an email I received last week. This is not good news for unprepared first time home buyers. I hope the legislation does not pass. This article does a great job of explaining why. Let me know what you think.
-----------------------------------------------------------------------
Pending Legislation May Kill Off The First Time Home Buyer
The progression of home sales within the housing market is dependent on first time home buyers starting the domino affect. Their home purchases are the catalysts that allow people to sell their existing home and then move into a new property such as a larger home, condo or townhouse. In order to keep the housing market moving forward, we need to encourage homeownership at the beginning of the cycle. Mortgage programs that are underwritten with greater flexibility regarding credit, income and down payment will create more homeowners. We need mortgage loan programs that allow you to buy a home with as little money down as possible.
As recently as March of 2008, there were conventional loans that allowed for 100% financing such as the Home Possible, My Community, and 80/20 combination first and second mortgage programs. Declining property values coupled with high mortgage delinquencies in all real estate markets have all but eliminated investors for these types of high LTV loans. In addition, due to large losses by private mortgage insurance companies (PMI) there is an unwillingness of mortgage insurers to insure these loans. Hence these loan programs have either been eliminated or now require a down payment. With Fannie Mae and Freddie Mac's current financial problems and the overall state of the mortgage markets, don't expect that they will be creating any new high loan to value zero down mortgage products anytime soon.
Herein lies the problem. Most first time home buyers lack sufficient resources for the down payment and closing costs. They often have good credit and the ability to make a payment. Until they save enough money, they are left out the housing market. FHA loans currently allow buyers to obtain down payment assistance (DPA) from a relative or from a qualified down payment assistance provider. This means that buyers without enough current resources may be able to obtain enough funds to buy a home today. There are a number of approved down payment assistance providers-some of the largest names are Nehemiah, Genesis, and Ameridream. In a nutshell, these non-profit organizations issue down payment assistance to a prospective home buyer and then collect funds from the seller of a home who has agreed to participate in this program at the time of closing. The non-profit charities charge an administrative fee of between $300 and $500 to facilitate with the assistance of this funding. FHA sometimes refers to this arrangement as seller funded down payment-which they don't allow. Although the funding is coming from a non-profit, the FHA perception is that it is actually from the seller, albeit indirectly. The problem stems from losses. According to FHA, they have experienced larger losses on portfolios of loans that were funded with DPA funds.
In fact, FHA hopes to eliminate these programs altogether through the fast tracked housing bill going through congress now. Time is of the essence! The senate version-which is the supported version-will eliminate DPA. What would this mean? Let me make this clear-if this bill passes fewer houses will be sold. More qualified homeowners will remain as renters. More homes will stay on the market and the real estate and mortgage crisis will get worse. DPA funding offers a solution to our crisis by making homeownership possible. If there are problems with the way things are being done within the current DPA program then let's work on modifying them. Let's identify solutions-such as raising the minimum required credit score on DPA funded loans. This would probably lower the defaults and match the underwriting to the risk. Elimination o r outright banning of DPA programs that are currently helping our ailing housing market is foolish. As a Minnesota FHA mortgage broker who works in the market on a daily basis, I can tell you about clients who are good people who want to become homeowners. Their shot at owning a home depends on these programs. Get involved and learn more. The consequences of making the wrong decision about the fate of DPA’s will affect our entire economy.
-----------------------------------------------------------------------
Pending Legislation May Kill Off The First Time Home Buyer
The progression of home sales within the housing market is dependent on first time home buyers starting the domino affect. Their home purchases are the catalysts that allow people to sell their existing home and then move into a new property such as a larger home, condo or townhouse. In order to keep the housing market moving forward, we need to encourage homeownership at the beginning of the cycle. Mortgage programs that are underwritten with greater flexibility regarding credit, income and down payment will create more homeowners. We need mortgage loan programs that allow you to buy a home with as little money down as possible.
As recently as March of 2008, there were conventional loans that allowed for 100% financing such as the Home Possible, My Community, and 80/20 combination first and second mortgage programs. Declining property values coupled with high mortgage delinquencies in all real estate markets have all but eliminated investors for these types of high LTV loans. In addition, due to large losses by private mortgage insurance companies (PMI) there is an unwillingness of mortgage insurers to insure these loans. Hence these loan programs have either been eliminated or now require a down payment. With Fannie Mae and Freddie Mac's current financial problems and the overall state of the mortgage markets, don't expect that they will be creating any new high loan to value zero down mortgage products anytime soon.
Herein lies the problem. Most first time home buyers lack sufficient resources for the down payment and closing costs. They often have good credit and the ability to make a payment. Until they save enough money, they are left out the housing market. FHA loans currently allow buyers to obtain down payment assistance (DPA) from a relative or from a qualified down payment assistance provider. This means that buyers without enough current resources may be able to obtain enough funds to buy a home today. There are a number of approved down payment assistance providers-some of the largest names are Nehemiah, Genesis, and Ameridream. In a nutshell, these non-profit organizations issue down payment assistance to a prospective home buyer and then collect funds from the seller of a home who has agreed to participate in this program at the time of closing. The non-profit charities charge an administrative fee of between $300 and $500 to facilitate with the assistance of this funding. FHA sometimes refers to this arrangement as seller funded down payment-which they don't allow. Although the funding is coming from a non-profit, the FHA perception is that it is actually from the seller, albeit indirectly. The problem stems from losses. According to FHA, they have experienced larger losses on portfolios of loans that were funded with DPA funds.
In fact, FHA hopes to eliminate these programs altogether through the fast tracked housing bill going through congress now. Time is of the essence! The senate version-which is the supported version-will eliminate DPA. What would this mean? Let me make this clear-if this bill passes fewer houses will be sold. More qualified homeowners will remain as renters. More homes will stay on the market and the real estate and mortgage crisis will get worse. DPA funding offers a solution to our crisis by making homeownership possible. If there are problems with the way things are being done within the current DPA program then let's work on modifying them. Let's identify solutions-such as raising the minimum required credit score on DPA funded loans. This would probably lower the defaults and match the underwriting to the risk. Elimination o r outright banning of DPA programs that are currently helping our ailing housing market is foolish. As a Minnesota FHA mortgage broker who works in the market on a daily basis, I can tell you about clients who are good people who want to become homeowners. Their shot at owning a home depends on these programs. Get involved and learn more. The consequences of making the wrong decision about the fate of DPA’s will affect our entire economy.
Wednesday, July 16, 2008
Number Of Homes Per Buyer In Decline
Here is a great article from the Minneapolis Area Association of Realtors. I know it's a little hard to read so I have also included the link below.
Here is the link :
http://mplsrealtor.com/downloads/inside/press-releases/news_2008-07.pdf
Here is the link :
http://mplsrealtor.com/downloads/inside/press-releases/news_2008-07.pdf
New Fannie Guidelines
This was part of an email I received from one of my trusted lenders. He received it directly from Fannie Mae. What does it mean?
This one is for all my investors. In the past an investor would be aloud to use 75% of the rental income on a property as personal income to offset the mortgage. This would allow the investor to go out and purchase another property as the 75% would most likely cover the PITI (principle, interest, taxes, and insurance). He or she would not see much of an increase in their debt to income ratio.
With lenders everywhere tightening up, this has now changed. Fannie will still allow you to use 75% of the rental income as an offset, but only if there is 30% equity in the property. So if you had a property worth $100,000 the leans on that property could not be more than $70,000.
Tuesday, July 15, 2008
Plymouth, MN Ranked Best Place To Live
Plymouth, MN was just ranked the best place to live by Money...
http://money.cnn.com/magazines/moneymag/bplive/2008/index.html
"1. Plymouth, MN
Plymouth's numerous lakes are a magnet for boaters, water skiers and fishermen.
WINNERTop 100 rank: 1Population: 70,100Compare Plymouth to Top 10 Best Places
Topnotch schools, good jobs, affordable housing, low crime, an active outdoor culture - yep, they're pretty much all here. Plymouth could have become just another Twin Cities suburb, but more than 50,000 jobs keep residents working there.
Home prices are within reason: The typical three-bedroom, two-bath house goes for $350,000. The city's main school district is ranked among the top three in the state, and for culture, Plymouth's open-air amphitheater, the Hilde Performance Center, hosts numerous summer concerts. Residents are a quick drive from the Mall of America, the nation's biggest mall.
And did we mention the outdoors? Plymouth boasts more than half a dozen sizable bodies of water. Of course, this being Minnesota, winter can be brutal: January's average low temperature is about 13°F. But when the mercury plummets, the locals get busy. In February the city hosts a Fire & Ice Festival that includes mini-golf, bowling and basketball - all right on the ice."
http://money.cnn.com/magazines/moneymag/bplive/2008/index.html
"1. Plymouth, MN
Plymouth's numerous lakes are a magnet for boaters, water skiers and fishermen.
WINNERTop 100 rank: 1Population: 70,100Compare Plymouth to Top 10 Best Places
Topnotch schools, good jobs, affordable housing, low crime, an active outdoor culture - yep, they're pretty much all here. Plymouth could have become just another Twin Cities suburb, but more than 50,000 jobs keep residents working there.
Home prices are within reason: The typical three-bedroom, two-bath house goes for $350,000. The city's main school district is ranked among the top three in the state, and for culture, Plymouth's open-air amphitheater, the Hilde Performance Center, hosts numerous summer concerts. Residents are a quick drive from the Mall of America, the nation's biggest mall.
And did we mention the outdoors? Plymouth boasts more than half a dozen sizable bodies of water. Of course, this being Minnesota, winter can be brutal: January's average low temperature is about 13°F. But when the mercury plummets, the locals get busy. In February the city hosts a Fire & Ice Festival that includes mini-golf, bowling and basketball - all right on the ice."
Sunday, July 13, 2008
Fannie and Freddie in the Spotlight
I'm sure many of you heard last week about the "trouble" Fannie and Freddie were in last week. Here is a quick explanation of it taken from a article written by my mortgage team.
Fannie and Freddie in the Spotlight
While there have been concerns for months about the size of losses at Fannie Mae and Freddie Mac due to the credit crisis, the troubles at the two firms increased significantly during the week. Monday, a report from an investment bank suggested that the two firms would have to raise enormous amounts of capital to comply with revised accounting rules. Thursday, Former Fed member Poole claimed that the two firms are insolvent under standard accounting rules and warned that a government bailout might be needed in the future. Friday morning, there was speculation that the government was considering a takeover of the two firms.
The response from government officials was swift. The director of OFHEO, Fannie and Freddie's regulator, reported that they both remained "well capitalized" based on their charters. On Thursday, Fed Chief Bernanke and Treasury Secretary Paulson attempted to reassure investors that the financial system was sound. Since Fannie and Freddie are government-sponsored enterprises, and together account for about 70% of mortgage originations and hold $5.3 trillion in home-loan debt, most investors believe that the government would step in to prevent the collapse of the firms. Friday, Treasury Secretary Paulson stated that he sees no bailout on the horizon for Fannie and Freddie and that the government is working to support them to carry out their "important mission" in their "current form".
Bottom line, despite the negative headlines, comments from OFHEO, the Fed, and the Treasury eased investor concerns. While the stock prices of Fannie and Freddie plunged during the week, investors apparently were comfortable that the firms' guarantees of the mortgage loans were not at risk, and mortgage rates ended the week moderately lower.
Fannie and Freddie in the Spotlight
While there have been concerns for months about the size of losses at Fannie Mae and Freddie Mac due to the credit crisis, the troubles at the two firms increased significantly during the week. Monday, a report from an investment bank suggested that the two firms would have to raise enormous amounts of capital to comply with revised accounting rules. Thursday, Former Fed member Poole claimed that the two firms are insolvent under standard accounting rules and warned that a government bailout might be needed in the future. Friday morning, there was speculation that the government was considering a takeover of the two firms.
The response from government officials was swift. The director of OFHEO, Fannie and Freddie's regulator, reported that they both remained "well capitalized" based on their charters. On Thursday, Fed Chief Bernanke and Treasury Secretary Paulson attempted to reassure investors that the financial system was sound. Since Fannie and Freddie are government-sponsored enterprises, and together account for about 70% of mortgage originations and hold $5.3 trillion in home-loan debt, most investors believe that the government would step in to prevent the collapse of the firms. Friday, Treasury Secretary Paulson stated that he sees no bailout on the horizon for Fannie and Freddie and that the government is working to support them to carry out their "important mission" in their "current form".
Bottom line, despite the negative headlines, comments from OFHEO, the Fed, and the Treasury eased investor concerns. While the stock prices of Fannie and Freddie plunged during the week, investors apparently were comfortable that the firms' guarantees of the mortgage loans were not at risk, and mortgage rates ended the week moderately lower.
Saturday, July 12, 2008
Great Quote
Abraham Lincoln on Private Property and Enterprise
"Property is the fruit of labor...property is desirable...is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."
"Property is the fruit of labor...property is desirable...is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."
Tuesday, July 8, 2008
Great letter from the Superintendent of IDS 279(Osseo / Maple Grove)
June 04, 2008
Sharing the Joy
What started out as a simple request for information for a Superintendent’s column has become an exciting and notable list of accomplishments from throughout our school system. This was the email I sent to our ISD 279 Principals and Leadership: Please help us celebrate all the wonderful accomplishments that we have made at our sites and within our system this year. I would like your help to declare our progress on our journey to optimize our energies and resources to increase student learning through a collaborative culture that is focused on results.
I am so proud of our district and I’m happy to share some of the highlights with you. All of the accomplishments submitted by our district’s leadership are posted online at http://www.district279.org/. I encourage you to take a look. Be sure to allow plenty of time. There’s a lot, but it’s worth it. They’re inspiring!
For this article, we selected some noteworthy accomplishments in four categories: Academics, Accolades, Helping Others and Behind the Scenes.
ACADEMICS – ESPECIALLY MATH!Academic test scores improved in many schools throughout ISD 279, with schools being recognized at the state and national levels!
Rush Creek was named a 2007 Blue Ribbon School by the U.S. Department of Education. Student test scores rank in the top 10% of the state. The school was one of eight Blue Ribbon schools in Minnesota and 287 nationwide.
The Osseo Junior High MATHCOUNTS team took first place in the regional competition and participated at the state meet. They also took a second- and two third-place finishes in the St. Cloud State University Math Contest.
Elementary schools reporting “skyrocketing” gains in math test scores include Zanewood Community School, Garden City, Birch Grove and Park Brook.
An individual standout is Sydney Kara, a 5th grader at Fernbrook Elementary, who scored a perfect 30 out of 30 on this year’s Continental Math League meets. CML is a rigorous math problem solving competition that is offered to students throughout the nation.
ACCOLADES
Edgewood Elementary: A Science, Math & Technology School, and Birch Grove Elementary School for the Arts, were each named a “Magnet School of Excellence” by the Magnet Schools of America. In addition, Edgewood was one of just three national finalists in the Elementary Science category for the Intel “Schools of Distinction” award.
Edward Stronge, a senior at Park Center Senior High, received a National Achievement Scholarship. Edward was one of only 700 scholarship recipients, from a pool of over 140,000 applicants.
Brad Derrick of Osseo Junior High and Jessica Barry of Weaver Lake won their respective school’s Geography Bee and represented Osseo Area Schools at the Minnesota State Geography Bee.
Ashlee Kephart, a junior at Park Center Senior High, was honored in Washington, D.C. by the Caring Institute as a 2008 National Caring Award Young Adult Winner. Ashlee has published a book, A Special Way of Remembering When a Parent Dies, has volunteered more than 5,000 hours, and is the founder of a non-profit organization, Kids for a Better World.
Rice Lake Elementary 4th grader Jack Cassidy was selected to play one of the lead roles in the Maple Grove Senior High fall production of Suessical the Musical. In addition, the production won the Hennepin Theatre District Spotlight Award and students will perform their opening number at the Orpheum Theatre in June.
The Park Center Senior High Summer Marching Band made history with its undefeated season. The Marching Pirates were 1st Place Grand Champions in each of their 10 competitive parades last May and June. The culmination of their championship season was winning the Grand Champion Trophyat the prestigious national parade in Alexandria, Minnesota.
More than 500 students representing Maple Grove Senior High, Osseo Senior High, Park Center High and the District 279 Children’s Chorus performed at Orchestra Hall last November.
Maple Grove Senior High earned State Team Championships in Girl’s Swimming, Dance Jazz/Funk, and CI-Adaptive Floor Hockey.
The Osseo Senior High softball team won its first Northwest Suburban Conference title in 13 years and is playing in the Minnesota State High School League AAA Girls Softball tournament.
HELPING OTHERS
When an Osseo Elementary student was diagnosed with sinus cancer, the school and community rallied together to plan a waffle breakfast fundraiser and raised nearly $6,000. Students also made posters to welcome him back to school.
At Maple Grove Senior High, when a student fell out of her wheelchair and broke four front teeth, students and staff are helping to raise money to replace the teeth. Almost $8,000 is needed to repair her teeth, and fundraising efforts are ongoing.
Basswood Elementary staff began a Families Helping Families initiative this year and hosted their first annual spaghetti dinner. Revenues from the event will support families in the community during times of loss.
Numerous schools also held fundraisers and hosted service projects. Thousands of dollars were raised and hundreds of donations were created or purchased to support worthy causes.
BEHIND THE SCENESSo much of our attention focuses on activities in our schools, which it should. However, none of that learning could take place without our wonderful support staff. We’re pleased to share some of their accomplishments:
The Health & Safety Department installed an anonymous “Tip Line” allowing students, parents and the public to report information that impacts school safety. Videos, posters and bookmarks were created to promote the new Tip Line.
The Transportation Department reported that the start-up of 2007-08 bus transportation was the best in five years due to staff training and effective staffing of the Transportation Call-in Center and the Enrollment Center.
The Technology Management Department reported the successful installation of Connect-Ed, a high-speed web-based parent notification system that allows district leaders to deliver a pre-recorded telephone message to all parents and employees in less than 15 minutes.
I want to close by acknowledging a wonderful story submitted by Custodial Services. While we all have made sacrifices this year due to the budget reductions, there are personal sacrifices occurring that are typically never seen or heard. This one is notable: “Enough members of the custodial unit volunteered to take three days off without pay to save one custodial position from layoff. I believe it shows the courage of the custodial unit to step up and contribute to the well-being of their fellow custodians, and to show their support of the educational process.”
This speaks volumes of the commitment at absolutely every level within our organization. We thank you.
Personally, I want to thank everyone in District 279 for a tremendous year. Have a fabulous summer, and we look forward to seeing you next year!
Sharing the Joy
What started out as a simple request for information for a Superintendent’s column has become an exciting and notable list of accomplishments from throughout our school system. This was the email I sent to our ISD 279 Principals and Leadership: Please help us celebrate all the wonderful accomplishments that we have made at our sites and within our system this year. I would like your help to declare our progress on our journey to optimize our energies and resources to increase student learning through a collaborative culture that is focused on results.
I am so proud of our district and I’m happy to share some of the highlights with you. All of the accomplishments submitted by our district’s leadership are posted online at http://www.district279.org/. I encourage you to take a look. Be sure to allow plenty of time. There’s a lot, but it’s worth it. They’re inspiring!
For this article, we selected some noteworthy accomplishments in four categories: Academics, Accolades, Helping Others and Behind the Scenes.
ACADEMICS – ESPECIALLY MATH!Academic test scores improved in many schools throughout ISD 279, with schools being recognized at the state and national levels!
Rush Creek was named a 2007 Blue Ribbon School by the U.S. Department of Education. Student test scores rank in the top 10% of the state. The school was one of eight Blue Ribbon schools in Minnesota and 287 nationwide.
The Osseo Junior High MATHCOUNTS team took first place in the regional competition and participated at the state meet. They also took a second- and two third-place finishes in the St. Cloud State University Math Contest.
Elementary schools reporting “skyrocketing” gains in math test scores include Zanewood Community School, Garden City, Birch Grove and Park Brook.
An individual standout is Sydney Kara, a 5th grader at Fernbrook Elementary, who scored a perfect 30 out of 30 on this year’s Continental Math League meets. CML is a rigorous math problem solving competition that is offered to students throughout the nation.
ACCOLADES
Edgewood Elementary: A Science, Math & Technology School, and Birch Grove Elementary School for the Arts, were each named a “Magnet School of Excellence” by the Magnet Schools of America. In addition, Edgewood was one of just three national finalists in the Elementary Science category for the Intel “Schools of Distinction” award.
Edward Stronge, a senior at Park Center Senior High, received a National Achievement Scholarship. Edward was one of only 700 scholarship recipients, from a pool of over 140,000 applicants.
Brad Derrick of Osseo Junior High and Jessica Barry of Weaver Lake won their respective school’s Geography Bee and represented Osseo Area Schools at the Minnesota State Geography Bee.
Ashlee Kephart, a junior at Park Center Senior High, was honored in Washington, D.C. by the Caring Institute as a 2008 National Caring Award Young Adult Winner. Ashlee has published a book, A Special Way of Remembering When a Parent Dies, has volunteered more than 5,000 hours, and is the founder of a non-profit organization, Kids for a Better World.
Rice Lake Elementary 4th grader Jack Cassidy was selected to play one of the lead roles in the Maple Grove Senior High fall production of Suessical the Musical. In addition, the production won the Hennepin Theatre District Spotlight Award and students will perform their opening number at the Orpheum Theatre in June.
The Park Center Senior High Summer Marching Band made history with its undefeated season. The Marching Pirates were 1st Place Grand Champions in each of their 10 competitive parades last May and June. The culmination of their championship season was winning the Grand Champion Trophyat the prestigious national parade in Alexandria, Minnesota.
More than 500 students representing Maple Grove Senior High, Osseo Senior High, Park Center High and the District 279 Children’s Chorus performed at Orchestra Hall last November.
Maple Grove Senior High earned State Team Championships in Girl’s Swimming, Dance Jazz/Funk, and CI-Adaptive Floor Hockey.
The Osseo Senior High softball team won its first Northwest Suburban Conference title in 13 years and is playing in the Minnesota State High School League AAA Girls Softball tournament.
HELPING OTHERS
When an Osseo Elementary student was diagnosed with sinus cancer, the school and community rallied together to plan a waffle breakfast fundraiser and raised nearly $6,000. Students also made posters to welcome him back to school.
At Maple Grove Senior High, when a student fell out of her wheelchair and broke four front teeth, students and staff are helping to raise money to replace the teeth. Almost $8,000 is needed to repair her teeth, and fundraising efforts are ongoing.
Basswood Elementary staff began a Families Helping Families initiative this year and hosted their first annual spaghetti dinner. Revenues from the event will support families in the community during times of loss.
Numerous schools also held fundraisers and hosted service projects. Thousands of dollars were raised and hundreds of donations were created or purchased to support worthy causes.
BEHIND THE SCENESSo much of our attention focuses on activities in our schools, which it should. However, none of that learning could take place without our wonderful support staff. We’re pleased to share some of their accomplishments:
The Health & Safety Department installed an anonymous “Tip Line” allowing students, parents and the public to report information that impacts school safety. Videos, posters and bookmarks were created to promote the new Tip Line.
The Transportation Department reported that the start-up of 2007-08 bus transportation was the best in five years due to staff training and effective staffing of the Transportation Call-in Center and the Enrollment Center.
The Technology Management Department reported the successful installation of Connect-Ed, a high-speed web-based parent notification system that allows district leaders to deliver a pre-recorded telephone message to all parents and employees in less than 15 minutes.
I want to close by acknowledging a wonderful story submitted by Custodial Services. While we all have made sacrifices this year due to the budget reductions, there are personal sacrifices occurring that are typically never seen or heard. This one is notable: “Enough members of the custodial unit volunteered to take three days off without pay to save one custodial position from layoff. I believe it shows the courage of the custodial unit to step up and contribute to the well-being of their fellow custodians, and to show their support of the educational process.”
This speaks volumes of the commitment at absolutely every level within our organization. We thank you.
Personally, I want to thank everyone in District 279 for a tremendous year. Have a fabulous summer, and we look forward to seeing you next year!
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