| 00:00:06 | >> | WE'RE GOING TO TAKE YOU LIVE NEXT TO A FORUM ON HOME OWNERSHIP AND WE'LL HEAR FROM SHEILA BAIR WHO HEADS UP THE FEDERAL DEPOSIT INSURANCE CORPORATION AND A PANEL FROM THE UNIVERSITY OF NORTH CAROLINA TALKS ABOUT HOME OWNERSHIP, AMONG LOWER INCOME FAMILIES, ROY BASHARA VICE PRESIDENT OF THE NEW AMERICA FOUNDATION IS INTRODUCING THE PANEL, LIVE COVERAGE ON C-SPAN2. |
| 00:00:12 | >> | .. IMPOSSIBLE TO IMAGINE OUR WORK ON ASSET BUILDING AND SAVINGS AND FINANCIAL SERVICES WITHOUT THE LEADERSHIP OF THE FORD FOUNDATION OVER MANY YEARS. SO, LET ME TURN NOW TO MY INTRODUCTION OF CHAIRMAN BAIR, I'M MOST HONORED TO INTRODUCE HER, SHE HAS BEEN HEADING UP THE FDIC SINCE JUNE, 2006. AND, A DEAR FRIEND OF NEW AMERICA, SHE HAS MEN MORE ADMIRERS THAN SHE IS AWARE OF. THE CHAIRMAN AND I HAPPEN TO SHARE A PASSION FOR CHILDREN'S SEUFTION ACCOUNT AND THE REVOLUTIONARY IMPACT WE BELIEVE THOSE ACCOUNTS WOULD HAVE ON FINANCIAL EDUCATION AROUND THE NATION, BUT WE'RE NOT HERE TO TALK ABOUT THAT TODAY. WE WILL IN THE FUTURE. TODAY, OF COURSE, WE ARE GOING TO -- CHAIRMAN BAIR WILL TALK TO US ABOUT HER WORK ON HOME OWNERSHIP IN PARTICULAR, PROTECTING VULNERABLE HOMEOWNERS MAKING SURE THEY CAN STAY IN THEIR HOMES, CHAIRMAN BAIR HAS HAD -- DEMONSTRATED SUPERB PRESCIENT AND COURAGEOUS LEADERSHIP ON THIS ISSUE AS MANY OF YOU KNOW AND KEEPING TROUBLED HOMEOWNERS IN THEIR HOMES, AND THE UPWARDS SPIRALING EFFECTS IT WILL HAVE ON OUR ECONOMY. CNN RECENTLY CALLED HER THE CONSISTENT VOICE OF REASON, FOR HER RELENTLESS FOCUS ON HOMEOWNERS, KEEPING THEM IN THEIR HOMES AND CONSUMERS AND THE FOCUS ON MAIN STREET, FOR -- THOSE ON MAIN STREET IN OUR NATION. AND, VERY IMPORTANTLY, AS WELL, SHE HAS DONE -- MADE AN ENORMOUS CONTRIBUTION TO RESTORING TRUST IN OUR PUBLIC INSTITUTIONS. I CANNOT SING HER PRAISES LOUDLY ENOUGH. AT NEW AMERICA WE HAVE VETTED AROUND THE -- BATTED AROUND THE IDEA OF HAVING PUBLIC SERVICE AWARDS AND I HAVE NO DOUBT IF WE WERE TO DO THAT, CHAIRMAN BAIR WOULD BE OUR FIRST RECIPIENT, THE CHAIRMAN WILL SPEAK 20 MINUTES, AND THEN WE WILL HAVE Q AND A, WHICH WILL BE MODERATED BY ED LEN SEIDMAN FORMER HEAD OF THE OFFICE OF THRIFT SUPERVISION AND DIRECTOR OF FINANCIAL SERVICES POLICY HERE AT NEW AMERICA. CHAIRMAN BAIR? [APPLAUSE]. |
| 00:02:25 | >> | THANK YOU, THAT WAS A KIND INTRODUCTION AND I DO INDEED SHARE THE PASSION OF THIS ORGANIZATION FOR SAVINGS AND ASSET ACCUMULATION STARTING AT A VERY ARTICLE AGE AND WE'LL BE ABLE TO GET BACK TO THAT ISSUE, TOO AT SOME POINT I HOPE. GOOD MORNING AND THANK YOU FOR INVITING ME TO SPEAK. WHAT A YEAR IT HAS BEEN! AS WE CLOSE THE BOOKS ON 2008, I HOPE WE DON'T SEE ANOTHER ONE LIKE IT THOUGH I THINK IT WILL BE TOUGH IN 2009. I DON'T THINK ANYONE ON THE PLAN AT THE EVEN A YEAR OR TWO AGO COULD HAVE PREDICTED WHAT WE WENT THROUGH AND WE WERE ONE OF THE EARLY ALARM SOUND,ON THIS BUT EVEN WE HAVE -- AT THE FDIC HAVE TAKEN BACK BY HOW SEVERELY THE PROBLEMS IN THE HOUSE MARKET HAVE HAD BROADER IMPACT. WHEN I TOOK OFFICE IN JUNE 2006, I THOUGHT IT WOULD BE REGULAR HOURS, 9:00 TO 5:00, TRIPS TO THE SWIPS ALPS TO TALK ABOUT GLOBAL CAPITAL RUMTION AND MY BIGGEST HEADACHE WOULD BE WHETHER WAL-MART SHOULD HAVE A BANK AND WHAT -- WHAT I WOULD LIKE TO DO IS BURY TWO MYTHS THAT HAVE BEEN CIRCULATING AND THE FIRST IS THE COMMUNITY REINVESTMENT ACT CAUSED THE FINANCIAL CRISIS. AND THE SECOND MYTH THAT IS WORKING WITH TROUBLED HOMEOWNERS TO REDUCE FORECLOSURES LACKS URGENCY AND MAY BE A -- AKIN TO A FOOL'S AIR RAND. I THINK WE CAN AGREE A COMPLEX INTERPLAY OF RISKY BEHAVIORS BY LENDERS, BORROWERS AND INVESTORS LED TO THE CURRENT FINANCIAL STORM. TO BE SURE, THERE IS PLENTY OF BLAME TO GO AROUND. HOWEVER, I WANT TO GIVE YOU MY VERDICT ON CRA. IT IS NOT GUILTY. POINT OF FACT. ONLY ABOUT 1 IN 4 HIGHER PRICED FIRST MORTGAGE LOANS WERE MADE BY CRA-COVERED BANKS DURING THE YEARS OF SUBPRIME MORTGAGE LENDING 2004 THROUGH 2006. THE REST WERE MADE BY PRIVATE INDEPENDENT MORTGAGE COMPANIES OR LARGE BANK AFFILIATES NOT COVERED BY CRA RULES. YOU HAVE PROBABLY HEARD THE LINE OF ATTACK, GOVERNMENT TOLD BANKS THEY HAD TO MAKE LOANS TO PEOPLE WHO WERE BAD CREDIT RISKS, AND COULD NOT AFFORD TO REPAY, AND TO PROVE THEY WERE MAKING LOANS TO LOW AND MODERATE INCOME PEOPLE AND LET ME ASK YOU, WHERE IN THE CRA DOES IT SAY MAKE LOANS TO PEOPLE WHO DON'T HAVE THE MEANS TO REPAY THEM? NOWHERE. AND THE FACT IS, THAT LENDING PRACTICES THAT ARE CAUSING PROBLEMS TODAY WERE DRIVEN BY A DESIRE FOR MARKET SHARE, AND REVENUE GROWTH. PURE AND SIMPLE. CRA IS NOT PERFECT. BUT IT HAS STAYED AROUND MORE THAN 30 YEARS, BECAUSE IT DOES WORK. IT ENCOURAGES FDIC INSURED BANKS TO LEND AND LOAN MODERATE INCOME AREAS AND I QUOTE, CONSISTENT WITH THE SAFE AND SOUND OPERATION OF SUCH INSTITUTIONS. ANOTHER QUESTION: IS LENDING TO BORROWERS UNDER TERMS THEY CANNOT AFFORD TO REPAY CONSISTENT WITH THE SAFE AND SOUND OPERATIONS OF THOSE INSTITUTIONS? NO, OF COURSE NOT. CRA ALWAYS RECOGNIZED THERE ARE LIMITATIONS ON THE POTENTIAL VOLUME OF LENDING AND LOWER INCOME AREAS DUE TO SAFETY AND SOUNDNESS CONSTRAINS AND A BANK'S CAPACITY AND OPPORTUNITY FOR SAFE AND SOUND LENDING IN THE LMI COMMUNITY MAY BE LIMITED. THAT IS WHY THE CRA NEVER SET OUT LENDING TARGET OR GOAL AMOUNTS. AND THAT IS WHY CRA SUPPORTERS, MANY OF YOU HERE TODAY, HAVE LABORED FOR THREE DECADES TO FIGURE OUT HOW TO DO IT SAFELY. IT MAKES NO SENSE TO GIVE A LOAN TO SOMEONE UNDER TERMS YOU KNOW THEY CAN'T PAY BACK AND IS A SETUP FOR FAILURE AND DESPITE OUR PROBLEMS THE HOMEOWNER IS STILL ONE OF THE BEST CREDIT RISKS IN THE WORLD AND YOUR RESEARCH TODAY SHOWS THAT. TODAY THE DELINQUENCY RATE ON ALL HOME MORTGAGES IS ONLY 3.6%. AND FOR SUBPRIME LOANS THERE IS A -- STRUCTURE DIFFERENCE IN THE TYPE OF LOAN AND SERIOUSLY DELINQUENT SUBPRIME FIXED RATE LOANS IS A LITTLE MORE THAN 1/3 THE RATE OF SUBPRIME ARMS AND ANY FAMILY WILLING TO WORK, SAVE MONEY, AND PAY THE MORTGAGE ON THEIR HOUSE IS A SOUND BASIS OF CREDIT. AND A SOUND BASIS FOR AMERICA. SO LET THE RECORD SHOW, CRA IS NOT GUILTY OF CAUSING THE FINANCIAL CRISIS. THAT BRINGS ME TO THE OTHER MYTH I WANT TO DISPEL. WE CAN END THE HOUSING CRISIS WITHOUT MODIFYING TROUBLED MORTGAGES TO MAKE THEM AFFORDABLE FOR MILLIONS OF PEOPLE FACING FORECLOSURE. THE HOUSING CRISIS WAS CAUSED BY LOOSE LENDING PRACTICES AND UNAFFORDABLE MORTGAGES. AND NOW, UNNECESSARY FORECLOSURES ARE A VERY SERIOUS THREAT TO A HOUSING RECOVERY. MILLIONS OF AMERICANS ARE SADDLED WITH MORTGAGES THEY CANNOT AFFORD AND ARE IN DANGER OF LOUINGZ THEIR HUMANS, THE SURGE IN FORECLOSURES IS HURRYING EVERYONE, BY DEPRESSING HOUSING VALUES AND PUTTING -- HURTING EVERYONE BY PUT MORGUE BORROWERS AT RISK AND MANY SUFFER THROUGH THE RECESSION, LOST JOBS, SAVINGS AND LOST COMMUNITIES. AND AS REGULATORS WE NEED TO USE OUR AUTHORITY AND CLOUT TO STOP IT. AND GET THE COUNTRY OUT OF THE FORECLOSURE CRISIS. THIS HAS TO BE A TOP PRIORITY. WHILE THERE ARE NO MAGIC BULLETS AND A MULTI-PRONGED EFFORT IS NEEDED THE CORE ISSUE IS TO LOWERING PAYMENTS TO AN AFFORDABLE AND SUSTAINABLE LEVEL AND RECENT MONTHS, WE HAVE SEEN FEDERAL AND STATE GOVERNMENTS AND CONSUMER GROUPS WORK WITH SOME SUCCESS TO ENCOURAGE THE INDUSTRY TO MODIFY LOANS. AND WE ARE NOW SEEING LARGER-SCALE INITIATIVES BEING UNDERTAKEN, SOMETHING I BELIEVE IS KEY TO ANY SOLUTION. BUT, WE ARE STILL BEHIND THE CURVE, AND WE NEED A FAST TRACK, NATIONAL EFFORT. WE SUCCESSFULLY LAUNCHED THE PROGRAM FOR SYSTEMATICALLY MODIFYING LOANS AT INDYMAC FEDERAL, A CALIFORNIA BANK WE TOOK OVER IN JULY AND TODAY WE VERIFIED NEXT AND COMPLETED MODIFICATION FOR OVER 7500 LOANS WITH THOUSANDS MORE IN THE PIPELINE. USING THIS AS A MODEL FOR A LOAN MOD IN A BOX, NATIONAL PROGRAM, WE THINK THE COULD HELP 1.5 MILLION FAMILIES AVOID FORECLOSURE USING 24 BILLION DOLLARS IN GOVERNMENT FINANCING. THIS WOULD HELP GET AT THE ROOT CAUSE OF THE CREDIT CRUNCH AND THE ECONOMIC RECESSION. WE ARE GAINING GROUND AND SUPPORT, AND THE AMERICAN BANKERS ASSOCIATION INTRODUCED A PROGRAM LAST WEEK AND I WAS PLEASED TO SEE THAT AND BELIEVE MORE BORROWERS ACROSS THE COUNTRY CAN BE HELPED AND I THINK THE INDUSTRY SUPPORTS UNDER SDORS SCORES THE BUSINESS CASE FOR LOAN MODIFICATIONS AND SOME QUESTION THE EFFECTIVENESS OF LOAN MODIFICATIONS. AND THEY HAVE BEEN POINTING TO RECENT SADAT SUGGESTS THAT MANY MODIFIED LOANS END UP REDEFAULT REDEFAULTING PUTTING BORROWERS BACK IN TROUBLE AND I BEG TO DIFFER ON THAT. AND AT THE LEAST THE JURY REMAINS OUT. LAST WEEK, THE OFFICE OF THE COMPTROLLER AND THE OFFICE OF THRIFT SUPERVISION RELEASE AID REPORT ON MORTGAGES, THAT HAS BEEN CITED TO SHOW SUBSTANTIAL REDEFAULTS ON MODIFICATIONS. AND UNFORTUNATELY IT IS HARD TO DRAW CONCLUSIONS FROM THE REPORT FOR THREE KEY REASONS: FIRST, THE REPORT SIMPLY DEFINES A MODIFICATION AS ANY CHANGE IN CONTRACT TERMS, AND MANY PAST MOIFTIONINGS WERE SHORT-TERM FIXES THAT DIDN'T CREATE A SUSTAINABLE PAYMENT FOR BROTHERS AND COMPTROLLER DUGAN AGREED THE MODIFICATIONS SHOULD PERFORM MUCH BETTER AND SECOND THE REPORT COVERS A PERIOD BEFORE MOST SUSTAINABLE MODIFICATION APPROACHES WERE ADOPTED AND IN NOVEMBER, FREDDIE, FANNIE AND THE HOPE NOW ALLIANCE ANNOUNCED THEY WERE ADOPTING MANY OF THE FEEPS OF THE FDIC'S MODEL. AND, MEDIA STORIES UNFORTUNATELY FOCUSED ON DELINQUENCIES AFTER ONLY 30 DAYS, WHILE THOSE MADE FOR VERY BIG NUMBERS, THE 60 DAY DELINQUENCY FIGURE REPORTED BY THE OCC IS -- WAS MUCH LOWER, AROUND P 5%, AND GENERALLY -- 35% AND THE INDUSTRY DEFINES REDEFAULT OR DISTRESS FOR DELINQUENCIES OF 60 AND 90 DAYS AND A LARGE PERCENTAGE OF THE 30 DAY DELINQUENT MORTGAGES WILL BECOME CURRENT AGAIN WHICH IS WHY THE INDUSTRY DOESN'T USE ANGRIER THAN 60 DAYS AS AN INDICATOR OF REDEFAULT, AS WE HAVE STRESSED, A SUSTAINABLE MODIFICATION MUST BE BASED ON AFFORDABILITY. THIS FDIC'S APPROACH FOCUSES ON CREATING AN AFFORDABLE AND SUSTAINABLE MONTHLY MORTGAGE PAYMENT BASED ON VERIFIED INCOME. USING A COMBINATION OF INTEREST RATE REDUCTIONS, CONFORMING RATE AMORTIZATION EXTENSIONS AND PRINCIPAL DEFERMENT PRODUCES MODIFICATIONS THAT WILL LAST AND WE BELIEVE DRAMATICALLY LOWER THE REDEFAULT RATE AND A RECENT CREDIT SUISSE STUDY FOUND MODIFICATIONS BASED ON INTEREST RATE CHANGES HAD A 15% REDEFAULT RATE AND THOSE WITH PRINCIPAL REDUCTIONS HAD A 23% REDEFAULT RATE AND WE HAVE BEEN URGING SERVICERS TO FOCUS ON AFFORDABILITY AND INCOME VERIFICATION AND SETTING MORTGAGE RELATED PAYMENTS AT 31 TO 38% OF MONTHLY INCOME, AND FIXING INTEREST RATES AND INCLUDING LIFETIME INTEREST RATE CAPS. SOME INVESTED ANALYSTS ARE BEGINNING TO COME AROUND. JUST YESTERDAY, FITCH RATINGS ANNOUNCED IT WAS LOOKING TO WELL STRUCTURED MOIFERXS AS A KEY PART OF THE RATINGS RECEIVERSERS AND AS FITCH MANAGING DIRECTOR SUMMERVILLE SAID, QUOTE, MODIFICATIONS WHEN PROPERLY DONE CAN BENEFIT U.S. HOMEOWNERS AND INVESTORS. THE FDIC HAS BEEN REWORKING TROUBLED BANKS AT FAILED BANKS FOR DECADESnd AND WE HAVE A LOT OF PRACTICAL EXPERIENCE IN DEALING WITH TROUBLED ASSETS AND NO HOW TO DO THIS AND BELIEVE IT NEEDS TO BE DONE ON A NATIONAL SCALE. LET ME RAISE A FINAL ISSUE. LARGELY BECAUSE WE HAVE WAITED SO LONG TO ACT EFFECTIVELY, WE HAVE A NEW PROBLEM, SCAM ARTISTS PREYING ON DISTRESSED HOMEOWNERS AND WE NEED TO WORK CLOSELY WITH CONSUMER GROUPS, PROMINENT POLICY GURUS LIKE YOURSELVES AND OTHERS TO WARN HOMEOWNERS ABOUT THE SCAM ARTISTS OFFERING HELP FOR A HEFTY FEE, A MEMBER OF CONGRESS RECENTLY CALLED ME WITH A HEARTBREAKING STORY OF A FINANCIALLY STRAPPED FAMILY WITH AN UNAFFORDABLE MORTGAGE WHO PAID $2500 TO A, QUOTED, FORECLOSURE PREVENTION SPECIALIST TO GET A LOAN MODIFICATION. WE WERE ABLE TO REFER THE FAMILY TO THE PROPER SERVICING AGENT WHO DOES THE LOAN MODIFICATIONS TO QUALIFIED BORROWERS AT NO COST. PLEASE HELP US GET THE WORD OUT THAT BORROWERS SHOULD CONTACT REPUTABLE COUNCILORS THROUGH NEIGHBOR WORKS OF AMERICA OR OTHER GROUPS OR WORK WITH THE SERVICER DIRECTLY. AND IT IS IMPORTANT FOR QUALIFIED BOWERS TO UNDERSTAND THE INDUSTRY BEST PRACTICE IS LOAN MODIFICATIONS FREE OF CHARGE. THEY DO NOT NEED TO SPEND THOUSANDS OF DOLLARS TO GET HELP. IT IS ALSO IMPORTANT FOR BORROWERS TO UNDERSTAND THAT IF THEY HAVE AN AFFORDABLE PAYMENT, THEY SHOULD KEEP PAYING ON THEIR MORTGAGE. EVEN UNDER THE INDYMAC PROGRAM, IF THE NET PRESENT VALUE OF THE MODIFIED LOAN DOES NOT EXCEED THE FORGE VALUE THE LOAN WILL HAVE TO GO INTO FORECLOSURE. AND WHILE WE CAN HELP A LOT OF PEOPLE WE CAN'T HAPPY EVERYONE, BORROWERS RISK LOSING THEIR HOMES IF THEY PURPOSELY BECOME DELINQUENT TO TRY TO GET A LOWER MORTGAGE PAYMENT AND BEST THING TO DO IS STAY CURRENT ON THEIR LOANS. LET ME END WITH THIS: CONSUMER PROTECTION, CONSUMER PROTECTION BY BANK REGULATORS IS NOT AN OXYMORON. THOUGH WE NEED TO CHANGE HOW WE DO IT AND DO IT BETTER. THE RULES NEED TO BE WORKING TO MATCH A CHANGING INDUSTRY, AND CHANGING CONSUMER NEEDS. INSTEAD OF PLAYING CATCH-UP WE NEED TO KEEP PACE WITH THE TIMES AND MAKING THE WAY WE OPERATE FLEXIBLE AND NIMBLE ENOUGH TO RESPOND QUICKLY TO CHANGING AND OFTEN UNPREDICTABLE MARKET DEMANDS. I WANTED TO THANK THE CENTER FOR COMMUNITY CAPITAL AND ITS MANY SPONSORS FOR YOUR NEW STUDY ON LMI LEFT HANDING. WE NEED MORE LEFTING AND WE NEED MORE RESEARCH LIKE THIS TO DESIGN POLICIES AND PROGRAMS THAT ARE MORE EFFECTIVE IN DELIVERING CREDIT TO FAMILIES OF MOTTEST MEANS WHICH IS NEEDED NOW, MORE THAN EVER AND I LOOK FOIRD TO WORKING WITH YOU GOING FORWARD AS -- FORWARD AS WE WORK TO BOLSTER PUBLIC CONFIDENCE IN OUR FINANCIAL SYSTEM. IT IS GOING TO BE ANOTHER TOUGH YEAR, 2009 AND WE ARE PREPARED FOR IT BUT WE WILL WORK THROUGH IT AND BY 2010 I BELIEVE WE'LL SEE THE LIGHT AT THE END OF THE TUNNEL. THANK YOU VERY MUCH. [APPLAUSE]. |
| 00:13:38 | >> | THANK YOU SO MUCH, I WILL ASK A COUPLE OF QUESTIONS, TO GET US STARTED. AND THEN, WE'LL OPEN IT TO THE FLOOR. WE WOULD LIKE TO ASK PEOPLE WHO AREN'T WITH THE PRECIOUS, WHO HAVE A LOT OF OPPORTUNITIES TO TALK TO CHAIRMAN BAIR TO START AND WE ARE GOING TO DO NONPRESS FIRST, AND SPEAK UP, AND TELL US WHERE YOU ARE FROM AND WHAT YOUR NAME IS. SO -- FIRST, SHEILA, RECENTLY, YOU HAVE BECOME PRETTY EXPLICIT ABOUT THE NEED FOR INVESTORS TO GET WITH THE PROGRAM. AND TO STOP THREATENING LAWSUITS AND, YOU KNOW, REALLY UNDERSTAND THAT WE ARE ALL IN THE TOGETHER AND IF THEY KEEP MAKING TROUBLE, WE ARE NOT GOING TO BE ABLE TO DO THE MODIFICATIONS THAT WE NEED TO. DO YOU HAVE SUGGESTIONS ABOUT WHAT THE FEDERAL GOVERNMENT MIGHT DO TO ENCOURAGE THAT? |
| 00:14:28 | >> | GREAT, OUR LOSS SHARING PROGRAM WE THINK IS DESIGNED TO ADDRESS ONE OF THE ISSUES THEY FREQUENTLY RAISE, REDEFAULT RISK AND THE PROBLEM IS, THAT THAT -- AS STATED IT IS A LEGITIMATE ISSUE, THAT IS THE MARKET KEEPS GOING DOWN AND IF YOU DECIDE TO MODIFY THE LOAN INSTEAD OF FORECLOSURE, AND THEN, TEN, 12 MONTHS LATER IT DOES REDEFAULT AND YOU HAVE TO FORECLOSURE AT THAT POINT, ARE GOING HAVE -- RECOVER LESS VALUE. SO THAT IS EXPRESSLY WHY WE HAVE SUGGESTED LOSS-SHARING WITH GOVERNMENT, 50/50, TO TRY TO COVER THAT RISK. SO, WE ARE -- THAT IS A CURATIVE APPROACH AND THERE ARE STICK APPROACHES AS WELL, AND THERE IS THE BANKRUPTCY BILL, WHICH IS STILL THERE AND I ASSUME THE BOOK COUNTED WILL -- VOTE COUNTED WILL CHANGE ON THAT IN THE NEXT CONGRESS AND THERE IS OTHER, I HEAR INCREASINGLY TALK ABOUT INVALIDATING CONTRACTUAL PROVISION AS CONTRARY TO PUBLIC POLICY OUT OF SHEER FRUSTRATION WE HAVE THE PUSH BACK AND I WOULD SAY IN DEFENSE OF INVESTORS WE HAVE HAD A FAIRLY POSITIVE EXPERIENCE, AT INDYMAC, WE HAD THE LEGAL AUTHORITY TO MODIFY THESE LOANS AND BRIEFED THE INVESTORS AND THEY WERE ACQUIESCE SCENT AND THAT WAS FORTUNATE AND SO, WE WILL KEEP PUSHING, BUT I DO THINK, THE MORE THAT THERE IS THREATS OF LAWSUITS, I THINK THERE IS A DEFINITE RISK OF A BACKLASH WHICH THEY SHOULD KEEP IN MIND AND EVERYBODY NEEDS TO TAKE LOSSES ON THIS AND ESPECIALLY THE LARGE HEDGE FUNDS AND OTHER INSTITUTIONAL INVESTORS, TO SUGGEST THEY DIDN'T THAT HAVE THE WHEREWITHAL TO ANALYZE THE LOAN QUALITY IN THESE MORTGAGE POOLS, I JUST THINK THAT IS NOT CREDIBLE AND SO, YOU KNOW, THERE NEEDS TO BE MARKET DISCIPLINE ALL AROUND AND INVESTORS DID NOT LOOKED AT FACTORS OTHER THAN WHAT THE LOAN QUALITY WAS IN THESE POOLS AND SO NOW THEY NEED TO TAKE LOSSES, JUST LIKE EVERYONE ELSE. |
| 00:16:10 | >> | AND, SPEAKING OF INDYMAC YOU HAVE DONE A REALLY NICE JOB, THERE WERE A LOT OF MODIFICATIONS, MUCH FASTER THAN WOULD HAVE BEEN POSSIBLE UNDER OTHER PROGRAMS, BUT OBVIOUSLY THERE ARE LOANS THAT CAN'T BE MODIFIED. |
| 00:16:21 | >> | RIGHT. |
| 00:16:23 | >> | WHICH MEANS YOU HAVE LOANS THAT YOU CAN'T DO ANYTHING WITH AND YOU HAVE REO, AND WHAT ARE YOU DOING THAT AND WHAT WOULD YOU SUGGEST ON A MORE BROAD BASIS. |
| 00:16:30 | >> | RIGHT. THAT IS A GOOD WELL, I THINK WE DO, THE STREAMLINE MODs IS -- THE BOOK OF THEM AND EVEN WHEN YOU CAN'T DO A STREAMLINE MOD YOU DO CUSTOMIZED MODS AND WE TRY WHERE WE CAN TO DO AN FHA REFINANCING THAT IS MORE DIFFICULT, ESPECIALLY FOR THE SERVICE PORTFOLIO, BECAUSE THEY PROHIBIT LIKE A LOT OF PSA, PROHIBIT PRINCIPAL WRITE DOWNS AND YOU NEED TO DO THAT TO GET INTO AN FHA REFINANCING AND SOME BORROWERS WHO WE MAKE THE MOD OFFERS SAY WE CAN'T DO IT AND ARE READY TO MOVE ON AND THERE IS A CASH FOR KEYS AND A RENTAL PROGRAM UP TO 6 MONTHS, I HAVE ASKED THE STAFF TO SEE WHETHER IT SHOULD BE EXTEND AND RENTAL AGREEMENTS FOR BORROWERS WHO CANNOT -- YOU HAVE TO REDUCE THE PAYMENTS SO MUCH THE MODIFICATION WILL EXCEED FORECLOSURE VALUE AND IF WE CAN DO MORE OF THAT I THINK IT WOULD BE HELPFUL. AND THE REO, YOU KNOW, WE NEED TO MAKE SURE THE HOUSES ARE APPROPRIATELY TAKEN CARE OF AND THAT AGAIN I THINK THE -- SO MUCH HOUSING STUFF IN -- STOCK IN THE MARKET THAT I THINK WILL BE -- WEIGH MORE AND MORE IN FAVOR OF DOING RENTAL AGREEMENT WHERE YOU CANNOT DO THE MODIFICATION. BUT, WITH ANY CASE WE ARE USING MULTIPLE TOOLS, TO TRY AND HELP AS MANY PEOPLE AS WE CAN AND IF THEY NEED TO LOSE THE HOME, OFFERING FINANCIAL SUPPORT AND ABILITY TO MAKE A TRANSITION. |
| 00:17:48 | >> | WHAT DO YOU SAY TO BANKS WHO SAY, WE ARE NOT IN THE PROMPT MANAGEMENT BUSINESS AND CAN'T RENT THEM? |
| 00:17:53 | >> | WELL, ACTUALLY THEY CAN. I THINK IF YOU GO OUT MORE THAN FIVE YEARS, WHICH WOULD BE A LONG TIME THERE ARE CAPITAL REPERCUSSIONS, BUT, YOU KNOW, WE THINK RENTAL AGREEMENTS ARE PART OF ANY APPROPRIATE LOSS MITIGATION STRATEGY AND NEED TO THINK, AGAIN, IS IT THE CASE OF A LOT OF THIS, IS HELPFUL FOR THE BORROW,AND ALSO GOOD BUSINESS SENSE, IF YOU TAKE STEEP LOSSES IN THE FORECLOSURE MARKET WHICH YOU WILL DO NOW AND CAN'T DO A LOAN MODIFICATION A RENTAL AGREEMENT SHOULD BE ANOTHER OPTION TO LOOK AT AND YES, UNLESS IT GOES BEYOND THE FIVE YEARS, I THINK, IT IS POSSIBLE WITHIN THE CURRENT FRAMEWORK FOR BANKS TO DO THAT. |
| 00:18:30 | >> | AND ONE LAST QUESTION. OBVIOUSLY THE HOUSE PRICES ARE DROPPING, AND THERE ARE A LOT OF BUYING OPPORTUNITIES. AND EVENTUALLY, HOPEFULLY, CREDIT WILL BECOME A LITTLE BIT LOOSER. WHAT ARE YOUR SUGGESTIONS FOR AS WE GO FORWARD, AVOIDING THE PROBLEM AGAIN. |
| 00:18:46 | >> | WELL, THAT IS A GOOD QUESTION AND I THINK THE FED SHOULD BE APPLAUDED AND CHAIRMAN BERNANKE WHO TOOK A PERSONAL LEADERSHIP ROLE IN THE AND FINALIZED THE RULES WHICH NOW APPLY, GOOD, STRONG LENDING STANDARDS ACROSS THE BOARD INCLUDING ABILITY TO REPAY AS A STANDARD, INCOME DOCUMENTATION AS A STANDARD THAT APPLIES TO EVERYONE, NOT JUST BANKS, I THINK THERE IS STILL WEAKNESS IN THE ENFORCEMENT SYSTEM OUTSIDE THE BANKING SECTOR AND CONTINUES TO CONCERN ME AND YOU GO ON-LINE AND I'M STILL SEEING THE TEASER RATE ADS AND WHERE ARE THEY COMING FROM, WHO IS FUNDING THESE. AND SO I THINK THERE IS -- STILL ISSUES, ABOUT ADEQUACY OF ENFORCEMENT AND I, SOUP THAT WILL BE SOMETHING CONGRESS WILL TAKE UP NEXT YEAR. BUT, CLEARLY, YOU KNOW, I THINK A LOT OF THE LENDERS WHO ARE DOING THIS ARE NOT IN BUSINESS ANY LONGER AND THERE WERE BANKS DOING IT, TOO AND WE NEED TO FESS UP TO THAT BUT THE REGULATORS GOT GUIDANCE OUT SOME TIME AGO, AND CORRECTING THIS AND TAKING VIGOROUS ENFORCEMENT ACTION, WHERE IT WAS APPROPRIATE. SOY, I THINK REGARDING BANKS -- SO, I THINK REGARDING BANKS WE HAVE, HOPEFULLY, VIRTUALLY ELIMINATED IT AND I THINK CONSUMER EDUCATION IS ALSO AN IMPORTANT PART OF THIS GOING FORWARD AND PEOPLE PLEASE UNDERSTAND THE MORTGAGE THAT YOU ARE UNDERTAKING, AND YOU KNOW, THERE IS NOTHING WRONG WITH A 30 YEAR FIXED MORTGAGE, A NICE, STEADY PAYMENT AND YOU KNOW EXACTLY WHAT YOU WILL BE PAYING FOR THE DURATION OF THE MORTGAGE AND SO IF THERE ARE STILL PEOPLE OFFERING YOU TEASER RATE MORTGAGES HOPEFULLY THEY AREN'T BUT IT'S NOT LAWFUL AND DON'T LISTEN TO IT. BECAUSE, IT WILL GET YOU INTO TROUBLE LATER ON. |
| 00:20:17 | >> | OKAY, LET'S OPEN IT UP. STAND UP. WE HAVE THE MIC. STATE YOUR NAME AND WHERE YOU ARE FROM. |
| 00:20:23 | >> | JIFF, NATIONAL ASSOCIATION OF REAL STORES. FOLLOW-UP TO ELLEN'S QUESTION. I UNDERSTAND THE FDIC INSURED BANKS ARE NOT THE BIGGEST PART OF THE PROBLEM, BUT DIDN'T THEY PROVIDE A LOT OF CAPITAL TO SUBPRIME LENDING -- LENDERS LIKE NEW CENTURY AND SO THEY WERE MAKING IT POSSIBLE. IS THERE ANYTHING THAT YOU CAN DO IN THE THIS FUTURE NOW THAT YOU SEE THE ABUSES, TO TRY TO BE MORE AGGRESSIVE ON WHERE BANKS INVEST THEIR MONEY? |
| 00:20:51 | >> | RIGHT, WE ARE NOT THE PRIMARY REGULATOR FOR SOME OF THE INSTITUTIONS, I THINK YOU ARE REFERRING TO. THOUGH, WE HAVE HAD SOME OURSELVES AND MY VIEW IS IT IS UNSAFE AND SOUND TO FUND ON AN UNSAFE AND SOUND LOAN AS WELL AND SO, I -- THAT WOULD BE OUR VIEW. AS -- WHERE THE PRIMARY REGULATORS OF SOME OF THOSE INSTITUTIONS AND THE LIABILITY IS SOMETHING THE CONGRESS NEEDS TO LOOK AT AND THEY WERE CONSIDERING IT AND WE THINK IT WOULD BE HELPFUL, AND WOULD BE HELPFUL FRANK TO PROTECT INVESTORS AS WELL FOR THOSE THAT ARE GOING TO BE FUNDING THESE MORTGAGES, AND THEN PASSING ON THE REST OF THE SECURITIZATION MARKET, IF IT EVER COMES BACK TO HAVE RESPONSIBILITY FOR BASIC SCREENS, I THINK YOU NEED TO HAVE RESPONSIBILITY GO TO AREAS WHERE, REALISTICALLY THE SECURITIZER CAN SCREEN AND CERTAINLY, INCOME VERIFICATION, DTI RATIOS, AND THERE ARE CERTAIN OBJECTIVELY ASCERTAINABLE FEATURES OF SAFE AND SOUND LENDING THAT THOSE WHO ARE FUNDING THE MORTGAGES CAN SCREEN FOR AND GOING FORWARD SOME REASONABLE BALANCED APPROACH ON THIS WILL ALSO HELP. |
| 00:22:08 | >> | FREELANCE CORRESPONDENT, SUBPRIME MORTGAGE INDICATES THE... NOT QUALIFY AND IN THE STRUCTURED LOAN, YOU EMPHASIZE THE... AND THAT WILL BE HARD TO MEET. AND SHOULD WE LOWER THE MORTGAGE PROCESS FEE? THANK YOU. |
| 00:22:33 | >> | THE PROCESSING, GUARANTEE FEE FOR GSE LOANS OR? ORIGINATION -- |
| 00:22:42 | >> | THE DEPOSIT. |
| 00:22:44 | >> | YES, YOU KNOW, I THINK IT IS AN INTERPLAY OF AFFORDABILITY. VERSUS REPUPMENT OF COST. I DO THINK THAT -- RECOUPMENT OF COST AND FROM A POLICY PERSPECTIVE I THINK WE NODE TO HAVE ORIGIN NAIL FREE STRUCTURES THAT ARE TIED TO THE LONG TERM SUSTAINABILITY OF THE LOAN. SO WHATEVER, WHATEVER FEES ARE INCURRED, I THINK SHOULD BE TIED TO LONG TERM PERFORMANCE AND THESE SHORT-TERMINAL, ORIGIN THAT THE LOAN AND GET A FAT FEE AND SILT OFF AND DON'T WORRY ABOUT IT AGAIN IS EXACTLY WHAT GOT US INTO THE PROBLEM AND WHAT YOU CALL THE FEE IS LESS IMPORTANT AND TYING TO IT LONG TERM PERFORMANCE I THINK IS GOING TO BE IMPORTANT. AND I'M SORRY, WHAT WAS THE FIRST PART OF YOUR QUESTION, DIDN'T CATCH ALL OF IT. |
| 00:23:23 | >> | AFFORDABILITY. |
| 00:23:24 | >> | AFFORDABILITY. |
| 00:23:26 | >> | ALREADY LOW AND I THINK, NO MATTER HOW YOU STRUCTURE, I THINK THEY STILL CANNOT MEET IT. |
| 00:23:32 | >> | THAT'S RIGHT AND WE DO FIND THAT. AT INDYMAC FIND IT AS WELL AND UNDER OUR MODIFICATION PROTOCOL, IF THE MODIFIED LOAN DOES NOT EXCEED THE FORECLOSURE VALUE, IT DOES NEED TO GO INTO FORECLOSURE OR TRY TO MAKE OTHER ARRANGEMENTS WITH THE RENTAL AGREEMENT OR A SHORT SALE. SO, YOU ARE RIGHT, THERE ARE SOME BORROWERS THAT SIMPLY DON'T HAVE -- THEIR INCOME WOULD SUPPORT ONLY A RADICALLY RESTRUCTURED MORTGAGE THAT WILL NOT PASS THE TEST OF COMPARING TO IT FORECLOSURE VALUES. SO, OTHER OPTIONS HAVE TO BE UNDERTAKEN THEN. |
| 00:24:00 | >> | SIR, SIR, SIR, I THINK WE ARE READY FOR ANOTHER QUESTION. IF YOU DON'T MIND. OKAY. YES, GO AHEAD. STATE YOUR NAME AND WHERE YOU ARE FROM. |
| 00:24:11 | >> | NEIGHBORWORKS AMERICA. ONE OF THE OBSTACLES TO PREVENTING FORECLOSURES SEEMS TO BE THE INCENTIVE STRUCTURE AND THE CAPACITY OF THE SERVICER. WHAT IS BEING DONE TO ADDRESS THAT PARTICULAR OBSTACLE. |
| 00:24:22 | >> | WELL, THE INCENTIVE IS AGAIN, ADDRESS A LOSS SHARING PROGRAM AND A THOUSAND DOLLAR ADMINISTRATIVE FEE PAID TO THE SERVICERS IN ADDITION TO THE LOSS SHARING IF THE LOAN REDEFAULTED LATER ON AND THE POOLING AND SERVICES AGREEMENT, THE ONES I HAVE SEEN, YOU GET YOUR COSTS REIMBURSED GO TOW TO FORECLOSURE AND WORKING ON A LOAN THERE IS NOTHING IN THE PSA TO REIMBURSE THAT. SO, THERE IS A -- ARE SKEWED ECONOMIC INCENTIVES THERE AND WHAT WAS THE OTHER PART OF YOUR QUESTION. |
| 00:24:46 | >> | THE CAPACITY. |
| 00:24:47 | >> | AND THAT IS A PROBLEM. YOU KNOW, AND WE ARE VERY CAREFUL AT INDYMAC, BUT I THINK THIS IS SOMETHING THAT WE CONTINUE TO WORK ON AND OTHER SERVICERS, AS WELL, TO MAKE SURE YOU HAVE ENOUGH STAFF AND MAKE SURE THEY ARE TRAINED, AND YOU CAN SAVE YOURSELF A LOT OF TIME, WITH THE SYSTEMATIC APPROACH, SO INSTEAD OF HAVING YOUR SERVICING REPS, TRY TO INDIVIDUALLY RENEGOTIATE EVERY SINGLE LOAN, YOU HAVE THE SYSTEMATIC PROTOCOL EVERYBODY GETS THIS, MEANING THE CRITERIA, AND, YOU CAN GET IT DONE A LOT FASTER. BUT, THEY NEED TO BE TRAINED, TOO, NEED TO BE TOLD, YOU KNOW, THIS IS WHAT YOU DO AND THIS IS WHAT YOU OFFER FOR THE CATEGORY OF BORROWERS AND SO I THINK THE STREAMLINE APPROACH MAKE IT EASIER FOR THE SERVICING STAFF AND WITH ADEQUATE TRAINING YOU CAN ALSO SPEED UP THE PROCESS. |
| 00:25:29 | >> | OKAY. CLIFF? |
| 00:25:36 | >> | CLIFF KELLOGG FROM SHORE BANCORP OPERATION, THIS MORNING'S "WASHINGTON POST" HAS AN ARTICLE ABOUT THE FACT THAT THE CONGRESS IS -- CONGRESS'S RECENT EFFORT TO CREATE A LOAN MOD PROGRAM RESULTED IN ONLY 400-SOMETHING HOMEOWNERS PARTICIPATING. IN A PROGRAM THAT WAS EXPECTED FOR 400,000 AND MY QUESTION IS, IN YOUR EXPERIENCE HOW MUCH OF THIS DO YOU THINK IS DUE TO THE DESIGN OF THE ECONOMICS OF THE HOME MOD PROMISE AND HOW MUCH OF IT MAY BE PSYCHOLOGICAL, DIMENSION OF HOMEOWNERS NOT YET BEING READY TO COME FORWARD WITH A LOAN MOD PROGRAM? |
| 00:26:10 | >> | THE HOMEOWNERS NOT BEING WILLING TO. |
| 00:26:12 | >> | IN THESE PROGRAMS? |
| 00:26:13 | >> | I THINK IT IS PROBABLY A COMBINATION. I THINK IN TERMS OF FEDERAL POLICIES THERE HAS BEEN A LOT OF -- I HEAR IT ALL THE TIME, AND I AM -- I UNDERSTAND SENTIMENT BUT THERE IS A LOT OF PUSH BACK, HELPING ANY OF THESE BORROWERS, QUOTE UNQUOTE, THAT, YOU KNOW, PEOPLE, I DIDN'T TAKE A HIGH RISK MORTGAGE AND DON'T HAVE AN ILTV AND AM CURRENT, SO WHY SHOULD YOU HELP THE GUY NEXT-DOOR AND I THINK WE NEED TO GET BEYOND THAT. BECAUSE IT IS IN OUR ECONOMIC BEST INTEREST TO DO THIS AND MAKES GOOD BUSINESS SENSE TO DO IT. AND A LOT OF THESE BORROWERS WERE UNFAIRLY TAKEN ADVANTAGE OF AND POOR MARKETING, DON'T WORRY ABOUT IS, YOU CAN REFINANCE LATER AND THE HOUSING MARK WILL GO UP FOREVER, VERY COMPLEX TERMS. AND OTHER BORROWERS, KNOWINGLY GOT IN OVER THEIR HEAD, AND AT THIS POINT, DOES IT MAKE SENSE TO KEEP DEBATING THIS AND IN AN EFFORT TO BE PUNITIVE, TOWARDS THOSE YOU VIEW AS UNSYMPATHETIC YOU HAVE A PROGRAM THAT DOESN'T WORK, SO, YOU KNOW, WE BELIEVE STRONGLY IT IS IN OUR ECONOMIC BEST INTEREST AS A NATION TO DO THIS, WE BELIEVE IT IS AN -- IN THE INVESTORS' AND OTHER MORTGAGE OWNERS' BEST INTEREST TO DO THIS, THE BUSINESS INTEREST AS WELL BUT I THINK THE ECONOMIC CASE NEEDS TO BE MORE HEAVILY EMPHASIZED. AND THAT IS SOMETHING WE HAVE TRIED TO DO AND, AGAIN, THE FDI COUNTRY. -- A LOT OF PEOPLE SAID WHY IS THE FDIC INVOLVED IN THE AND WE HAVE -- IT IS IN OUR BUSINESS INTEREST TO RESTRUCTURE TROUBLED MORTGAGES, WHEN A BANK FAILS WE PAY PAY OFF THIS DEPOSITS AND COVER THE DEPOSITS AND WE RECOVER OUR COST, BY SELLING ASSETS AND FREQUENTLY A FAILED BANK WILL HAVE A LOT OF DELINQUENT LOANS, AND RESTRUCTURING LOANS WITH A RESIDENTIAL MORTGAGES, COMMERCIAL, WHATEVER, IS SOMETHING WE HAVE BEEN DOING FOR A LONG TIME, AND WE DO IT BECAUSE IT MAKES GOOD BUSINESS SENSE AND THAT IS REALLY I THINK THE MESSAGE THAT NEEDS TO GET OUT RIGHT NOW. |
| 00:28:02 | >> | |
| 00:28:04 | >> | FRED AMCRIST, UNDERSTANDING GOVERNMENT FOUNDATION. HOW WILL YOU KNOW -- WE HAVE BEEN SUCCESSFUL IN GETTING OUT OF THE MESS AND WHAT METRICS WILL YOU LOOK AT DOWN THE ROAD THAT WILL TELL US. |
| 00:28:14 | >> | CERTAINLY THE FORECLOSURE RATE, IS ONE INDICATOR, HOME VALUE DECLINES, THAT STABILIZING OR AT LEAST SLOWING AND IS IN SOME AREAS OF THE COUNTRY ALREADY AND THOSE WOULD BE TWO IMPORTANT METRIC AND THE FORECLOSURE RATE, IS CERTAINLY SOMETHING WE HAVE BEEN FOCUSED ON AND HAS BEEN SLOWING A BIT BUT ARC AIM -- AFRAID ONLY BECAUSE STATE AND LOCAL GOVERNMENTS ARE MORE ACTIVE IN PUTTING A MORATORIUM IN FORECLOSURE ACTIVITY AND I DON'T THINK THE DELINQUENCY RATES ARE GOING UP AND WE ARE IN A WAVE OF OPTION ARMs AND THE TRAGEDY IS THE SUBPRIME RESETS, WERE ALMOST THROUGH THOSE, AND A LOT OF SUBPRIME BORROWERS HAVE LOST THEIR HOME, WHEN PROBABLY THEY SHOULDN'T HAVE BECAUSE THERE WASN'T A SYSTEMATIC APPROACH AND NOW WE HAVE THE OPTION ARMs COMING IN, AND SO, AGAIN THE STRUCTURE OF THE LOANS, AND WE HAVE MORE ECONOMIC DISTRESS, PEOPLE HAVING THE HOURS CUT BACK AND SPOUSES LOSING A JOB AND REDUCED COMMISSION INCOME, SO THERE WILL BE OTHER, YOU KNOW, MORE TRADITIONAL SOURCES OF DISTRESS FOR THE MORTGAGES AND SO, IT IS JUST GOING TO -- DELINQUENCIES WILL RAMP UP UNLESS WE GET MORE AGGRESSIVE ON FORECLOSURE PREVENTION, NECESSARY FORECLOSURES WILL BE GOING UP -- UNNECESSARY FORECLOSURES WILL BE GOING UP, TOO. |
| 00:29:24 | >> | THANKS. YES, SIR? |
| 00:29:30 | >> | WITH GAO. I'M ON THE TARP TEAM. AND I HAD A QUESTION -- |
| 00:29:33 | >> | OH, YOU! |
| 00:29:35 | >> | YOU ARE KEEPING US VERY BUSY! NOT YOU, BUT THE WHOLE TARP THING. BUT I HAVE A QUESTION ABOUT THE BACK END RATIO AND PARTICULARLY TOTAL HOUSEHOLD INCOME RATIO. TO WHAT EXTENT DOES THAT HELP DETERMINE THE FUTURE SUCCESS OF A LOOK MOD PROGRAM AND TO WHAT -- A LOAN MOD PROGRAM AND WHAT EXTENT HAS THE INDYMAC PROGRAM AND THE LOSS SHARING PROPOSAL, TAKEN THAT INTO ACCOUNT IN. |
| 00:29:59 | >> | WELL, WE -- LOW FRONT END NDTI AND THE 31% DTI WOULD BE REQUIRED UNDER THE LOSS SHARING PROPOSAL AND IN AN IDEAL WORLD YOU LOOK AT BACK END DTIes AND THE STALE OF THE PROBLEM IS SUCH IF YOU GET INTO THAT YOU ARE REALLY LOOKING AT THE BUDGET AND LOOK AT THE STEAK HOME PAY AND THERE IS NOT ENOUGH TIME TO DO THIS. AND SO, I THINK WE RATIONALIZE USING THE FRONT END, THE IMPORTANT POLICY GOAL TO PROVIDE AN AFFORDABLE MORTGAGE PAYMENT, TO SUBSTITUTE FOR ONE NOT AFFORDABLE AND PERHAPS NOT AFFORDABLE ON ORIGINATION OR THE RESET UNAFFORDABLE AT ORIGINATION AND THE LOW FRONT END DTI REQUIREMENT TO TRY TO ADDRESS THE BACK END PROBLEM. BUT, I DON'T THINK IT IS FEASIBLE. I DON'T THINK YOU CAN GET THE SCALE YOU NEED IF YOU REQUIRE THEY GO THROUGH AND TRY TO -- YOU KNOW, GET HOUSEHOLD BUDGETS, FOR ALL OF THESE BORROWERS, I DON'T THINK IT IS SCALEABLE. |
| 00:30:51 | >> | THAT IS HOW ARE DEALING WITH THE SECOND MORTGAGE ISSUE, TOO. |
| 00:30:54 | >> | THAT'S RIGHT, MODIFICATION, THE SECOND LEAN HOLDER CAN THE NOT GET IN THIS WAY OF THE MODIFICATION, YOU ARE RESTRUCTURING THE LOAN THAT IS THERE ALREADY AND THE INDYMAC PROTOCOL DOES NOT REQUIRE A PRINCIPAL WRITE DOWN AND THE LOSS SHARING PROPOSAL DOESN'T, EITHER AND FOR THOSE WHO WANT TO DO THE WRITE DOWNS TO GET TO THE 31% DTI WOULD BE A GOOD THING, BUT ONE ASPECT OF NOT DOING A PRINCIPAL WRITE DOWN, WE DO FOR 10% OF THE CASES, HAVE TO DO PRINCIPAL FORBEARANCE AND CAN GET TO AN AFFORDABLE PAYMENT WITH INTEREST RATE REDUCTION AND AM MORETATION AND HAVE TO DEAL WITH PRINCIPAL AND WE PERMANENT MENTAL FOREBEAR IT AND MEANING YOU NEVER HAVE TO MAKE A PAYMENT BUT IF YOU REFINANCE OR SELL THE HOUSE YOU STILL HAVE THAT TO DEAL WITH. THERE IS NO INTEREST. BUT ONE THING IT DOES FOR THIS SECOND LIEN HOLDERS, KEEPS THEM THE SAME DISTANCE BEHIND, AND BECAUSE SOME OF THE PRINCIPAL WRITE DOUNL REQUIREMENTS HAVE BEEN CRITICIZED BY THE FIRST LIEN HOLDERS AS UNDULY HELPING THE SECOND LIEN BECAUSE YOU FREE UP MORE VALUE AND THEY COULD POTENTIALLY TAP INTO AND THIS DOES NOT -- AND ALSO, BACK TO BANKRUPT, THE SECOND LIEN ISSUE, I THINK THE SECOND LIEN HOLDERS NEED TO BE REALISTIC ABOUT WHAT THEY ARE WORTH NOW AND I HAVE BEEN TOLD BY BANKRUPTCY EXPERTS, THAT IF A SECOND LIEN IS UNDER WATER, FIRST LEAN CANNOT BUT THE SECOND LIEN CAN BE EXTINGUISHED IN BANKRUPT AND NEED TO BE REALISTIC ABOUT WHAT THE SECOND LIENS ARE WORTH AND NOT STAND IN THE WAY OF MODIFICATIONS OR REFINANCINGS AND AS WELL AS, YOU KNOW, UNDERSTAND THAT THEIR LEVERAGE WITH THE BORROWER AND FIRST LIENHOLDER IS WELL, AND THE OFFER IS MADE, THEY SHOULD TAKE IT. |
| 00:32:30 | >> | QUESTION? MARK? THANK YOU. FORD FOUNDATION. TWO QUESTIONS, ONE, ALLOW YOU IF YOU WANT TO ELABORATE MORE ON THE CONSENSUS OR LACK OF IT ON MODIFICATION POLICY, BECAUSE, GETTING THE INVESTORS TOGETHER, YOU KNOW THE MECHANICS OF WHY IT IS DIFFICULT AND A LOT OF DIFFERENT INTERESTS, BUT, AT LEAST WHEN I GO AROUND AND TALK TO PEOPLE, I DON'T THINK PEOPLE ARE GENERALLY YET COMFORTABLE WITH WHAT OUGHT TO BE DONE, YOU KNOW, PARADIGM BEING I PAID MY LOAN AND THE PERSON ACROSS THE -- |
| 00:33:04 | >> | I THINK THAT IS ABSOLUTELY RIGHT. AND -- YEAH. WELL, I THINK THAT IS RIGHT AND I THINK JUST WE JUST NEED TO KEEP MESSAGING THAT. AND GET THE ECONOMICS OUT OF WHY IT MAKES GOOD BUSINESS SENSE AND GOOD ECONOMIC SENSE. AND I DON'T KNOW HOW ELSE TO DO IT. I THINK, ACTUALLY, I SENSE A CHANGE IN PUBLIC SENTIMENT, THOUGH AND THERE IS A GROWING PUBLIC SUPPORT FOR DOING SOMETHING LIKE THIS. I THINK IRONICALLY, PART OF IT IS THAT, WELL, YOU ARE BAILING OUT THE BIG INSTITUTIONS AN GO AHEAD, AND MIGHT AS WELL BAIL OUT THE LITTLE GUY, TOO, AND THERE IS INTERPLAY THERE AND I THINK ALSO MORE PEOPLE ARE BEING IMPACTED. IF THEIR HOUSE, YOU KNOW, THEY ARE NOT IN TROUBLE, DOWN THE STREET, YOU KNOW, THERE MAY BE AN EMPTY HOUSE NOT DOING THEIR HOME VALUES ANY GOOD. SO, I THINK THERE IS -- JUST IN TERMS OF THE KIND OF E-MAIL AND STUFF I GET, IT IS MORE POSITIVE. WHEN WE FIRST WENT OUT WITH THIS I CAN'T TELL YOU SOME OF THE THINGS WE WERE GETTING AND I'M OPTIMISTIC WE ARE GETTING THE MESSAGE OUT, AND YOU KNOW, YOU CAN HAVE COMPASSION ON THE BORROW,OR NOT HAVE COMPASSION FOR THEM BUT THE ECONOMIC AND BUSINESS CASE SO IS SO COMPELLING WE NED TO MOVE FORWARD. |
| 00:34:11 | >> | ON THE MODIFICATION POLICY, I THINK WE ALL AGREE WE HAVEN'T BEEN AS AGGRESSIVE, AS WE SHOULD HAVE BEEN. |
| 00:34:18 | >> | RIGHT. RI. |
| 00:34:21 | >> | BUT, I MAY HAVE MISS IT EARLIER, I'M A LITTLE LATE. FIRST QUESTION, FIRST PART OF THE QUESTION WOULD BE, WHAT PERCENT OF THOSE THAT ARE GOING INTO DEFAULTED DO YOU THINK COULD BE HELPED? YOU KNOW, -- |
| 00:34:34 | >> | RIGHT, WE THINK -- |
| 00:34:36 | >> | JUST ADD, CAN YOU AN ANSWER, AND DO YOU THINK IT WILL CHANGE WITH ALT-A OR OPTION ARMs IN TERMS OF THE PERCENT THAT CAN BE HELPED THROUGH LOAN MODIFICATION. |
| 00:34:44 | >> | OUR ECONOMISTS ESTIMATE WE THINK WE CAN REDUCE FORGES BY ABOUT A THIRD. SO FOR A PROGRAM THAT WOULD GO THROUGH 2009 AND IS 1.5 MILLION FORECLOSURES AND IN OTHER WORDS, THOSE LOANS THAT BECAME DELINQUENT IN 2009, THE PERCENTAGE OF THOSE THAT WOULD GO INTO FORECLOSURE, WE THINK WE CAN REDUCE BY THERE'D WITH THE PROGRAM. SO -- I'M SORRY. THE SECOND PART -- |
| 00:35:05 | >> | ALT-A. |
| 00:35:07 | >> | YEAH, THESE -- THAT IS MORE DIFFICULT BECAUSE THE OPTION ARMs, ALT-A INCLUDES A NUMBER OF DIFFERENT TYPES OF LOAN CHARACTERISTICS AND THE OPTION ARMs ARE HARD TO MODIFY BECAUSE YOU HAD THE PAYMENT SHOCK ON THESE CAN DOUBLE OR TRIPLE THE PAYMENT. SO, IF YOU DON'T HAVE THIS DOES GET INTO A SITUATION WHERE IF THEY WERE DISQUALIFIED AT THE STARTER RATE, MAKING THE LOWEST POSSIBLE PAYMENT TO MAKE DURING THE INTRODUCTORY PERIOD OF THE OPTION ARM, WITH PRICES GOING DONE THEY CAN'T REFINANCE AND GETTING THEM TO AN AFFORDABLE PAYMENT, SOMETHING CLOSE -- CLOSER TO WHAT THEY WERE PAYING IN THE INTERDUCK TERRY RATE, IF THAT IS ALL THEY CAN AFFORD IS MUCH MORE DIFFICULT TO PASS THE TEST AND COMPARE TO IT FORECLOSURE VALUE AND SO I THINK THAT IS -- THOSE WILL BE TOUGHER BUT, STILL LIGHT OF THEM CAN BE MODIFIED. |
| 00:36:00 | >> | TIME FOR ONE MORE QUESTION. COME ON! ONE JOURNALIST. |
| 00:36:07 | >> | [INAUDIBLE]. |
| 00:36:10 | >> | YOU WON'T BE, SOMEBODY ELSE ALREADY SKIT. |
| 00:36:12 | >> | I'M SORRY. ELLEN. MAY I? MAY I? |
| 00:36:17 | >> | WAIT A MINUTE. THIS ONE FIRST AND THEN YOU DO QUICKLY. |
| 00:36:24 | >> | ONE OF THE BIG TALKING -- ALLEN -- AP, ON THE 4.5% THING, THAT THE TREASURY HAS BEEN TALKING ABOUT, IS IT -- I KNOW THAT THE INITIAL PLAN, YOU KNOW, MIGHT BE TO JUST FOR NEW HOME PURCHASES BUT THERE'S A LOT OF PEOPLE TALK ABOUT APPLYING IT TO REFINANCES. IS IT FEASIBLE TO REFINANCE EVER WITH A MORTGAGE ABOVE 4.5% IN AMERICA WHO MIGHT WANT TO REFI AT THAT ATTRACTIVE RATE? HAPPEN ALL AT ONCE AND IS IT A PRACTICAL SOLUTION TO THE FORECLOSURE CRISIS. |
| 00:36:54 | >> | WELL, IF YOU ARE UNDER WATER, NO. BECAUSE, YOU ARE UNDER WATER, RIGHT AND YOU HAVE -- YOU HAVE TO HAVE EQUITY IN THE HOUSE TO REFINANCE AND I DON'T THINK THAT WILL WORK AND THIS ONLY WAY IT WILL WORK IS IF THE OWNERS OF THE MORTGAGES WOULD BE WILLING TO REALLY AGGRESSIVELY WRITE DOWN PRINCIPAL WHICH THEY SO FAR HAVE SHOWN AN INCLINATION NOT TO DO AND THE POOLING AND SERVICING AGREEMENTS FREQUENTLY PROHIBIT PRINCIPAL WRITE DOWNS AND I THINK THAT IS THE MAIN ISSUE AND I THINK GETTING THE MORTGAGE RATES DOWN FOR PURCHASES, AT LEAST WILL CLEAN OUT INVENTORY FOR WHAT THIS THERE IS ALREADY, I THINK IS THIS THEORY BUT, THAT IS WHERE THE IMPACT WOULD BE, I DON'T SEE PEOPLE ARE UNDER WATER WITH DISTRESSED MORTGAGES, I DON'T SEE HOW IT CAN HELP THEM UNLESS THE MORTGAGE OWNER IS WILLING TO WRITE DOWN THE PRINCIPAL. |
| 00:37:37 | >> | WITH THE VOLUME. |
| 00:37:39 | >> | SIR, SIR, ONE MORE PERSON. |
| 00:37:40 | >> | THANK YOU, HOUSING MARKET REPORT. I WANTED TO ASK WHY YOU THOUGHT THAT, YOU KNOW, FROM A PROGRAM STANDPOINT, THAT THE TREASURY DEPARTMENT HAS BEEN SO RESISTANT TO THE INDYMAC CONCEPT -- |
| 00:37:54 | >> | I THOUGHT WE COULD AVOID THAT ONE! |
| 00:37:56 | >> | SORRY! DO YOU THINK IT WILL CHANGE DURING THE NEXT ADMINISTRATION. |
| 00:37:59 | >> | I WILL SAY IT IS IMPORTANT, THE TREASURY IS SUPPORTIVE OF THE INDYMAC PROTOCOL AND HAVE BEEN SUPPORTIVE OF IT, AS HAS THE WHITE HOUSE, AND THE GSE, THE NEWLY ANNOUNCED GSE PROTOCOL HEAVILY DRAWS ON THE INDYMAC PROTOCOL AND AS WELL AS THE HOPE NOW ALLIANCE AND IN TERMS OF SYSTEMATIC MODIFICATIONS AND THE DISAGREEMENT IS WHETHER TO USE, YOU KNOW, TARP MONEY TO TRY TRY TO PROVIDE FINANCIAL INCENTIVES TO GET THIS DONE AND WE CONTINUE YOU NO, WE DISCUSS IT WITH EVERYBODY AND WE ARE GOING TO CONTINUE OUR ADVOCACY AND HOPE FOR THE BEST. IT IS, YOU KNOW, DIFFICULT WORK TO RESTRUCTURE AND NOBODY IS SAYING THAT AND THE REASON WHY WE HAVE BEEN EMPHASIZING SYSTEMATIC APPROACHES FOR A YEAR-AND-A-HALF NOW, BECAUSE IT IS HARD TO DO. EVEN WITH THE SYSTEMATIC APPROACH, HARD TO DO, BUT, YOU NO, LOOKING FOR THE EASY SOLUTION, BUY THEM ALL AND RESTRUCTURING, A LEGITIMATE QUESTION BUT IT'S NOT THERE AND I THINK WE KIND OF NEED TO GET AWAY FROM THE SHORT-TERM THINKING WE WRITE A BIG CHECK AND SOMEHOW GET ALL OF THE LOANS UNDONE, IT WILL LABORIOUS TO RECONSTRUCT TOUR THEM AND ROLL UP OUR SLEEVES AND WORK AT GETTING IT DONE AND MAKING SURE THE FINANCIAL INCENTIVES ARE ALIGNED WITH THAT PROCESS AND I THINK IT IS VERY VERY, IMPORTANT AND IS WORTH SPENDING TAXPAYER |
| 00:39:13 | >> | THANKS SO MUCH. |
| 00:39:14 | >> | YOU BET, THANK YOU. [APPLAUSE]. |
| 00:39:22 | >> | I WITH URGE EVERYBODY TO STICK AROUND, THE SECOND HALF OF THIS PROGRAM IS AS EXCITING AS THE FIRST. AND, WE HAVE REALLY GOOD RESEARCH TO PRESENT, JUST HOLD ON AS WE MOVE OUT HIGHER. -- MOVE OUT HERE. [INAUDIBLE CONVERSATIONS]. |
| 00:40:14 | >> | THANK YOU AGAIN FOR JOINING US THIS MORNING AND I WOULD ALSO LIKE TO THANK SHEILA BAIR AND MY COLLEAGUE, ELLEN SEIDMA INPUT FOR THAT TIMELY AND INTERESTING DISCUSSION. WE'RE NOW GOING TO CONVENE OUR PANEL ON LOOKING FORWARD AND HOW TO MAKE LOW INCOME HOME OWNERSHIP WORK. I'M REID CRAMER AND WORK AT THE NEW AMERICA FOUNDATION AS RESEARCH DIRECTOR IN OUR ASSET-BUILDING PROGRAM. AND I'M GOING TO TURN THE PANEL OVER TO MY COLLEAGUES AND CO-SPONSORS OF THE GATHERING AT THE CENTER FOR COMMUNITY CAPITAL AT THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL AND ROBERTO AND YANIKA AND MICHELLE, ARE ALL ACCOMPLISHED SCHOLARS AND THEIR WORK NEEDS TO BE BROUGHT TO BEAR ON THE CHALLENGES WE ARE FACING NOW IN THE HOUSING MARKET AND THEIR BIOS ARE IN YOUR PACK AND THEY'LL PRESENT THEIR WORK, EVALUATING A PARTICULAR LOW INCOME HOUSING HOME OWNERSHIP PROGRAM, AIMED AT THIS PARTICULAR TARGETED MARKET AND THEIR FINDINGS HAVE MAJOR POLICY IMPLICATIONS THAT I THINK WE'LL TRY AND DRAW OUT IN DISCUSSION. AND THEY'LL SPEAK FOR ABOUT 31 MINUTES AND THEN, WE'LL HAVE SOME REMARKS BY MYSELF, ERIC STIB AND MARK WILLIS, AND ERIC STEIN IS PRESIDENT OF CENTER FOR COMMUNITY SELF-HELP, MARK WILLIS IS CURRENTLY OF THE FORD FOUNDATION BUT A LONG-TIME FORCE IN COMMUNITY DEVELOPMENT BANKING BANKING. FROM HIS PERCH AT JP MORGAN AND THEIR BIOS ARE IN YOUR PACKETS AS WELL. SOY ROBERTO. |
| 00:42:07 | >> | GOOD MORNING, EVERYBODY, I AMRO BARRETT TOW -- WITH THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL AND ON BEHALF OF ALL OF US, I WANT TO ECHO ELLEN AND WELCOME YOU ALL HERE AND WOULD ALSO LIKE TO THANK THE NEW AMERICA FOUNDATION FOR PUTTING THIS EVENT TOGETHER IN SUCH A SHORT TIME. THE CURRENT CRISIS MAY HAVE SOME BELIEVING THAT IT'S NOT A GOOD IDEA TO EXTEND HOME OWNERSHIP AND LENDING TO LOW INCOME FAMILIES, MODERATE INCOME FAMILIES, MINORITY FAMILIES. I -- RESEARCH SEEMS TO SHOW OTHERWISE. THIS RESEARCH STARTED TEN YEARS AGO, FUNDED BY THE FORD FOUNDATION, AND LED BY MY PREDECESSOR, MICHAEL STEADMAN. TAKEN TOGETHER, THE RESEARCH, WE PRESENT TODAY, HAD TWO CONCLUSIONS AND IF YOU DON'T REMEMBER ANYTHING ELSE REMEMBER THESE TWO THINGS. THE FIRST THING IS THAT HOME OWNERSHIP HAS SIMILAR BENEFITS TO LOW INCOME FAMILIES THAN IT DOES NOT HIGHER INCOME FAMILIES, THE RESEARCH HAS BEEN INCONCLUSIVE AND WE HAVE BEEN ABLE TO ACTUALLY MEASURE THAT EMPIRICALLY AND THIS LEADS YOU TO ASK, IF YOU SHOULD CONTINUE DESPITE THE CURRENT CRISIS, SHOULD CONTINUE TO EXPAND HOME OWNERSHIP OPPORTUNITIES TO FAMILIES AND THE SECOND FINDING I WOULD LIKE TO YOU REMEMBER IS THAT IF DONE RIGHT, LENDING TO LOW AND MODERATE INCOME AND MINORITY FAMILIES IS VIABLE AND A GOOD BUSINESS. I WILL -- OUR RESEARCH SHOWS THAT. THIS TO ME TELLS US AS WE MOVE INTO THE FUTURE, REGULATORS NEED THE ABILITY TO CONCERN BETWEEN GOOD LENDING AND BAD LENDING, BETWEEN WHAT IS RYAN WHAT IS WRONG AND THE WILL TO ACT ONTHAT KNOWLEDGE. SO THE ASSOCIATE DIRECTOR OF THE CENTER WILL GIVE US AN INTRODUCTION OF THE RESEARCH AND THE PROGRAM, AND THE EVALUATING, AND MICHELLE WILL TALK ABOUT THE WE'LL CONCLUDED WITH THE FINANCIAL ASPECTS OF THE PROGRAM INCLUDING THE IMPORTANCE OF DELINQUENCY SERVICING AND MITIGATIONS. THANK YOU. |
| 00:44:29 | >> | THANK YOU, ROBERTO AND NEW AMERICA FOUNDATION AND THANK YOU SHEILA BAIR ON SO MANY LEVELS AND ALSO THANK ALL OF YOU FOR TAKING TIME OUT OF YOUR BUSY SCHEDULES TO REFLECT ON THE HUGH OF LOW INCOME HOME OWNERSHIP WITH US TODAY. WE FIND OURSELVES IN A TIME WHERE IT SEEMS IMPORTANT TO TEST ALL OF OUR ASSUMPTION ON THIS ISSUE, THROUGH OBSERVATION AND IN LIGHT OF THE EVIDENCE AND WE, AT UNC AND SELF-HELP HAVE EVIDENCE TO SUBMIT TODAY. TIMELY RESEARCH, THAT GOES DIRECTLY TO MANY OF THE POINTS RAISED BY CHAIRMAN BAIR EARLIER AND MY TASK IS TO BRIEFLY INTRODUCE OR STUDY ON SELF-HELPS AFFORDABLE HOME LOAN SECONDARY MARKET PROGRAM WHICH WE REFER TO AS CAP, A LITTLE EASIER, SHORT FOR COMMUNITY ADVANTAGE PROGRAM AND SELF-HELP IS ONE OF THE NATION'S LEADING NONPROFIT FINANCIAL INSTITUTIONS HEADQUARTERED IN NORTH CAROLINA AND THE CAP PROGRAM PROVIDES AFFORDABLE FUNDING FOR MORTGAGES TO LOW INCOME AND MINORITY HOUSEHOLDS ACROSS THE COUNTRY. THE PROGRAM IS THE SUBJECT OF OUR RESEARCH WAS ORIGINALLY ANNOUNCED BY SELF-HELP IN THE CLOSING MONTHS OF 1998. A WHOLE DECADE AGO, AND THE WHOLE LOT CHANGED SINCE THEN, BUT, ERIC AND I, WE HAVEN'T AGED A BIT, HAVE WE? AT THE TIME, SELF-HELP HEARD A NEED AMONG BANKS WHO COULDN'T SELL THEIR CRA OR COMMUNITY REINVESTMENT ACT MORTGAGES BECAUSE BACK IN THOSE DAYS FANNIE AND FREDDIE CONSIDERED THEM TO BE TOO RISK TOY PURCHASE. THIS LIMITED BANK'S CAPACITY TO EXPAND MORTGAGE LENDING IN LOW INCOME AND MINORITY COMMUNITIES. SELF-HELP ON THE OTHER HAND, HAD BEEN MAKING LOANS TO UNDER SERVED BORROWERS FOR A NUMBER OF YEARS AND FELT CONFIDENT IN THEIR ABILITY TO TAKE ON THE ASSOCIATED CREDIT RISKS AND THEY WERE AWARDED A GROUND BREAKING $50 MILLION GRANT FROM THE FORD FOUNDATION AND WITH THE FUNDING IN HAND SECURED A COMMITMENT FROM SFAEN MAY TO BUY BILLIONS OF DOLLARS WORTH OF CRA MORTGAGES FROM SELF-HELP PROVIDED THAT SELF-HELP WOULD TAKE RECOURSE AND THAT IS WOULD PAY FOR ANY LOSSES THAT AROSE FROM DEFAULTS AND A FORM OF GUARANTEE. SELF-HELP COULD BUY SUCH MORTGAGES FROM LENDSERS AROUND THE COUNTRY. AND SELL THEM TO FANNIE MAE, THUS OPENING UP ACCESS TO -- FOR A WHOLE NEW SET OF POTENTIAL LOW INCOME HOMEBUYERS TO THE VAST FUNDING MACHINE THAT FANNIE MAE REPRESENTED. A SOURCE OF EFFICIENT, LOCK -- LONG TERM FIXED RATE STANDARDIZED MORTGAGE CAPITAL AVAILABLE THROUGH A BROAD DISTRIBUTION. TODAY, THE PROGRAM TALLIES 50,000 LOANS, IN 48 STATES, ORIGINATED BY ROUGHLY 40 LENDERS FOR A TOTAL OF OVER $4.5 BILLION. PARTICIPATING LENDSERS COULD CUSTOM DESIGN THEIR PROGRAMS BUT HAD SEVERAL FEATURES IN COMMON, THE FIRST AMONG THEM WAS REDUCING THE AMOUNT OF CASH A BORROWER HAD TO BRING TO THE CLOSING TABLE AND SOMETIMES AS LITTLE AS 1% OF THE PURCHASE PRICE FOR EXAMPLE. THERE WAS ALSO FLEXIBILITY AROUND CREDIT HISTORY AND INCOME BOTH IN TERMS OF THRESHOLDS AND DOCUMENTATION. NOW, ALL OF THE LOANS WERE FULLY DOCUMENTED, NO SUCH THING AS STATED INCOME BUT, MANY OF THE PROGRAMS FEATURED THE ABILITY TO PROVE YOUR CREDIT WORTHINESS AND REPAYMENT ABILITY THROUGH NONTRADITIONAL FORMS OF DOCUMENTATION. AND REACHED THE TARGET EFFECTIVELY MORE THAN 40% OF THE BORROWERS WERE MINORITY AND A SIMILAR AMOUNT WERE SINGLE FEMALE HEADED HOUSEHOLDS, AND THE AVERAGE INCOME, $32,600 REALLY SHOWS HOW EFFECT THIS THE PROGRAM WAS IN REACHING ITS TARGET MARKET. THE MEDIAN HOUSEHOLD EARNED JUST ABOUT 60% OF THEIR AREA MEDIAN INCOME. AND YOU MIGHT SAY, WOW, THAT SOUNDS RUSK I YOU KNOW, I'VE READ THE PAPERS, HOW SUSTAINABLE IS THIS KIND OF LENDING? SO, THOUGH IT IS TOO EARLY TO TELL INDICATIONS ARE SO FAR SO GOOD. WHEN WE LOOK AT RELATIVE PERFORMANCE, FOR EXAMPLE THE MOST RECENT RELEASE OF DELINQUENCIES STATISTICS BY THE MORTGAGE BANKERS ASSOCIATION, WE CAN SEE THAT THE CAP MORTGAGES ARE DRAMATICALLY OUT PERFORMING SUBPRIME ADJUSTABLE RATE MORTGAGES, SUBPRIME FIXED RATE MORTGAGES AND EVEN, PRIME ADJUSTABLE RATE MORTGAGES AND FHA IN TERMS OF 90 AND MORE DAY DELINQUENT LOANS. BUT THESE ARE JUST BROAD BRUSH FINDINGS THAT DON'T GIVE US A WHOLE LOT OF IN SIGHT INTO WHAT IS REALLY GOING ON HERE. FORTUNATELY, THANKS TO THE FORESIGHT OF THE FORD FOUNDATION A SUBSTANTIAL INVESTMENT HAS GONE INTO A RESEARCH COMPONENT HAVEN HAS TWO PRIMARY PARTS AND UNC HAS ACCESS TO LOAN LEVEL INFORMATION ON EVERY LOAN FUNDED THROUGH THE SELF-HELP PROGRAM AND WE HAVE THE ORIGINATION DATA AS WELL THAT'S MONTHLY PAYMENT HISTORIES AND THEN WE SUPPLEMENT THIS WITH UPDATED PRAPT PROPERTY VALUES, ON THE PROPERTIES -- AND UPDATED CREDIT SCORES ON ALL OF THE BORROWERS WHO REMAIN ACTIVE IN THE PORTFOLIO. FURTHER TO RIGOROUSLY EXAMINE THE EFFECTS OF HOME OWNERSHIP ON THE HOUSEHOLDS WE PULLED A RANDOM SAMPLE OF 4,000 OF THE BORROWERS AND WE CALL THESE FOLKS EVERY YEAR, AND PUT THEM THROUGH A SURVEY AND WE'RE IN THE 6th ROUND OF A DATA COLLECTION RIGHT NOW. AND THESE SURVEYS COVER TOPICS LIKE UNEMPLOYMENT, AND HOUSEHOLD COMPOSITION, AND DETAILS ABOUT THEIR ASSETS AND LIE BALTS, AND HOW THOSE ARE CHANGING OVER TIME AND ATTITUDES TOWARDS SAVINGS AND CREDIT AND WE GET INTO THINGS LIKE VOTING AN VOLUNTEERING BEHAVIOR AND COMMUNITY ENGAGEMENT AND PARENTING AND THAT SORT OF THING. WE ALSO INTERVIEW A COMPARISON GROUP OF LOW INCOME RENTERS WHO LIVE IN THE SAME COMMUNITY AND TRY AND REALLY SIGHS LIT -- ISOLATE THE EFFECTS OF OWNING A HOME OF YOUR OWN AMONG THE LOW INCOME POPULATION AND THE RESULT IS A RICH DATASET TO HELP US BETTER UNDERSTAND THE HOME OWNERSHIP PROPOSITION FOR THESE LOW INCOME HOUSEHOLDS AND CERTAINLY YOU HAVE BIGGER DATASETS OUT THERE AND THERE ARE LOAN PERFORMANCE AND HOME DATA BUT WE THINK THE DATA ADDS TO THE FIELD FOR SEVERAL REASONS, FIRST IT IS FOCUSED ON THE AFFORDABLE SEGMENT AND ALLOWS US TO DELVE INTO ISSUES RELEVANT TO THAT MARKET. SECOND, IN ONE PLACE, WE HAVE INFORMATION ABOUT THE BORROWER, THE NEIGHBORHOOD AND THE LOAN AS WELL AS THINGS LIKE CREDIT SCORE AND PROPERTY VALUE AND IT IS HARD TO FIND DATASETS WITH ALL OF THOSE ELEMENTS IN ONE PLACE. THIRD, THE PANEL GIVES US AN INCREDIBLE DEPTH OF INFORMATION, JUST TO GIVE EXAMPLES, WE CAN LOOK AT THE POTENTIAL EFFECTS OF DIVORCE, OR UNEMPLOYMENT, WE CAN FIND OUT WHAT KIND OF MORTGAGES PEOPLE REFINANCED INTO OR WHO MOVED FROM OWNING A HOME AND GOING BACK TO RENTING OR WHO BOUGHT UP OR WHO WENT FROM RENTING TO OWNING. AND, FOURTH AND PERHAPS MOST IMPORTANT, WE CAN USE IT. OTHER THAN HUMDA THERE IS NOT A LOT OF LOAN LEVEL DATA AVAILABLE IN THE PUBLIC DOMAIN AND SINCE SO MUCH DATA IS CAPTURED IN THE PRIVATE SECTOR IT PUTS THE PUBLIC WELFARE I THINK AT A DISADVANTAGE, SOMETIMES AND INFORMATION A SIMTY TRIAND WE'LL MAKE THE DATASET -- ASYMMETRY AND WE'LL MAKE IT AVAILABLE EVENTUALLY AND NOW IS MESSY AND WE ARE DOING DATA COLLECTION AND THERE ARE A NUMBER 0 TECHNICAL ISSUES TO ADDRESS SUCH AS ACCOUNTING FOR THE INCREASING NUMBER OF SURVEY PARTNERSHIP PANNED REALLY KNOWING EXACTLY WHO WE CAN GENERALIZE OR FINDINGS TO. BUT WHETHER IT IS GOOD LUCK OR GREAT PLANNING, OUR FINDING CAPTURE BOTH THE PEEK AND WHAT WE -- PEAK AND HOPE IS A VALLEY IN THE HOUSING CYCLE AND FOR EXAMPLE, CAP BORROWERS HAVE MOST OF THEIR EQUITY, WEALTH IN THEIR HOME ECQUITY AND -- EQUITY AND HOW WILL THAT BE AFFECT BY REAL ESTATE VALUE DECLINES AND ALSO, WE FIND THE CAP BORROWERS ARE VERY HIGHLY EMPLOYED, TYPICALLY BOTH ON WAGE EARN EARNS AND TWO-HEADED HOUSEHOLDS IN THE THIS WORKFORCE AND WE WILL BE CURIOUS TO SEE HOW UNEMPLOYMENT OR CUTBACKS IN INCOME MIGHT AFFECT THEIR FINANCIAL CONDITION AND WHETHER THEIR HOUSING, QUIT WILL HELP THEM WEATHER THIS CRISIS. SO, WE SERIOUSLY DO WANT OTHER RESEARCHERS TO HELP US MAKE THE MOST OF THE INFORMATION, AS WE INVESTIGATE TWO OVERARCHING ISSUES AND FIRST, AS A MATTER OF PUBLIC POLICY, HOME OWNERSHIP SOMETHING WE WANT TO PROMOTE AND WHY AND AND THE DOCTOR WILL WALK US THROUGH THE SOCIAL IMPACTS WE HAVE BEEN ABLE TO IDENTIFY AMONG THE CAM BORROWERS, AND, SECOND, IF SO, HOW DO WE GO ABOUT PROMOTING IT PARTICULARLY FROM A FINANCIAL CONTEXT AND FINANCING CONTEXT AND HERE THE DOCTOR, THE CENTER'S DOCTOR WILL TAKE US THROUGH A NUMBER OF FINDINGS ON THE FINANCIAL AND BUSINESS OUTCOMES OF THE CAP MODEL AND THE IMPLICATIONS. SO, WITHOUT FURTHER ADO? |
| 00:52:20 | >> | THANK YOU VERY MUCH, AND GOOD MORNING, EVERYONE. SO AS SHE SUGGESTED I WILL WALK YOU THROUGH SOME OF OUR FINDINGS AND OUR EMPIRICAL EVIDENCE, ON THE EFFECT OF HOME OWNERSHIP ON SOCIAL OUTCOMES AND SPECIFICALLY I'M GOING TO LOOK ON INDIVIDUALS AFFECTS ON INDIVIDUALS, FAMILIES AN EFFECTS ON COMMUNITY AND BEFORE I PRESENT OUR FINDINGS I WANT TO TAKE A FEW MINUTES TO SHARE WITH YOU SOME OF OUR MAJOR STRENGTHS OF OUR STATED DESIGN AND OUR MODELS WE USED IN OUR ANALYSIS TO BE ABLE TO DERIVE RIGOROUS RESULTS FROM OUR PAMPAL. THE FIRST ONE IS WHICH WAS MENTIONED, CAUSING USING THE QUASI-EXPERIMENTAL DESIGN AND FOLLOWING THE GROUP OF HOMEOWNERS THAT, YOU KNOW, BOUGHT HOMES WITH THE SECONDARY MORTGAGE PROGRAM BUT WE ARE USING A COMPARISON GROUP OF RENT,AND WE MATCH THIS OWNERS AND RENTERS BY INCOME AND GEOGRAPHICAL LOCATIONS AND REALLY BEING ABOUT THE HOMEOWNER EFFECT AND THE SECOND MAJOR STRENGTHS OF OUR STUDY IS THE FACT THAT WE ARE USING THE LONGITUDINAL DESIGN AND FOLLOWING THESE PEOPLE OVER TIME AND WE ARE ABLE TO LOOK ON SOME OF THE SOCIAL OUTCOMES, OVER TIME. AND THE EFFECT OF HOME OWNERSHIP OVER TIME. AND IN E THE ANALYSIS METHOD WE ARE USING MULTI-LEVEL MODELING TO THE FACT, THAT INDIVIDUALS LIVE IN DIFFERENT NEIGHBORHOODS ACROSS THE U.S. AND TWO-STAGE REGRESSION MODELING TO ACCOUNTED FOR THE SELF-SELECTION INTO HOME OWNERSHIP AND A LOT OF THE RESEARCH ON HOME OWNERSHIP IS BEING CRITICIZED AS THE FACT OF THE SELF-SELECTION INTO HOME OWNERSHIP. THAT SOME OF THE ATTRIBUTES THAT MAKE, YOU KNOW, SOMETHING MORE LIKELY TO BE HOMEOWNERS ARE ALSO THE SAME ATTRIBUTES THAT MAKE THEM MORE LIKELY TO VOTE AND PARTICIPATE IN THE COMMUNITY AND, YOU KNOW, TO BE MORE INVOLVED IN SCHOOLS AND WE ARE TAKING STATISTICAL TECHNIQUES TO ACCOUNT FOR THE SELF-SELECTION. IN OUR ANALYSIS. I WANT TO SHARE WITH YOU FOR A MINUTE KIND OF THE CONCEPTUAL FRAMEWORK AND WE ARE ASKING THE QUESTION ABOUT WHETHER HOME OWNERSHIP, YOU KNOW, VARIETY OF DIFFERENT SOCIAL OUTCOMES, WE ARE LOOKING ON SOCIAL CAPITAL, NEIGHBORHOOD, PARENTING, POLITICAL PARTICIPATION IN -- AND VOLUNTEERING AND WHILE DOING THAT WE ARE CONTROLLING FOR VERY IMPORTANT DEMOGRAPHIC, FINANCIAL AND NEIGHBORHOOD CHARACTERISTICS AND CONTROLLING FOR DEMOGRAPHIC THINGS SUCH AS EDUCATION AND EMPLOYMENT AND STATUS, ET CETERA AND ALSO CONTROLLING FOR FINANCIAL CHARACTERISTICS SUCH AS INCOME AND ASSETS AND CAR OWNERSHIP, AND FINALLY, FOR NEIGHBORHOOD CHARACTERISTICS SUCH AS NEIGHBORHOOD STABILITY, SCALE, PERCENT OF RACIAL COMPOSITION WITHIN THE NEIGHBORHOOD, AND ET CETERA. SO, LET ME SHOW YOU THE FIRST SET OF OUTCOMES. AND FIRST SET OF STUDIES THAT WE LOOKED ON HOME OWNERSHIP AND SOCIAL CAPITAL. AND WE MEASURE SOCIAL CAPITAL AS ASSETS, OF INDIVIDUALS AND ALSO ACCESS TO A SOCIAL NETWORK AND WE ASKED OUR RENT,AND OWNERS A SET OF QUESTIONS INCLUDING HOW MANY PEOPLE DO YOU KNOW WHO WILL LIKELY FIND A JOB, AND WILL HELP YOU -- GIVE YOU GOOD ADVICE ON HOW TO HANDLE STRESS AND SO TO THE, THE LIST OF THE QUESTIONS WE ASKED ARE ON THE SLIDE. AND WHAT WE ARE FINDING IS THAT OUR HOMEOWNERS REPORT THAT THEY ARE MORE LIKELY TO HAVE MORE PEOPLE THAT WILL HELP THEM WITH THAT, THAN ACCESS TO MORE RESOURCES, AND, MORE OF THESE RESOURCES ARE IN THEIR OWN NEIGHBORHOOD. OF COURSE, THIS, WE DO FORMAL STUDIES, WE ARE ALSO -- STATISTICALLY SIGNIFICANT TO ASK THE CONTROL FOR THIS VARIETY OF CONTROL -- YOU KNOW, DEMOGRAPHIC FINANCIAL, AND NEIGHBORHOOD STATISTICS, WE'LL BE SHOWING YOU KIND OF OUR OWN DATA AND WE ARE FINDING SIGNIFICANT CONTROL FOR ALL OF THESE CHARACTERISTICS AND THIS SLIDE, WE DO OUR RESULTS ABOUT HOME OWNERSHIP AND NEIGHBORHOOD DISFAEKZ AND ASK OUR RENT,AND OWNERS, WHETHER THEY ARE LIKELY TO RECOMMEND THEIR NEIGHBORHOOD TO OTHERS AND WE FIND THAT HOMEOWNERS ARE MORE LIKELY TO RECOMMEND A NEIGHBORHOOD TO OTHERS AND ARE ALSO MORE LIKELY TO RATE THE NEIGHBORHOOD AS SAFE -- A SAFE PLACE TO RAISE CHILDREN. WE LOOK AT NEIGHBORHOODS BECAUSE WE BELIEVE IT IS IMPORTANT OUTCOMES AND RESEARCH INDICATE PEOPLE WHO ARE MORE SATISFIED FROM THE NEIGHBORHOOD, AND HAVE MORE SENSE OF COMMUNITY AND QUALITY OF LIFE AND ARE LESS LIKELY TO MOVE. SO, THIS IS ONE OF THE REASONS WE LOOK AT THE NEIGHBORHOOD AS ONE OF THE ASPECT AND MOVING TO FAMILIES AND SPECIFICALLY LOOKING ON HOMEOWNER AND PARENTING. AND WE FIND THAT OUR HOMEOWNERS AGAIN ARE MORE LIKELY TO BE INVOLVED IN SCHOOLS AND IN THE -- YOU KNOW, KIDS' SCHOOLS AND CHILDREN ARE MORE LIKELY TO PARTICIPATE IN ORGANIZED ACTIVITIES. THANK YOU. CONTINUING WITH THIS, HOME OWNERSHIP AND PARENTING AND WE ASKED A FEW QUESTIONS ABOUT, YOU KNOW, LOOKED ON READING TO A CHILD AND AMOUNT OF TIME CHILDREN SPEND IN FRONT OF SOME TYPE OF A SCREEN, WHETHER A TV, OR VIDEO OR PLAYING A VIDEOGAME, SO, AMOUNT OF TIME SPENT IN FRONT OF THE SCREEN DURING THE DAY, AND, SURPRISINGLY, WE FIND THAT OUR RENTAL SUPPORT -- RENTERS ARE READING MORE TO THE CHILDREN AND ARE NOT SURE, YOU NO, NOT CONGRUENT WITH WHAT WE EXPECTED AND WE ARE NOT STILL SURE, YOU KNOW, WHAT IS HAPPENING THERE: |
| 00:59:09 | >> | SO WHAT CAN WE DRAW FROM THAT? WE HAVE EVIDENCE THAT THERE ARE SOCIAL BENEFITS FROM OWNING A HOME, THIS IS CONSISTENT WITH THIS POLICY THAT FOCUS ON EXPANDING HOME OWNERSHIP AND ROBERTO WILL TALK ABOUT THAT IN A MINUTE. ALSO THERE'S A LOT MORE TO COME. AS JANNEKE IS SAID WE ARE IN THE MIDDLE OF DATA COLLECTION, WE HAVE MORE DATA AND MORE THAN WE WILL LOOK AT, THERE IS SOCIAL OUTCOMES THAT WE'RE LOOKING FOR ENGAGEMENT, WE WANT TO KEEP LOOKING ON THIS ALL THE TIME IF YOU HEAR A LOT MORE FROM US IN THE YEARS TO COME AND NOW WE WILL TALK OUT OF FINANCIAL CONSIDERATIONS. |
| 01:00:12 | >> | THANK YOU MICHAL. I HAVE FIVE OR SIX DIFFERENT ASPECTS OF THE FINANCIAL PARTS OF THE PROGRAM. TELL US ABOUT THE EVOLVING RELATIONSHIP BETWEEN THE PROGRAM AND THE CAPITAL MARKETS, THE PERFORMANCE OF THESE LOANS I WILL TALK ABOUT THE BUILDING WEALTH COMPONENT OF THE PROGRAM WITHIN THE ECONOMIC DOWNTURN WE ARE EXPERIENCING NOW. ALSO TALK ABOUT REFINANCE INTO THESE PRIOR MORTGAGES AND FINALLY I WILL SHARE THE FINDINGS WE HAVE COME TO ESTIMATE WITH THE COUNCIL SERVICING AND THE OPPROBRIOUS STRATEGY IS. THE PROGRAM AS JANNEKE SAID, WHAT THEY HAVE REALLY CHANGED IN NATURE. WHEN IT WAS ACTUALLY PUSHING THE MARKET AND PUSHING LENDERS TO MAKE AT THAT TIME WHICH WERE CONSIDERED RISKY LOANS BASED ON THE BORROWER'S ABILITY TO PAY, LOW DOWN PAYMENT, BUT BASICALLY MORTGAGES WITH ESCROWS AND NOW WE CAN SEE TODAY WAS MAINSTREAM. THE SUBPRIME MORTGAGE MARKET GREW, THE CAP WAS LEFT BEHIND SO IT WAS MUCH MORE AGGRESSIVE WITH THE SUBPRIME ON THE CAPSULE OVER TIME THE PROGRAM PROVIDED THE ALTERNATIVE TO THE RISKY SUBPRIME MORTGAGES. THERE IS AN GUESSTIMATION OF THE IMPACT OF THIS OVER TIME THAT IT WENT FROM INCREASE SAYING NEIGHBORHOODS TO ACTUALLY SUBSTITUTING FOR THE SUBPRIME MORTGAGES. AS WE HAVE SEEN AT THE PROGRAM INTO THE FUTURE WE BELIEVE WE BOTH GO BACK TO THE FUTURE. SUBPRIME MORTGAGES ARE MOSTLY GONE AND WE BELIEVE THE FEARS OF THE MARKET ABOUT LENDING TO CERTAIN GROUPS OR DURING CERTAIN TYPES OF LENDING WILL HAVE THEIR ROLE TO PLAY BUT THIS TIME THE LENDING IS DONE CORRECTLY. THE NEXT SLIDE TALKS ABOUT THE PERFORMANCE OF THESE LOANS AND HEAR THE CONCERN WE ALWAYS HAVE IN RESEARCHER IS HOW CAN YOU MEASURE THE PERFORMANCE OF TWO ITEMS OF IT IS NOT HELD CONSTANT? IF IT IS HELD CONSTANT YOU CAN SEE THE PERFORMANCE. WE DID THIS STATISTICALLY. WE HAVE BORROWERS WITH EXACTLY THE SAME THESE PROFILES AND WE FOLLOW THE PERFORMANCE GIVING THE ONE INVESTMENT LOAN AND THE OTHER A SUBPRIME LOAN. AS YOU CAN SEE, 24 MONTHS AFTER ORIGINATION THE DELINQUENCY AND SUBPRIME LOANS IS ALMOST FOUR TIMES AS MUCH AS THE TRADITIONAL INVESTMENT LOAN. THIS TELLS US AGAIN THAT FOR THESE KINDS OF BORROWERS THURSDAY IT RIGHT AND WRONG WAY TO LEAD AND SUBPRIME IS THE WRONG WAY TO LEND. GIVEN THE MARKET'S DOWNTURN AND THE WEAKENING OF THE ECONOMY, WHAT IS LOOKING AT THE WEALTH BUILDING ASPECTS OF THE PROGRAM AND HOW WE HAVE FAILED OVER TIME AND AS YOU CAN SEE THEY HAVE SHOWN A VERY SIGNIFICANT EQUITY RETURN FOR GROWTH AND THEY HAVE A MORE DOWNPAYMENTS, THE MEDIAN BORROWER HAS AN AVERAGE OF $13,000 IN RETURN. EVEN AFTER THE DOWNTURN, THEY HAVE A MEDIAN EQUITY OF RETURN IS POSITIVE. FOR THE MEDIAN BORROWER WHO IS DOING WELL WE LOOK AT IT THAT EXCEPT IN A COUPLE OF STATES OHIO, IN THE MIDWEST, THEY STILL SEE POSITIVE EQUITY. THEY ARE FORTUNATE TO SUGGEST VERY GOOD UNDERWRITING AND A GOOD KNOWLEDGE OF THE MARKET WHEN THE MORTGAGES EVEN WITH THESE MORTGAGES THAT WERE LOW INCOME BORROWERS THAT IN THE ABSENCE OF CAPITAL THEY WENT TO A SUBPRIME MORTGAGE COMMENT WE WENT TO SEE HOW MANY OF THESE BORROWERS REFINANCED AFTER THIS INITIAL INVESTMENT PRODUCT INTO SUBPRIME MORTGAGE AND THE EQUITY PROGRESS WE CAN SEE MOST OF THE BORROWER'S STAYED IN THE PRIVATE MARKET. THEY DID REFINANCE WITH THE BENEFITS OF THE LOWER INTEREST RATE. OF THOSE THAT REFINANCE -- SUBPRIME. THESE FAMILIES REFINANCE INTO THE INVESTMENT LOANS SEEM TO BE MORE MAINSTREAM. HOUR MAIN CONTENTION IS THAT THE FIRST LOAN AS A MOVE INTO THE INVESTMENT LOAN TO A FINANCIAL INSTITUTION THEY GO REFINANCE WITH THE SAME INSTITUTION AND GET ANOTHER PRODUCT. WE WILL THIS MORNING AT THE TELL YOU ABOUT THE FUTURE WORK FOR GROWTH THE PROGRAM THAT WE HAVE TODAY THAT CHAIRMAN BEAR WAS TALKING ABOUT OF THE INTERVENTION, WHAT CAN WE DO? |
| 01:06:03 | >> | WITH THE PROACTIVE DELINQUENCY LOAN PREVENTION PROGRAM WE CAN TALK ABOUT THE SPECIFICS OF THAT WHEN WE TALK TO ALL OF YOU. ALSO IN OVER 2% RATE FOR THOSE THAT RECEIVED DELINQUENCY COUNSELING WITH THE INTERVENTION, MANY PEOPLE TODAY ARE DELINQUENT L. LEAST 80% THEN IN THE ABSENCE OF COUNSELING. COUNSELING SEEMS TO BE PLAYING A KEY ROLE. I SUSPECT THAT COUNSELING RESULTS IN A HIGHER DEFAULT PEARLESCENT SENSE OF COUNSELING AND BASED ON HIS WORK AND OTHER RESEARCH DONE AT THE CENTER, AND ITS ASSISTANCE TO THE BORROWER GIVING A REDUCED RATE, AN EMERGENCY LOAN, A PRINCIPAL REDUCTION COVER THE INCREASES THE LIKELIHOOD OF PUT THREE DEFAULTING. SO MOVING FORWARD LOOKING AT THE CURRENT CRISIS, OVERALL I THINK THE FINDINGS SUGGEST THAT SERVICE SAYING LOOKING AT THE SPECIFICS OF THE MORTGAGES DEMANDED THE BAR WHERE THEY ARE DEALING WITH FROM DAY ONE. YOU SHOULD NOT WAIT FOR A CRISIS TO DETERMINE WHAT KIND OF SERVICING THESE BORROWERS AND THE BORROWERS IN PARTICULAR, MORTGAGES NEED. THEY NEED TO BE FIGURED OUT AT THE TIME OF THE UNDERWRITING AND THE SERVICE PUT IN PLACE EVEN AT TIMES WHERE THERE ARE NO PROBLEMS. THAT WE CONCLUDE WITH SOME THOUGHTS OF WHAT WE HAVE OUR RESEARCH WE HAVE DONE AT THE CENTER. HOW TO DO THE RIGHT LENDING DOES NOT SEEM TO BE TOO COMPLICATED OR ROCKET SCIENCE. IT IS GOING BACK TO THE BASICS. RENAME TO PAY, FIXED-RATE MORTGAGES COME IN THE RENTAL MARKET WE USE ADJUSTABLE RATE MORTGAGES WERE RISKY LOANS TO A LONG TIME AGO AND WE DON'T USE THEM ANYMORE BUT WE USE THEM AFFORDABLE HOUSING. DEVELOP ESCROW, HAVE RATIOS AFFECTING FAMILIES ABILITY TO PAY, SERVICING AND WHAT WE HAVE LEARNED FROM THE COMMUNITY ADVANTAGE PROGRAM AND COMMUNITY INVESTMENT LENDING, WE NEED LONG-TERM ENGAGE THREE BETWEEN BORROWERS AND LENDERS. LENDERS NEED TO KNOW ABOUT THEIR COMMUNITY TO BE EFFECTIVE LENDERS IN THAT COMMUNITY PROGRESS IMAGE OF A FOUR I THINK SERVICING NEEDS TO BE LINED UP FOR THE SPECIFICS OF THE MORTGAGE AND THE BORROWER FROM DAY ONE WITH UNDERWRITING. AND WE BELIEVE THAT LENDING AS THE PROGRAM OVER A BROADER MARKET SO THE IMPORTANCE AS THE MARKET HAS CHANGED TO BELIEVE THAT THE CRA LENDING CAN ALSO BE THE SAME WAY. WE DO BELIEVE BECAUSE CRA HAS PRECIPICE AND ENTITIES RELATED THAT THIS IS A WAY TO PROMOTE THIS KIND OF LENDING. AND WE BELIEVE THAT IF DONE RIGHT WITH THE LOW INCOME FAMILIES AND MINORITY FAMILIES IS A GOOD BUSINESS AND DONE RIGHT, LENDING TO THESE FAMILIES IN A RIGHT WAY IS A SIGNAL THEY ARE GETTING BORED WITH THEIR. THANK YOU [APPLAUSE] |
| 01:10:04 | >> | ERIC STEIN CHIEF OPERATING OFFICER AT SELF-HELP HAS MENTIONED WE ARE A NONPROFIT COMMUNITY LENDER FINANCING OVER $5 BILLION AT 55,000 HOUSEHOLDS, A SMALL BUSINESS OWNERS AND NONPROFITS AROUND THE COUNTRY WITH A LOSS RATE OF UNDER 1% PRICE SECONDARY MARKET WAS DISCUSSED TO CREATE WEALTH THROUGH HOME OWNERSHIP AND WE'RE GRATIFIED TO HEAR THE WEALTH GAINS HAVE BEEN POSITIVE WHICH IS WHAT WE WERE LOOKING FOR PRIMARILY WHEN WE ASSUMED AND IT IS NICE TO HEAR ABOUT THE SOCIAL BENEFITS AS WELL. THE REASONABLY PROMOTE HOME OWNERSHIP IS BECAUSE IT IS ONE OF THE VERY FEW LEVERAGED INVESTMENTS LOW-INCOME FAMILIES CAN OBTAIN A PIVOT THREE PERCENT DOWN PAYMENT AND APPRECIATION OF 3% YOU INCREASE 100% RETURN ON YOUR INVESTMENT TEACHER ASSUMING YOU'RE IN A SUSTAINABLE MORTGAGE THAT YOU CAN STAY IN WHICH WE HAVE LEARNED IS A BIG ASSUMPTION. THE HOUSING PRICES THROUGH THE USE OF LENDING HAS LED THESE GAINS, BUT NOW SOME PLACES IN THE COUNTRY CLEARLY NOW IS NOT THE RIGHT TIME FOR PEOPLE TO BUY AS WE WAIT FOR THE PRICES TO SETTLE DOWN. WE STARTED FOCUSING ON PREDATORY LENDING 1999 WHEN BORROWERS CAME TO A STAND WITH ASTONISHING LOANS WHICH ARE NOT AS BAD AS THE ONES WE HAVE SEEN RECENTLY THAT THE MORE WE LOOKED AT WE REALIZE HOW OLD THEY WERE LEGAL AND THAT IS HOW WE STARTED WORKING ON PREDATORY LENDING BEING TREATED THE CENTER FOR RESPONSIBLE LENDING WHICH REPRESENT. THE MIDDLE OF THE DECADE WALL STREET DEMAND LED $42 TRILLION OF SUBPRIME AND ALL-DAY LENDING WHICH IS THE UNDOCUMENTED INCOME AND THESE WERE PUT INTO PRIVATE LEGAL SECURITIES THE TOP FIVE INVESTMENT BANKS EARNED SECURITIZED SUBPRIME LOANS WALL STREET PAID THE MOST FOR THE MOST DANGEROUS LOANS AND IN 2004 COUNTRYWIDE WAS PAID BY WALL STREET 1% FOR A REGULAR CONVENTIONAL BORING MORTGAGE THAT ROBERTO WAS TALKING ABOUT BUT FOR THE SAME BORROWER COUNTRYWIDE PAID 3.5% AS YOU CAN DECIDE WHAT IT COUNTRYWIDE DECIDED TO PROMOTE. THEN BACK IN THE CENTER FOR COMMUNITY CAPITAL IN 2005, THE TERMS OF THE SUBPRIME LOANS ARE STATISTICALLY MORE LIKELY TO RESULT IN FORECLOSURE BUT BECAUSE WALL STREET WAS PAYING MORE FOR THESE LOANS COMMITTEES OF THE ONES THAT WERE FAVOR. THESE FELLOWS THAT HELPED TO START CAUSE THE HOUSING -- A COMMON DENOMINATOR AS CHAIRMAN BARRY DISCUSSED THEY LOOK ARTIFICIALLY CHEAP THEM BUILT INTO THE STRUCTURE OF THE MORTGAGE WITH A LARGE INCREASE OF PIVOT THE PEOPLE CANNOT SUSTAIN IN THAT CONTRIBUTED TO THE HOUSING BUBBLE GOING UP BUT THE FACT THESE ARE UNSUSTAINABLE MORTGAGES WERE HIDDEN THAT PEOPLE COULD NOT AFFORD THE MORTGAGE AND REFINANCE INTO ANOTHER ONCE THE BUBBLE POPPED TO THE FACT THERE UNSUSTAINABLE MORTGAGES BECAME CLEAR FOR ALL TO SEE AS FORECLOSURES OCCUR. THIS REALLY STRIKES AT OUR MISSION NOT JUST THE BORROWERS THAT WE ARE INVOLVED WITH, BUT THE MISSION IS BROADER THAN THAT. THE MAJORITY OF AFRICAN-AMERICAN MORTGAGES IN THIS COUNTRY THE LAST SEVERAL YEARS THROUGH SUBPRIME LOANS WITH THESE ASTRONOMICAL DEFAULT RATES OF 40 OR 50% IN THE CASE 40 PERCENT OF LATINO BORROWERS WERE SUBPRIME FOR WHEN MANY OTHERS TRY TO RAISE THE PROGRAM -- PROBLEMS THE RESPONSE BEGOT WAS WE CANNOT INTERRUPTED THE FREE FLOW OF CREDIT FOR GRIES THING IS CLEAR BY NOW THAT THE LACK OF COMMON SENSE RULES SUCH AS THE BORROWER SHIP HAS IMPEDED THE FLOW OF CREDIT BEYOND ANYBODY IS WILDEST DREAMS. SINCE THE PROBLEM IS ROOTED IN EXCESS OF FORECLOSURES THIS IS WHERE THE SOLUTIONS MUST ART. FIRST OF ALL, OF LIKE TO REITERATE EVERYTHING THAT CHAIRMAN BAYER SAID THAT YOU NEED TO HAVE MASS SUSTAINABLE MODIFICATIONS AND THE T.A.R.P. PLAN IS THE BEST LEVER TO ACCOMPLISH THAT THE MODIFICATION AND GUARANTEE PROGRAM THAT SHE PROMOTES IS PROMISING AND CAN INDUCE INVESTORS AND SERVICERS TO DO A LOT OF MODIFICATIONS. SECONDLY WHEN THE GOVERNMENT BUYS EQUITY IN A BANK PURCHASES ASSETS FROM IT, IN THAT CASE THEY SHOULD ALSO INSIST ON A SYSTEMATIC LOAN MODIFICATION PROGRAMS SIMILAR TO IN. |
| 01:14:50 | >> | AND THAT IS WHAT CHAIRMAN BAIR SUGGESTED WITH SYSTEMATIC MODIFICATIONS AS PART OF THAT AND THAT BECAME PART OF THE DEAL. WE ARE PREVENTING A LOT OF TAX BENEFITS TO INSTITUTIONS THAT THEY SHOULD BE AT MINIMUM DOING WHAT IS WITH THEIR LONG-TERM FINANCIAL INTEREST WHICH IS WITH THESE MODIFICATIONS. THE SECOND THING THAT SHOULD BE DONE THIS CONGRESS SHALL THE THE NONTRADITIONAL LOAN MODIFICATIONS WHICH WE THINK WILL SAVE HUNDREDS OF THOUSANDS OF FORECLOSURES AND LOW-COST TO TAXPAYERS. THE PRINCIPAL ON EIGHT SECURED DEBT WITH A CHAPTER 13 CANNOT BE MOTIVATED THESE MODIFIED BY A JUDGE THAT MAY HAVE MADE SENSE IN THE PAST IN THE '70S WHEN MORTGAGES WERE BORING BUT DOES NOT MAKE SENSE NOW. ONE EXAMPLE CANDACE WEAVER IS A SCHOOLTEACHER IN NORTH CAROLINA A. 2005 SHE REFINANCE YOUR MORTGAGE FROM CONVENTIONAL BECAUSE HER HUSBAND HAD A HEART ATTACK AND THEY NEEDED SOME CASH. THEY RECEIVE A MORTGAGE INTEREST RATES THAT SEEMED HIGH, 8.9% FROM AN OBSCURE LENDER CALLED PNC IT TURNS OUT IT IS A SUBPRIME TO 28 EXPLODING MORTGAGE WHICH SHE HAD NO IDEA BECAUSE THAT WAS NOT REPRESENTED TWO YEARS LATER THE RATE WENT UP AT 11.9% WHICH SHE CANNOT AFFORD SHE WAS END DIAGNOSED WITH KIDNEY CANCER SHE CALLED THE SERVICER SAYING I WILL MISS A COUPLE PAYMENTS CAN WORK SOMETHING OUT NOW BECAUSE THIS SURGERY IS SCHEDULED. THE SERVICERS SAID NO WE CANNOT DO ANYTHING INTEL DEALING WITH. HAVE THE SURGERY AND BECAME DELINQUENT AND CALLED THE SERVICER AND SAID CAN WE WORK SOMETHING OUT NOW? I AM BACK TO WORK AND CANNOT PAY THE ARREARS AS WELL AS 11.9% AND SAID WE CANNOT TALK TO YOU UNTIL YOU'RE IN FORECLOSURE AND THEN SHE CALLED AGAIN AND THEY OFFERED HER A REPAYMENT PLAN WHERE SHE PUT THE ARREARAGES OUT EVERY MONTH IN ADDITION TO THE 11.9% WHICH SHE HAD NO PROSPECT. SHE HAD GOOD REPRESENTATION AND NOTHING THAT A JUDGE COULD DO TO HELP HER OUT. ON THE OTHER HAND CONSIDER LEHMAN BROTHERS. THEY WERE PURCHASERS OF THE 228 MORTGAGES AS SECURITIZE SERVERS EARNING HUNDREDS OF MILLIONS IN FEES A HUGE INVESTOR AT 30 /1 LEVERAGE WHICH THE FAILURE OF THAT HAS ROCKED THE WORLD ECONOMY AND THEY OWNED A LENDER CALLED THE AND SEE THE VERY SAME LENDER THAT GAVE MS. WEAVER FURLOUGH THAT WAS THE SUBJECT OF THE "WALL STREET JOURNAL" INVESTIGATION THAT FOUND FALSIFICATION OF TAX FORMS, DOCUMENTS, FORGINGS SIGNATURES, IGNORING UNDERWRITER WARNINGS AND WITH EVERY PROBLEM YOU CAN IMAGINE. THEY WERE ABLE TO GO TO COURT AND TO RECEIVE CHAPTER 11 WHERE THE DEBTS CAN GET RESTRUCTURED. THERE SOMETHING NOT RIGHT WITH THIS PICTURE. WE ALSO NEED TO FOCUS ON REACHING -- MAKING SURE THESE ABUSES DON'T OCCUR GOING FORWARD. THE BIGGEST IS TO PREVENT FORECLOSURES WE ALSO NEED TO WORK ON AND REALLY PAY ATTENTION TO THE FINANCIAL INCENTIVES PLACED ON ORIGINATORS THAT LED TO THE CRISIS BECAUSE YOU CAN ASK PEOPLE TO DO THINGS BUT IF THEY ARE PAID MORE TO DO SOMETHING DANGEROUS OR BAD THAT IS WHAT THEY WILL DO. WE HAVE LEARNED THAT. THE FEDERAL RESERVE HOPE NOW RULES ARE GOOD BUT THEY IGNORE THE OIL SPREAD PREMIUMS WHEN LENDERS AND LOAN OFFICERS ARE PAID MORE IF THEY PUT PEOPLE IN THE WORST LOANS WITH HIGHER RATES. WHAT WILL THEY DO? THAT IS WHAT THEY WILL DO. THOSE PROTECTIONS ALSO NEED TO BE EXTENDED TO NONTRADITIONAL MORTGAGES PAYMENT OPTION ARMS, INTEREST ONLY LOANS AND OTHERS. CONGRESS NEEDS TO PASS A LAW THAT PROTECTS AGAINST ABUSES LEADING TO RETAIN ASSET LIABILITY TO SHARE LIABILITY FOR THOSE THAT THEY BUY PROGRAMS WE HAVE LEARNED ANYTHING WALL STREET WILL BUY LOANS TO MAXIMIZE SHORT-TERM REVENUES REGARDLESS OF LONG-TERM EFFECT OF SUSTAINABILITY UNLESS THERE IS A FINANCIAL INCENTIVE TO ENSURE GOOD LENDING. THANK YOU [APPLAUSE] |
| 01:19:04 | >> | THANK YOU VERY MUCH IRAQ. HUBBUB LIKE TO USE MY COMMENTS, AM I REMARKS TO CONNECT SOME OF THE RESEARCH FINDINGS TO THE CURRENT LANDSCAPE WHICH AS WE KNOW, AS WE HAVE HEARD HAS CHANGED DRAMATICALLY IN RECENT MONTHS. FIRST OFF IT IS IMPORTANT TO RECOGNIZE THAT THIS IS A HOUSING CRISIS THAT WE ARE IN AND IT IS URGENT. THE RECESSION AND ASSOCIATED JOB LOSSES WILL CREATE A LOT OF WIDESPREAD HARDSHIP. WE WILL SEE THINGS GET WORSE NEXT YEAR BEFORE THEY GET BETTER. IT WILL ADD A GREAT DEAL OF PRESSURE TO THE HOUSING FINANCE SYSTEM THAT IS ALREADY UNDER ATTACK. IF WE EXAMINE THE ROOTS OF THIS CURRENT HOUSING A MESS, I THINK THAT SHOULD BE THE TECHNICAL TERM THAT WE USE NOW BECAUSE THERE ARE SO MANY FORCES THAT HAVE WAS CONVERGE BUT IF WE LOOK CLEARLY, WE WILL SEE THE ROUTE SITUATED IN THE HOUSING BUBBLE AND FALLING PRICES. CERTAINLY THERE WAS A POLICY PUSH FOR INCREASED, OWNERSHIP. BUT THE MARKET DID MOST OF THE WORKING IN CREATING THIS APPETITE FOR MORTGAGE-BACKED SECURITIES THAT WOULD BE SLICED, DICED COME IT MULTIPLE WAYS AND WOULD BE IN SUCH A MANNER IT WOULD BE DIFFICULT TO UNDERSTAND THE UNDERLYING VALUE AND ULTIMATELY PRICED AS THESE INSTRUMENTS. THE MARKET INITIALLY DID ENCOURAGE THE SUBPRIME LENDING BUDS THIS INITIALLY WAS SEEN AS AN INNOVATION. THE ADVENT OF THE RISK-BASED PRICING WAS A MEANS OF GETTING PEOPLE INTO LOWS THAT COULD WORK FOR THEM AND IN TO GOOD HOMES BUT TOO OFTEN, WE DID SEE PREDATORY PRACTICES THAT GOT A GOOD PEOPLE INTO BAD LOANS THAT THEY COULD NOT AFFORD. AS THE ERIC EIGHT DESCRIBE WITH A VERY POIGNANT EXAMPLE. MANY ADVOCATES OUT THERE DID NOT SEE THE DANGERS AND RISKS OF HOME OWNERSHIP IT WOULD HAVE BEEN NICE TO HAVE A MORE FULLER DISCUSSION OF THE RISKS BUT THOSE OF THE ADVOCATES WERE NOT INVOLVED IN HOUSING FINANCE. NUMBER OF PEOPLE AND GROUPS WERE PAYING ATTENTION SUCH AS THE CENTER FOR RESPONSIBLE LENDING AND SELF-HELP AND TOO OFTEN THE CONCERNS WENT UNHEEDED. I AM GLAD THAT CHAIRMAN BAIR STARTED OFF REMARKS THIS MORNING TALKING ABOUT THE COMMUNITY REINVESTMENT ACT, A CRA. I THINK THE CLAIM THIS IS THE ROOT OF THE HOUSING CRISIS IS SUCH A WEEKLY WITH VERY LITTLE EMPIRICAL EVIDENCE THAT IT NEEDS TO BE IN FORCE. SHE SAID IT WAS NEVER AN EXCUSE TO MAKE LOANS THAT WERE NOT GOING TO WORK OR PERFORM. THERE WERE MANY WAYS TO GET AN OUTSTANDING RATING FOR THE BANKS THAT WERE ASSESSED UNDER CRA BY MAKING SAFE AND SOUND AND FAIR LENDING PRACTICES AND MANY GROUPS WERE DOING THAT. ALSO SHE HIGHLIGHTED A LOT OF THE LOANS WERE NOT COVERED BY CRA ANY WAY. THESE ARE FACTS THAT HAVE BEEN KNOWN, DISCUSSED, I INCLUDED IN YOUR PACKETS AN EDITORIAL FOR "THE NEW YORK TIMES" FROM OCTOBER WHICH LAID OUT THE CASE QUITE CLEARLY AND IT HAS NOT STOPPED PEOPLE FROM RECYCLING THESE TALKING POINTS THAT WERE INITIALLY AIMED AT UNDERMINING THE CASE FOR ANY TYPE OF REGULATION OF FINANCIAL SERVICES THE DISTRESSED TO SEE THE TIMES JUST LAST WEEK PUBLISHED THE EDITORIAL ON THE RIGHT SIDE OF THE OP-ED PAGE, ITS NOT EDITORIAL OPINION THAT BROUGHT UP THE CRA CLAIMS AGAIN. I THOUGHT THAT WE HAD THE TWO THIS BACK BUT CLEARLY THE ATTACK CONTINUES AND THE WORK GOES ON. WE NEED TO CONTINUE TO DEBUNK THE CLAIM. UNFORTUNATELY I THINK THIS IS TO ACCESS FROM THE REAL WORK WHICH CREATES AND THINK ABOUT THE ELEMENTS OF A NEW REGULATORY FRAMEWORK WOULD BE TO DELIVER APPROPRIATELY FINANCIAL PRODUCTS. THE RESEARCH HERE IS IMPORTANT BECAUSE IT DOES CONFIRM THAT THERE IS A RESPONSIBLE WAY TO DO HOME OWNERSHIP. THERE ARE WAYS TO MAKE IT WORK. SELF-HELP WENT AHEAD AND CREATED THEIR OWN PRODUCT. WE NOW SEE IT HAS MADE A DIFFERENCE. THIS IS A KEY FINDING THAT NEED TO BE HERALDED WE CAN DO SO TODAY BUT I THINK THE WORK WILL GO ON. I WOULD LIKE TO EMPHASIZE IT IS NOT REALLY JUST THE PRODUCT THAT WAS AT THE END OF THE GAME BUT A WHOLE PROCESS THAT PROBABLY MADE A BIG DIFFERENCE FOR HOME BUYERS. AND SO THE PROCESS AND THE PRODUCT MATTERS. THERE'S A LOT MORE TO BE LEARNED ABOUT THE PROCESS AND OUR LIKE TO SEE THE RESEARCH MOVE IN THAT DIRECTION BUT I THINK NONPROFIT GROUPS, HOUSING COUNSELING GROUPS, A BUNCH OF MEDIATING THE INSTITUTIONS, INTERMEDIARIES, BUT PLAYED AN IMPORTANT ROLE. THE OTHER THING THE PROCESS NEEDS TO DOING IS INCORPORATE CONSUMER SAFEGUARDS AND ACCOUNTABILITY. THE ISSUE BECOMES WHAT DOES ACCOUNTABILITY LOOK LIKE IN TODAY'S CHANGING ENVIRONMENT? WE HAVE LOW CONSUMER CONFIDENCE, AN UNCERTAIN FUTURE FOR A NUMBER OF FINANCIAL INSTITUTIONS, SO IT IS AN OPEN QUESTION. CLEARLY, ACCOUNTABILITY NEEDS TO EXTEND TO WHATEVER THE FINANCIAL OR WHEREVER THE DRAIN OF THE FINANCIAL SERVICES BEING DELIVERED. THE RISE OF THE ALTERNATIVES SECTOR THAT NEEDS TO BE COVERED AS WELL AS WE MOVE FORWARD AND CREATE THIS NEW FRAMEWORK. SAFEGUARDS ALSO CAN BE EMBEDDED INTO THE PROCESS. PERHAPS IN WAYS THAT LEAD TO A DEFAULT PRODUCT THAT HAS THE CONSUMER SAFEGUARDS ALREADY THERE CREATING PRODUCTS THAT WORK FOR A NUMBER OF PEOPLE UNLESS THEY OPT OUT AND MAKE INFORMED CHOICES FOR SOMETHING ELSE. THERE IS A LOT OF WORK THAT CAN BE BUILT ON HERE THAT COMES OUT OF THE BEHAVIORAL ECONOMIC FRAMEWORK THAT IS QUITE PROMISING. ANOTHER THING I WANT TO MENTION IS THE ROLE OF SAVINGS AND DOWN PAYMENTS THAT COME OUT OF IT BECOME OR SAVED UP OVER TIME. IT SHOULD BE SEEN AS A SAFEGUARD. WE ARE ALREADY SEEING THIS HAPPEN NATURALLY IN THE MARKET. IT HAS A LOT OF IMPLICATIONS FOR PEOPLE GETTING INTO THE PIPELINE AND GETTING READY TO BECOME HOMEOWNERS. AND THAT MEANS THE LENGTH OF TIME IT WILL TAKE OF FAMILY TO SAVE OF THE DOWN PAYMENT WILL INCREASE BUT WHAT THAT MEANS IS RESPONSIBLE HOME OWNERSHIP, THAT DISCUSSION NEEDS TO BE CONTEXTUALIZE INTO A BROADER DISCUSSION OF HOUSING POLICY GENERALLY. WE NEED TO CONSIDER STRATEGIES FOR REVISITING THE RENTAL HOUSING MARKET. THE TIME IS RIGHT TO DO THAT. WE ALSO NEED TO LOOK AN ALTERNATIVE STRATEGY IS SHARED EQUITY, HOUSING, AND THE DELIVERY OF FEDERAL RENTAL HOUSING ASSISTANCE SUCH AS THE WAY WE GIVE OUT SECTION EIGHT VOUCHERS AND ACCESS TO PUBLIC HEALTH. THIS RESEARCH IS UNIQUE IN SOME WAYS BECAUSE IT IS NOT JUST AN ACADEMIC EXERCISE BUT HAS REAL IMPLICATIONS AND REAL VALUE AND WE NEED TO USE WHAT COMES OUT OF IT TO ESTABLISH THE FOUNDATION FOR SUPPORTING RESPONSIBLE HOMEOWNERSHIP GOING FORWARD AND I THINK FOR MOST WE NEED TO CONNECT PEOPLE TO PRODUCTS THAT ARE APPROPRIATE, THAT WORK FOR THEM, THAT MEET THEIR NEEDS AND MITIGATE RISKS. SECONDLY, WE NEED TO LOOK AT THE INSIGHTS AND KRAFT A RESPONSE NOW OF HOMEOWNERS THAT ARE CAUGHT UP IN THE HOUSING CRISIS BROKE THE WE DO NEED TO THINK ABOUT MODIFYING THESE TERMS OF EXISTING MORTGAGES AS WE HAVE HEARD TODAY. WE HAVE HEARD IT IS COMPLEX WORK, THE SCALE IS QUITE LARGE, BUT THE ESSENTIAL WORK THAT HAS TO BE DONE AND NEEDS TO BE PURSUED ENERGETICALLY. PEOPLE HAVE TO BE ABLE TO STAY IN PLACE TO SOME DEGREE. CONTRACTS HAVE TO BE REVISITED. WE WILL NOT BENEFIT THE ECONOMY. FAMILIES WILL NOT BE ABLE TO BENEFIT BY HAVING A MASSIVE DISPLACEMENT. I DON'T THINK THIS IS THE TIME TO TEACH CHARACTER LESS SINCE. THINK PEOPLE WILL GET IT AND WE CAN WORK ON MODIFYING BEHAVIOR GOING FORWARD. AND THEN BE WILL NEED MORE FEDERAL RESOURCES WHETHER THE NEXT LAUNCH OF THE T.A.R.P. FUNDS OVER QUITE SUBSTANTIAL CASH COMING EARLY NEXT YEAR AND THAT IS THE RIGHT TIME FOR CONGRESS TO BE THINKING ABOUT HOW TO MAKE THAT HAPPEN. BUT THE SELF-HELP APPROACH DOES CLEARLY SHOW US WE WILL GET WHEN REMATCH HOMEBUYERS WITH OF MORE APPROPRIATE MORTGAGE PRODUCTS. SO THOSE ARE MY A COMMENTS I WANT TO BRING UP MARK WILLIS FOR A FEW REMARKS AND THEN WE WILL OPEN IT UP FOR AUDIENCE |
| 01:28:28 | >> | . |
| 01:28:33 | >> | THANK YOU FOR INVITING ME. I HAVE FIVE MINUTES? I WILL DO SOMETHING EVEN A LITTLE MORE DIFFERENT BUT FIRST LET ME THANK YOU FOR INVITING ME HERE. DUE TO MY USUAL DISCLAIMER I HAD NOTHING TO DUPE WITH THE GRANT THE FORT I AM A GRANTEE, BUT NEVERTHELESS THIS IS AN AREA I HAVE WORKED A LOT IN AND I FOUND THE RESEARCH FASCINATING. IT IS TERRIFIC WHAT YOU HAVE DONE. THINK ABOUT THE THE CAFTA PROGRAM AND ALSO TO SEE THE RESULTS OF IT. I HAVE ALSO QUESTIONS AND I WILL THEY THEM OUT AND YOU CAN CHOOSE. I AGREE THE RIGHT PRODUCT MATTERS A 30-YEAR FIXED SEEMS TO MAKE SURE THAT THEY CAN PAY BUT LOOKING AT THE DATA IT SHOWS THAT THE 2006 COHORT HAD HIGHER DELINQUENCIES IN 2004. IS THERE ANY LEARNING TO THAT? COULD BOTH EXTEND INTO TODAY? 2006 IS A MORE RECENT COHORTS WITH DELINQUENCY SO WHAT HAVE YOU LEARNED ABOUT THAT? IN THE SECOND THING I NOTICE IS THE DELINQUENCY RATES OF CAP AT THE FOUR RECENTLY PERFORMING RELATIVELY WELL NOW WAS ALWAYS HIGHER WHAT DOES THAT TELL US WHEN WE GET BACK TO MY NORMAL MARKET WHAT WE SHOULD THINK ABOUT CAP IN TERMS OF SUSTAINABILITY? I AM AN ECONOMIST BY A TRAINED IS THAT MANY TO CHARGE MORE FOR ITS? ALTERNATIVELY HAVE YOU LEARNED ANYTHING ABOUT ANY ADDITIONS TO THE PRODUCT? WAS SAYING THAT I HAVE I GUESS I USE THE WORD TO SPECULATE COMMENT IS WHY DIFFERENT A DIFFERENT GROUPS HAVE DIFFERENT CREDIT SCORE DISTRIBUTION IS THAT ETHNICITY OR RACE IS OVER ONE IS THAT WHEN YOU DO HAVE, STUFF HAPPENS. WHAT IS OUR ABILITY TO GET BY? AS THEIR PRODUCT DESIGN THAT OUGHT TO THINK ABOUT HELPING PEOPLE FOR A SHORT-TERM MEDICAL EMERGENCIES, LOSS OF JOBS, WHAT EVER, TO HELP THEM GET THROUGH IS THERE IN A LEARNING IN YOUR RESEARCH TO HAVE BEEN ABLE TO THINK ABOUT THAT? OBVIOUSLY WE'RE ALL STRUCK BY THE NEED FOR MORE MODIFICATIONS. I THOUGHT THAT'S CHAIRMAN IN 86 COMMENTS ABOUT A THIRD TO BE HELD COMMENT 2/3 CANNOT THIS IS HAVING A HUGE IMPACT ON OUR NEIGHBORHOODS AND IS THERE ANY THOUGHT WOULD TO DO OF THESE NEIGHBORHOODS BECAUSE IF THEY COMPLETE THE DECLINE WILL BE HARDER TO GET HOME OWNERSHIP OPPORTUNITIES TO THE PEOPLE THAT YOU WANT TO HELP AS THEY CALL THE MODERATE INCOME HOUSEHOLDS. I AGREE HOMEOWNERSHIP HAS THE BENEFITS PERIDOTITES A GREEK HAVE A SOCIETY OF BUT HOW MUCH WE SHOULD PUSH FROM OWNERSHIP BEEN GENERAL FOR ALL INCOME LEVELS. AND I AM JUST WONDERING ALSO IN THAT DID YOU CONTROL THE LINKS OF TENURE? AND ENABLE IT? IF PEOPLE HAVE BEEN LIVING THERE FIVE YEARS AND RENTERS OR HOMEOWNERS DID YOU CONTROL FOR THAT PIECE? I SEE THAT YOU DID BECAUSE THAT IS IMPORTANT BECAUSE NOT EVERYBODY CAN RENT AND RENTING, IS SPENDING PEOPLE'S LIFESTYLE AND CHANGES EXPECTED CAN DETERMINE WHETHER THEY CHOOSE TO BE A RANCHER OR HOMEOWNER SO BECAUSE A SHIPPING GOES BOTH WAYS IN THIS IS SOMETHING YOU NEED TO CONTROL FOR SO I WOULD BE INTERESTED HERE AND ELSEWHERE TO HEAR MORE ABOUT THAT. LASTLY, ONE THING I AM DOING A FORD WORK GAIN WITH CRA I AM REINVENTING CRA. I AM NOT SURE I UNDERSTOOD THE STATEMENTS CRA AMENDING BROKERS IN THE CONTEXT OF A BROADER LENDING MARKETS ARE LIKE TO HEAR MORE ABOUT THAT. BECAUSE I THINK MANY OF US, CERTAINLY MYSELF THINK CRA IS IMPORTANT BUT I AM NOT SURE IT IS A SOLUTION TO EVERYTHING. I AM NOT SURE WHAT IT IS THE SOLUTION IN THE FUTURE WHAT ROLE IT SHOULD PLAY IN TERMS OF HELPING PROVIDE A BETTER MORTGAGE MARKET PARTICULARLY WHEN WE KNOW THERE IS SOME DIRECT THINGS WE NEED TO DO IN REGARD TO REGULATING PEOPLE TO MAKE SURE THEY CAN PAY AND THE ABILITY TO PAY AND THOSE SORTS OF THINGS. THOSE OF THE THOUGHTS I HAD FOR MY PRESENTATION. THANK YOU [APPLAUSE] |
| 01:34:04 | >> | I BUT LIKE TO ANSWER BRIEFLY SO WE HAVE MORE TIME FOR QUESTION AND ANSWER. THEY MORTGAGE COHORTS SOME ARE BETTER THAN OTHERS. UNFORTUNATELY THE 2006 COHORT IS NOT A GOOD ONE IN GENERAL. THE REASON WHY WE SEE, WE TAKE A WORSE PERFORMANCE FOR THE 2006 ACCORD TO SAID IT IS A DIFFERENT MARKET. SO PEOPLE WHO HAVE SEEN EQUITY APPRECIATION IN THEN REFINANCING A SO THERE IS MORE TO PLAY WITH WITH THE YEAR EARLIER COHORTS THEM WITH THE PRICES START TO COME DOWN. WITH REGARD TO THE CAP HAVING HIRE OR -- HIRED BORROWERS ARE MORTGAGES IF YOU COMPARE THE |
| 01:35:05 | >> | [INAUDIBLE] |
| 01:35:10 | >> | I HAVE A FEELING LOOKING AT THE NUMBERS THE BORROWER'S IN THE CAP HAVE A PROFILE PARTICULARLY THE PRIME BORROWERS. BUT BECAUSE WE SEE THE ADJUSTABLE RATE OF PRIME BE SIGNIFICANTLY HIGHER THAN THE CAP, OBERY THINK IT IT MAKES A BIG DIFFERENCE BECAUSE THE PRIME BORROWERS WITH ADJUSTABLE-RATE HAVE MORE THAN DOUBLED THE DELINQUENCY RATES. WITH REGARDS TO THE DIFFERENT GROUPS AND DIFFERENT CREDIT SCORES WE ARE LOOKING AT THAT. WE ARE VERY CONCERNED THAT THE FOUNDATIONS OF THE CREDIT SCORES STARTING COLLEGE. YOU HAVE TO GET THAT FROM YOUR FAMILY, THE RESOURCES THAT YOU HAVE, LOOKING AT SCHOOL, COLLEGE DEBT, SO IT STARTS EVEN BEFORE THEY GET THEIR FIRST REAL JOB AND THAT THE SPIRALS WORSE AND WORSE IF YOU HAVE A HUGE COLLEGE DEBT. THAT IS AN IMPORTANT ISSUE WE WOULD LIKE TO SEE AND STUDY MORE BUT WHY THEY HAVE THESE DIFFERENT CREDIT SCORE MARKETS. WE CANNOT LOOK IT WOULD HAVE BEEN DONE WITH THE TWO-THIRDS THAT CHAIRMAN BAIR SAID WE COULD HELP. THE CONCERN THAT WE HAVE IS THAT THE CRISIS IS IN SERB RELATED IT AND FEEDING INTO EACH OTHER SO ARGUING THAT THE FORECLOSURE CRISIS NOW IS AN ISSUE ONLY OF MORTGAGES IS ENTIRELY TOO NARROW TO DO. WE NEED A SOLUTION TO THOSE 2/3 WITH THE CREDIT MARKETS AND MORE IMPORTANTLY THE ECONOMY. IT SEEMS TO BE THE SOLUTION TOO THEM WITH A LOAN MODIFICATION IS A PRESSING ISSUE FOR THE GOVERNMENT. AND WE DID LOOK AT IS PLAYING A 10 YEAR AND WE DO SEE THE CRA WITH THE UMBRELLA CONTEXT OF THE MARKETS, BECAUSE THE LENDERS ARE CREATING THE MARKET AND CRA LOOKS AT THE ABILITY AND THE TYPES OF MORTGAGES THEY USE IT TO SERVE CRA PURPOSE IS. WE DON'T HAVE A SOLUTION TO EVERYTHING BUT WE DO THINK OF BASED BASED ON OUR ANALYSIS THERE IS A RIGHT WAY TO SERVICERS TO BORROWERS. THERE IS SOMETHING TO SAY ABOUT THE POSITIVE IMPACTS OF COMMUNITY INVESTMENT LENDING HAS WHEN IS SERVING A MARKET AND WE HAVE DONE SO 30 YEARS. AND THE MAINSTREAM MARKET COME IF YOU WILL WAS NOT ABLE TO SERVE IN ANY SIGNIFICANT WAY PRO BE GLAD TO TALK MORE AFTERWARDS. THANK YOU. |
| 01:38:15 | >> | LET'S OPEN THE DISCUSSION. |
| 01:38:26 | >> | DEILY KENNEDY AND NATIONAL ASSOCIATION OF AFFORDABLE HOUSING LENDERS THAT REPRESENTS CRA BANKS AND BLUE-CHIP NONPROFIT LENDERS. I HAVE TO TELL YOU THAT LISTENING TO THIS PRESENTATION TODAY HAS BEEN VERY PAINFUL FOR ME. IN PART BECAUSE I AM DELIGHTED WITH HAVE GRANULAR YOUR DATES IT IS PUT IN A LARGE PART BECAUSE WE COULD HAVE HAD THIS CONVERSATION 10 YEARS AGO. THERE IS NOTHING NEW HERE. AND THE FEDERAL RESERVE DID A STUDY IN 2010 OF CRA COVERED LOWS THAT WAS NOT AS GRANULAR BUT HAVE THE SAME CONCLUSIONS FOR THE LAST EIGHT TO 10 YEARS I HAVE BEEN LISTENING TO BANKERS AND NONPROFIT LENDERS COMPLAINED ABOUT THE FACT THAT TO SELL A CRA COVERED LOAN TO THAT FANNIE MAE HAD TO PAY A PREMIUM TO SELF-HELP WITH A GRANT FROM THE FORD FOUNDATION FOR FANNIE MAE LOANS. PUT ANOTHER WAY, MY QUESTION IS TOO, AS THE 23 THE EXTENT THAT NOW SELF-HELP REGRETS FANNIE MAE IT IS SELF-DESTRUCTIVE AND NOT GETTING THE MESSAGE OUT EARLIER THAT IN ADDITION TO THE WONDERFUL $5 BILLION OF LOANS EACH YEAR THERE WERE HUNDREDS, HUNDREDS OF BILLIONS OF RESPONSIBLE CRA BORING MORTGAGES MADE THAT FANNIE AND FREDDIE REFUSED TO BUY. |
| 01:40:05 | >> | ON A COUPLE OF MARKS QUESTIONS, FIRST COME ON THE 2006 LOWS THERE ARE VINTAGES THAT PERFORM BETTER OR WORSE THAN LENDERS THAT PERFORM BETTER OR WORSE AND IT IS REGRETTED TO SAY THERE WAS A LENDER IN 2006 THAT HAD A LOT OF LOANS TO LESS THAN WE CUT OFF THAT DID NOT PERFORM AS WELL AND THAT IS A PART OF LIFE. |
| 01:40:28 | >> | PART OF REGULATING YOUR MARKET. |
| 01:40:29 | >> | EXACTLY. IN TERMS OF WHAT TO DO WITH NEIGHBORHOODS WITH FORECLOSURES, WE HAVE A COUPLE OF PILOTS WE HAVE PURCHASED MORTGAGES BUT THE IDEA IS TO GET THE HOUSE IS OCCUPIED QUICKLY AND A LOT OF PEOPLE WILL BE CREDIT IMPAIRED NOT TO BUY TOO SOON SO IF YOU CAN HAVE A NONPROFIT OR SOMEBODY ELSE LEASING THE HOUSE WITH THE MORTGAGE THAT THEY CAN NOT TAKING THE RISKS OF FRAUD BECAUSE THAT IS ONE THING THAT SHOULD BE SEEN IN TERMS OF OUR RELATIONSHIP WITH FANNIE MAE COMMENT JUDY IS NOT MAKING THAT CLAIM BUT A LOT OF PEOPLE HAVE THAT FANNIE MAE HAS THE SAME ATTACK AGAINST CRA. FANNIE MAE FELL BECAUSE THEY TRIED TO HELP TO MANY POOR PEOPLE AND THE GOVERNMENT MADE THEM TO THAT WHICH IS NOT WHAT SHE IS A BUT JUST TO CONTINUE THE CRA DISCUSSION AND, 10% OF FANNIE AND FREDDIE FLOWS ARE THE ALT A LOANS PRIMARILY UNDOCUMENTED AND COME TO THE HIGHER INCOME PEOPLE HIGH BALANCE LOANS TO COVER OVER HALF OF THE LOSSES. THE PROBLEM THAT DOOMED FANNIE AND FREDDIE WHY THEY WERE TAKEN OVER BY THE GOVERNMENT IS BECAUSE THEY FOLLOW THE MARKET INTO THE PRIVATE SECURITIZATION THE PRIVATE LABEL SECURITIES BECAUSE THAT IS WHERE THE ACTION WAS AND IT WAS NOT A GOOD MOVE. IT IS INTERESTING SUBPRIME, THEY ALSO NINTH INSTIGATED THE SUBPRIME AT TRANCHE OF THE MARKET THAT IS NOT WHAT CAUSE A LOSS BECAUSE THERE WAS ENOUGH'S SUBORDINATED TRANCHE THAT THE LOSSES HAVE NOT CREPT UP THAT MUCH. SO THEY ENTERED THE SUBPRIME, GOT KILLED BY THE ALL DAY -- ALT-A LOANS AND HELP THE CREDIT ENHANCE THAT WENT TO THE FANNIE MAE KOMEN DAY MAYBE MARKET CAN TALK MORE ABOUT THEIR RELATIONSHIPS WITH BANKS OF MAKING LOANS AND BUY CLOTHES FOR LENDERS. FANNIE MAE HAS TO SHARE RECOURSE WITH SOMEBODY BY CHARTER. WHAT WE DID WAS TAKE RECOURSE SOMETIMES MORTGAGE INSURANCE COMPANIES AND SOME CASES LENDERS ARE WILLING TO DO IT AND IN MANY CASES THEY'RE NOT WILLING TO DO IS WE WERE FILLING A NICHE THE LOANS THAT THEY WERE ABLE TO BUY, FANNIE AND FREDDIE LOANS PERFORMED WELL NOT LIKE THE SUBPRIME LOANS OR THE ALT A LOANS DID. |
| 01:42:55 | >> | I AM MELISSA FROM THE NEW AMERICA FOUNDATION. CONGRATULATIONS ON THIS DATA. EXCELLENT. WHAT OF THE DATA POINTS IS USEFUL SPEAKING TO WORK WE'RE TRYING TO DO HERE HOW DO CONNECT THE POST LOWER INCOME HOUSEHOLDS WITH FINANCIAL ADVICE, COUNSELING, PLANNING? ONE DATA AT POINT THAT YOU MENTIONED ROBERTO THE ABOVE TO HEAR MORE OF IT IS A QUESTION TO YOU OR CAN YOU ATTRIBUTE THE 66% OF THOSE THAT REFINANCED INTO PRIME LOWS AS A RESULT OF THE FINANCIAL EDUCATION? I KNOW YOU WERE DOING THE ANCILLARY RAP ON THE SERVICE IS TO PARTICIPANTS IN YOUR PROGRAM. |
| 01:43:39 | >> | THAT IS A GOOD QUESTION, THE ANSWER IS YES. I APOLOGIZE TO THE PRIOR QUESTIONER AND TO ALL OF YOU FOR NOT PRESENTING BUT WE HAVE A SHORT TIME AND WE WERE TOLD SOMETIMES IT IS CONFUSING BUT I ENCOURAGE YOU TO GO TO THE WEBSITE THAT HAS MORE METHODOLOGY AND TELLS YOU WHAT YOU CARE ABOUT. BUT WE NEED TO INCLUDE THE HOME OWNERSHIP COUNSELING IS SIGNIFICANT. BORROWERS ARE MORE LIKELY TO DO THE RIGHT KIND OF REFINANCE BASICALLY WHEN INTEREST WAS LOW ENOUGH TO MAKE THE OPTION TO REFINANCE POSITIVE. SO WE FEEL THAT IS AN IMPORTANT FINDING ALTHOUGH THE HOME OWNERSHIP COMPANIES IN GENERAL, AND THEY HAVE RECEIVED ENOUGH TO ACTUALLY UNDERSTAND WHEN THEY REFINANCE AND THESE ARE PEOPLE THERE REFINANCE WITH GOOD MORTGAGES FROM THE SUBPRIME ASPERGER WE NEED TO LOOK AT THAT AND IF YOU LOOK AT OUR PAPER WE WILL HAVE A COPY THERE IS THE ACTUAL IMPACT. |
| 01:44:55 | >> | THE WEBSITE? |
| 01:44:59 | >> | THE ADDRESS? WE WILL GET IT UP THERE. |
| 01:45:06 | >> | CONGRATULATIONS AGAIN AND THE CURSE OF PROVIDING DATA IS THAT YOU GET MORE QUESTIONS. PERHAPS THE ANSWER TO MY QUESTION IS ON YOUR WEBSITE BUT IT SEEMS TO BE IT IS IN THE REAL HEADLINE NEWS IS PERHAPS NOT IN THE GENERAL OVERALL DATA THAT YOU HAVE PRESENTED TODAY BUT TO UNDERSTAND MORE ABOUT THE DIFFERENT PERFORMANCE, A DIFFERENT LENDERS, THE PERFORMANCE OF DIFFERENT FINANCIAL INSTRUMENTS AND THE PERFECT STAGE PERFORMANCE OF DIFFERENT REGIONS BECAUSE WE HAVE VERY DIFFERENT DYNAMICS BASED ON THOSE THREE FACTORS COMMITTEE INSTRUMENTS FROM THE LENDER'S COME INCENTIVES, AND THE PROPERTY VALUES IN THAT AREA. OF WONDER IF YOU COULD OF THESE TOUCH ON THOSE AREAS? DID YOU GET A CHANCE TO ANALYZE THAT DATA AND REDUCE THE DIFFERENCES? WE HAD A PAPER -- AND LOOKING AT SERVICING PRACTICES WITH THE DIFFERENT LENDERS. OUR CONCLUSION IS THAT STILL NOT ALL SERVICING IS CREATED EQUAL. EVEN WITHIN THE PROGRAM THERE WERE DIFFERENCES AND THERE REALLY WAS A POSITIVE EFFECT OVER A SERVICER WITH THE PERFORMANCE OF THE LOAN. |
| 01:46:25 | >> | I WOULD SAY WE TAKE THESE THINGS LIKE PROPERTY VALUES TRENDS AND OTHER CHARACTERISTICS OF FRONT INTO ACCOUNT WHEN REMODEL THE PROPENSITY TO DEFAULT AND ARE CONSTANTLY UPDATING THE MODEL SAYS YOU CAN IMAGINE PROGRAM IS A MOVING TARGET RECOMMENDING TO MENTION IS THE RISKY BORROWERS AND MORTGAGES WHAT ATTRIBUTES OF THE SUBPRIME PRODUCT WERE ASSOCIATED WITH GREATER LIKELIHOOD OF DEFAULT? |
| 01:46:57 | >> | WE INC. VARIABLE OF GEOGRAPHY INTO THE MARKET ISSUE. IN THE RISKY -- RISKY MORTGAGES AND RISKY BORROWERS MAY LOOK AT THE SUBPRIME MARKET AND WE INCLUDE ALL THE FACTORS INCLUDING LOAN TO VALUE, THE SAVINGS, CREDIT SCORES, EVERYTHING THAT YOU CAN GET IN THE UNDERWRITING FILE. AND WE ALSO INCLUDE THE GEOGRAPHIC ISSUES THE ECONOMIC VARIABLES AND EIGHT EXTERNAL FACTOR AND WE ALSO INCLUDE A PERSONAL THINGS LIKE IN THE SURVEY THE CRISIS EVENTS THAT ARE HAPPENING IN THE FAMILY. SO FOR US TO CAPTURE SOME OF THE REGIONAL ISSUES AND WITH THE MODELS THAT WE HAVE THE SERVICING ONE THAT I MENTIONED, THAT IS ALSO ON THE WEBSITE, WE ALSO INCLUDE AT AND TRACK A COUPLE OF CASE STUDIES TO THE SERVICERS TO SEE THE DIFFERENCES. |
| 01:48:15 | >> | WE WILL TAKE ABOUT FOUR MORE QUESTIONS THE. |
| 01:48:17 | >> | FIRST OF ALL, CONGRATULATIONS ON EXCELLENT PROGRAM THIS MORNING. I WANT TO RAISE A DIFFERENT ISSUE THAT MAY FALL INTO THE ADDITIONAL RESEARCH CATEGORY THE OF ROBERTO AND TEAM, THE RENTAL OPTION IT SEEMS TO ME THAT CURRENT EVENTS THEY YOU HAVE DESCRIBED TO BEGIN TO OPEN UP SOME INTERESTING RESEARCH QUESTIONS ABOUT WHAT WOULD HAVE HAPPENED HAD THEY NOT BOUGHT OR CONTINUE TO RENT PARTICULAR FROM THE ASSETS STANDPOINT? IT WOULD NOT BE UNDER WATER OR ON THE STREET. SECONDLY, TO WHAT EXTENT IS RENTING ALSO A VIABLE OPTION FROM THE STANDPOINT OF SOME OF THE OBJECTIVES THAT WE TOO FREQUENTLY LOOK TO HOME OWNERSHIP? YOUR STUDY IT DOES LOOK TO THESE QUESTIONS WHEN NOT AT SUGGESTING YOU CAN DIRECT THE ANSWER THEM BUT IF YOU HAVE ANY OBSERVATIONS AND WHETHER THESE ARE THE KIND OF THINGS WE'VE WE WANT TO LOOK AT IN THE FUTURE. |
| 01:49:17 | >> | THAT IS A GREAT QUESTION. THERE ARE SOME ORGANIZATIONS INCLUDING SELF WHO PUT BEING AT THE WAY TO DEAL WITH SOME OF THESE NEIGHBORHOODS HIGHLY IMPACTED BY FORECLOSURES BY ALLOWING BORROWERS TO STAY IN THE HOUSE AS RENTERS AND MAYBE GET TO RENTERS EVENTUALLY THAT WILL BUY BACK THE WE ALSO BELIEVE THE IMPACT -- LESS LIKELY TO RENT IT DID TO THE RENTERS SPUDS I HAVE BEEN TRYING FOR MANY YEARS TO CONVINCE THE FORD FOUNDATION AND TO DO RESEARCH IN PARIS TO HAVE A SEVEN YEAR LEASE FOR RENTALS AND WANT TO COMPARE. [LAUGHTER] AND BUT THEY DO NOT AGREE TO THAT. BUT THERE IS SOMETHING ABOUT THE OTHER THINGS THAT COME FROM HOME OWNERSHIP THAT I THINK IS IMPORTANT. WEALTH BUILDING IS ONE OF THEM, INVOLVEMENT AS YOU MENTIONED COMMENT ANOTHER IMPORTANT THING WITH HOME OWNERSHIP AT THE MOMENT IS WHEN PEOPLE GO IN A CYCLE THE CLOSER TO THE PEAK, THEY THESE BENEFITS, BUT THE PEOPLE IN THE EARLY 2000 THE RELATION ALTHOUGH THE PRICE WAS DROPPED. THERE ARE SOME PROGRAMS WE HAVE BEEN TALKING ABOUT ONE IT IN A CINCINNATI WHERE THERE IS A COMPANY THAT DOES RENTAL PROPERTIES THAT INCLUDES EQUITY IN THEM. THEY ACTUALLY PAID ATTENDANCE, YOU EARN POINTS AND AFTER CERTAIN AMOUNT OF POINTS THEY CAN BE ACCUMULATED INTO CASH THAT THE FAMILY CAN USE FOR WHATEVER PURPOSE AND THAT RENTAL COMPANY HAS COME OUT WITH THAT SCHEME AND A VERY STABLE TO A SET OF RENTERS THAT REDUCES THE COSTS AND REDUCES MAINTENANCE BECAUSE THE RENTERS' CARE FOR THE PROPERTIES OF THERE ARE WAYS WITH THE BENEFITS WE HAVE SEEN WITH HOME OWNERSHIP CAN BE TRANSLATED INTO RENTERS BUT WE NEED THE OPPORTUNITY TO EXPLORE THAT. WE HAVE ALREADY SEEN SOME MODEL PROGRAMS WITH SHARED EQUITY THAT SEEMS TO BE ANOTHER VERSION IT CAN HAPPEN NOW AND IT IS A MATTER OF GETTING THE WORD OUT FOR I WILL TAKE THE LAST THREE QUESTIONS AND COMMENTS IS SEQUENCER AND CHALLENGE THE PANELIST. SO RIGHT HERE AND THEN IN THE BACK. |
| 01:52:03 | >> | WE ONLY HAVE A FEW MOMENTS LEFT. |
| 01:52:06 | >> | I'M A FREE-LANCE CORRESPONDENT TO THE UNC GROUP, YOU STATE UNIVERSITY DO LOOK AT THE EFFECTS OF THE COMMUNITY? AND YOU TALK ABOUT THIS PIECE AS THE EDITOR, DO HAVE SOME COMMENT ON THIS? AND ALSO THE SUBPRIME MORTGAGE WITH INNOVATION AND THIS CRISIS IN 30 YEARS IS IN THE MAKING, CAN YOU NAME FIVE INSTITUTES OF FIBROUS UNDER FIVE CONGRESSIONAL ACTIONS TO THIS? THANK YOU. |
| 01:52:53 | >> | FIRST UNDERSTANDING THE GOVERNMENT FOUNDATION. WAS IMPRESSED BY THE RESULTS YOU HAD 47 WITH THE RELATIVELY HIGH VALUE AND LOW INCOME AND I AM JUST CURIOUS IF THESE LOANS WERE DONE IN AREAS WHERE THERE WAS LOWER UNEMPLOYMENT RATES WILL ABLE TO CONTROL THAT ESPECIALLY IF YOU HAVE TWO WAGE EARNERS AND RESPECTFULLY TO THE QUESTION WITH WHAT IS HAPPENING IN THE ECONOMY NOW, I DO THINK IF YOU DID YOUR STEADY NOW OR ONE YEAR FROM NOW WHAT YOU THINK MIGHT BE HAPPENING IF |
| 01:53:27 | >> | . |
| 01:53:33 | >> | IT IS A FOLLOW-UP ON THAT WHICH IS IT COULD MEAN THERE ARE PEOPLE WITH SUFFICIENT SAVINGS AND DISPOSABLE AND COME TO DEAL WITH EMERGENCIES BUT ON THE OTHER HAND THAT MEANS THEY COULD HAVE BEEN STRETCHED TO THE LIMITED TO EXPLORE THE ISSUE OF SAVINGS BEYOND DOWNPAYMENT? |
| 01:53:53 | >> | JUST CURIOUS THIS PROGRAM AND MICHAEL BARR HAS FLOATED THE IDEA OF THE OPT OUT MORTGAGE CHICKEN FROM THE BEHAVIORAL ECONOMICS APPROACH AND DO THINK THAT HAS SOME |
| 01:54:03 | >> | . |
| 01:54:09 | >> | WHEN IT IS TIME QUICKLY. WE LOOKED AT NORTH CAROLINA, WE HAVE PROGRAMS IN NORTH CAROLINA SO WE LOOK AT THESE SEVERAL THINGS AND ALSO WORKING FOURTH DAY OF NORTH CAROLINA A COMMISSION THE BASIC DATA ON FORECLOSURES AND GO TO FORECLOSURE HELP.ORG YOU CAN SEE AND THE MAPS WE HAVE THE DATA. SO LOOKING SPECIFICALLY AT NORTH CAROLINA BUT WE DO HAVE A LONGER PRESENCE. WITH REGARD TO THE APPRECIATION OF PERFORMANCE, THE ANALYSIS GOES THROUGH 2008. THIS IS AS RECENT AS YOU CAN GET. WE DO THESE PERIODICALLY, WE HAVE AN ARRANGEMENT WITH FANNIE MAE, WE GETS THEM UPDATED PROPERTY VALUES EVERY SEMESTER, EVERY QUARTER I THINK, MR.. [LAUGHTER] I APOLOGIZE. SO WE CAN UPDATE THESE EXCEPT FOR THE LAST QUARTER. SO THIS REFLECTS WHAT IS HAPPENING WITH THE PROGRAM. SO WHAT THE FUTURE LOOKS LIKE ON IN THE PAST COME AND YOU CAN SEE THE EQUITY GAINS VERY SMALL AFTER THE DOWNTURN AND THEY CONTINUE TO DETERIORATE AT SOME TIME AT LEAST FOR THE MEDIAN BORROWER. WE INDEED CAN WILL CONTINUE TO FOLLOW THAT AND HAVE ANOTHER EVENT IN THE NEAR FUTURE AND WE WILL SHARE SOME OF THOSE. WE HAVE LOOKED AT BUT NOT TO THE EXTENT THAT WE WOULD LIKE ABOUT THE SAVINGS OF FAMILIES BUT WE ARE CONSIDERING EXPANDING THE SUNDAY FOR A FEW MORE YEARS TO SEE HOW FAMILIES ARE MANAGING THROUGH THE CRISIS. HOW THEY RAISE THE BUDGETS, SAVINGS' DES, USE OF OTHER THINGS AND SO WE WILL HAVE TO REPORT WHEN WE HAVE FINDINGS ABOUT THAT. |
| 01:56:20 | >> | THAT IS GOOD. |
| 01:56:22 | >> | TO THE OPT OUT MORTGAGE FIVE WOULD SAY IN MANY WAYS THIS PRODUCT AND SERVES AS A OPT OUT MORTGAGE FOR THE BORROWERS IN THOSE COMMUNITIES WHERE THEY WERE AVAILABLE THAT WAS THE PREFERRED PRODUCT OF CHOICE. |
| 01:56:35 | >> | THERE IS MORE REFORMATION ON THERE WEBSITE COME ON OUR WEBSITE NEWAMERICA.NET AND ASSET BUILDING.ORG AND THANK YOU FOR COMING IN FOR A OUR PANELISTS AND THE C-SPAN AUDIENCE, THANK YOU [APPLAUSE] [INAUDIBLE CONVERSATIONS] . . |
| 01:57:34 | >> | ASSOCIATED PRESS REPORTS THE WHITE HOUSE IS IN TALKS WITH REPUBLICAN SENATOR BOB CORKER WHO WANTS UNION CONCESSIONS BEFORE GIVING FEDERAL HELP TO CARMAKERS. BUSINESS ANALYSTS ARE ADVISING PRESIDENT-ELECT OBAMA'S TRANSTEAM THAT AN ECONOMIC RECOVERY PACKAGE MUST COST MORE THAN $600 BILLION OVER TWO YEARS. OBAMA OFFICIALS SAY THE RECOMMENDATIONS RANGE FROM $400 BILLION IN JUST ONE YEAR TO ONE TRILLION DOLLARS OVER TWO YEARS. THE ASSOCIATED PRESS SAYS THE OBAMA TEAM HAS NOT SETTLED ON A FIGURE. PRESIDENT-ELECT OBAMA IS EXPECTED TO ANNOUNCE DEFORMER IOWA GOVERNOR TOM VILSACK AS HIS NOMINEE FOR AGRICULTURE SECRETARY AND COLORADO SECRETARY KEN SALAZAR FOR INTERIOR SECRETARY. WE'LL HAVE LIVE COVERAGE OF CHICAGO NEWS CONFERENCE AT 11:45 EASTERN ON C PAN. -- C-SPAN. WE'LL BE HERE AT 12:15 WITH DISCUSSION OF THE FINANCIAL MARKETS WITH A FORMER BEAR STEARNS INVESTMENT BANK STRATEGIST. FIRST LADY AS FIND A SECLUDED LUNCHEON SPOT ON GARDEN PATIO AND WHITE HOUSE CHEFS VENTURE OUT HERE TO THE HEART ROSEMARY AND CHIVES FROM HAPPENING BASKETS TO SUPPLEMENT THEIR OWN KITCHEN STORES. (music). |