Hope, from Colorado writes:
I am, or was a homeowner. My husband and I lost our jobs to layoff two weeks from each other June of 2006. Our mortgage servicing company would NOT work with us to save our home and basically forced us into foreclosure. What is The President doing to help protect homeowners that fall upon hard times from these types of actions from Loan Servicing Companies?Thank you Hope

Alphonso Jackson
Hope, I’m terribly sorry to hear you lost your home to foreclosure. It is too bad your lender wouldn’t work with you. Nobody wins when a foreclosure occurs. You should know the President and I are working hard to help more families keep their homes or find more affordable loans.

One of the most important things we’ve done is introduce a new refinancing initiative that allows homeowners with good credit history who have defaulted on their mortgage payments after their teaser interest rates increased to qualify for an FHA-backed loan. This product, which is called FHASecure, will make more loans available to more American families. The FHA also has terrific foreclosure prevention measures, which last year helped more than 75,000 homeowners (who were in default) avoid foreclosure and keep their homes.

Also, you might want to contact a local housing counselor to get advice on buying a home, renting, defaults, foreclosures, and establishing good credit. Here’s a link that will help you find a counseling agency in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

Also for your information, the banking regulators, like the Federal Reserve, are also strongly encouraging lenders to tighten underwriting standards so that hard-working families aren’t put into mortgages they can’t afford by unscrupulous lenders. And HUD and many other federal agencies are also working with the Department of Justice to go after predatory lenders.

Michael, from Powell, Tn writes:
What do you suggest to people buying their first home?

Alphonso Jackson
Michael, thanks for your interest in owning a home. It is important to remember that owning a home remains the best long-term investment a family can make. It’s also likely to be the biggest purchase of your life and can be a little overwhelming, so you should go in with your eyes open and have the background to make smart decisions. Financial education is an important first step.

I would strongly suggest you talk with a HUD-approved Housing Counselor in your area. They will help you figure out how much you can afford considering your income, monthly expenses, downpayment, credit rating, and expected interest rate. Here’s a link that will help you find a counseling agency in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

Also, shop for a mortgage loan by talking to several lenders, comparing costs and interest rates, and negotiating for the best deal. Additionally, you might want to consider an FHA-insured loan for a safe, reasonably priced mortgage product. Also, shop for a home by looking into homebuying programs available in your area. Finally, read the fine print of your mortgage before you sign on the dotted line and get a home inspection before you buy.

Good luck, Michael. I hope you find the perfect home.

Rollie, from Fresno writes:
We really appreciate FHA Secure and will want to integrate it into our regional stop-foreclosure program called No Homeowner Left Behind. 1) I trust that the refinance product will be limited to mortages for families who are occupying their homes (not investors or flippers). Is that correct?

2) Will there be flexibility on the mortgage limits in order to reach working families in California?

3) Will there be flexibility with the terms (eg extend to 40 years) so that the monthly payment will be affordable.

Alphonso Jackson
Hi Rollie. I’m happy to hear that FHASecure is already becoming a vital refinancing resource that will be offered by lenders to homeowners who need a safe alternative to their exotic subprime loans.

Yes, FHASecure is limited to owner-occupied mortgagors. Currently, FHA is limited by mortgage limits set by Congress. That is why the President has been urging Congress for the past two years to pass FHA Reform legislation which would raise the limit. FHA Reform would raise the mortgage loan limit in California from the current ceiling of $362,790 to a new ceiling of $417,000. This could help thousands of families refinance their high-cost, high-risk loans and get an FHA-insured loan. Also, FHA is currently limited to 30-year mortgage products. Again, FHA Reform would help because it includes a 40-year product.

Cliff, from Brimfield, Ohio writes:
Secretary Jackson: I AM ALL FOR HELPING PEOPLE NOT LOOSE THEIR HOMES but in this issue it seems to be one that was PAY ME NOW OR PAY ME LATER. And when the later came the problem came. The loan companies that talked these home owners into these loans and the home owners who accepted them are now trying to get the government(taxpayers) to bail them out. To me it is like a car dealer who wants to sell his cars and will make out some kind of FANTASTIC deal in rates to get me to buy the car and worry about the FULL payments later.What does this say about the incentive to have people do the right thing and not just do it now and expect the government to bail them out later. Your the expert on this so Im going to the horses mouth as they say and ask you what is your take on this situation? Thank You

Alphonso Jackson
Hi Cliff. Make no mistake, FHASecure, which the President announced last week, is not a bailout. In fact, it is quite the opposite. A bailout would reward risky behavior, which is what got markets into trouble in the first place.

FHASecure is designed for families who are good borrowers and meet our strict underwriting standards, but who are in trouble now that their reset rates have kicked in.. In all likelihood, these are families who could have qualified for a conventional loan but were lured into an exotic subprime mortgage. Only families with on-time mortgage payments under the original interest rates are eligible. They must have good debt-to-income ratios, a stable employment history, and their delinquency must not be due to financial negligence. In essence, we verify that they can actually repay the loan…which is a qualification that was sorely missing in much of the subprime loans that are going sour.

In fact, FHASecure will promote good money management, not be a substitute for it. Borrowers will pay mortgage insurance premiums out of their own pockets to offset claims to the FHA insurance fund and ultimately prevent risk to the taxpayer.

Jo, from Miramar, FL writes:
When will these steps to help homeowners avoid foreclosure be taken? Is there anyone I can contact immediately for help? I could lose my home by the time Congress acts and Bush signs the law. I need assistance now, not two, six, or nine months from now.

Alphonso Jackson
Hi Jo. You don’t need to wait for Congress to act to get help avoiding foreclosure. You might be able to get help immediately. The important thing is to ask. HUD’s Federal Housing Administration offers homeowners an opportunity to refinance with an FHA-insured loan. The FHASecure initiative announced by the President last week will aid tens of thousands of responsible homeowners who took out adjustable rate mortgages but found themselves in default when their interest rates reset to double or triple where they started in many cases. Over the next two years, FHASecure and other FHA-backed loans will help an estimated 240,000 Americans—about half the families expected to go into foreclosure in the next two years—keep their homes. To find out if you’re eligible to refinance with FHA, call 1-800-CALL-FHA. Also, you might want to contact your lender directly to see if they can provide temporary assistance. On Wednesday, the Federal Reserve strongly urged loan-service companies that collect and otherwise service mortgages to help homeowners. The Fed is asking these companies to consider offering better terms, such as lowering the size of the loan, deferring payments or extending the lives of loans. Also, you might want to call your local housing counseling agency. Here’s a link that will help you find a counselor in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

Brenda, from Tennessee writes:
I have a ARM thats going from 8.5 to 11.420. Im in the rear now because my husband was sick 7 weeks this summer. We don't have good credit. It is fair. We have always paid our debts . We didn't realize we that this ARM would jump this must. We were mislead by the morgage company. How do I get in touch with someone to help to refinance?Thanks Brenda

Alphonso Jackson
Brenda, you should start by calling your lender, your local housing counselor or contacting the Federal Housing Administration. You might be eligible to refinance with an FHA-insured loan. These loans are safe, affordable and backed by the full faith and credit of the government. You can contact FHA by calling 1-800-CALL-FHA or visiting http://www.fha.gov to learn more about their refinancing products.

Sally, from Sacramento writes:
What is the federal government doing about keeping lenders from shady business practices - like offering sub-prime loans to people who really can't afford the loan? And what can be done in the meantime, for those who are facing foreclosure NOW? Thanks for your time.

Alphonso Jackson
Some sub-prime loans may be posing a barrier to homeownership. Our Fair Housing and Equal Opportunity (FHEO) division has created a Fair Lending Division to look specifically at whether pricing disparities in sub-prime loans are discriminatory. Specifically, the new Fair Lending Division will investigate discrimination complaints against lenders who have allegedly violated the Fair Housing Act by refusing to make mortgage loans, refusing to provide the same information regarding loans, or imposing different terms or conditions for granting a loan, such as factors based on the race or national origin of the borrower. The division will also conduct investigations where lending patterns or other information suggests discrimination by a lender, but no individual has come forward to file a complaint. Recently, HUD has taken steps to assist in reducing lending discrimination, for example, we hired an economist to review and analysis HMDA data; commenced system investigations against three national financial institutions; and convened a Fair Lending Roundtable where government agencies and private organizations participated. HUD is serious about fighting housing discrimination and this new Division will help us continue to do just that.

Our FHA-based loans have common-sense underwriting standards: we ensure the borrower can actually repay the loan. I agree with you – lenders not doing that smell-test are indeed shady and likely most of them are or will be out of business. Our FHA-backed loans, including this new FHA Secure option, are available now. Anyone who is interested should talk to their lender.

Marcus, from Philadelphia writes:
With so many homeowners facing foreclosure, why isn't the Bush Administratoin pushing for a national Emergency Mortgage Assistance Program such as the one that exists in Pennsylvania, where homeowners in default on their mortgages are provided with temporary assistance in the form of a loan to help them save their homes?

Alphonso Jackson
The Administration feels that reform of existing FHA programs will best serve American families by providing safe effective products, the same products that have worked well for almost 35 million homeowners since 1934.

FHASecure will also help thousands of eligible families in the current crisis, and FHA reform legislation will help thousands more avoid these pitfalls in the future.

We’re also trying to empower consumers with the tools to read and understand the fine print of the mortgage, and also know when to ask for help before it is too late. We know that while most people facing foreclosure are afraid of their banks, they are much more open to talking to a local non-profit counseling agency about their problems. That's why housing counseling and financial education are so important. This Administration has increased the budget for counseling over 200 percent, with the President requesting another increase, to $50 million, in the coming fiscal year.

Curtis, from Singapore writes:
Hi Secretary Jackson, The recent steps President Bush announced in addressing the subprime issue in the U.S. has helped calm financial markets and "contained" the woes that emerged in the subprime market. Here in Asia, the lending institutions have remained somewhat unaffected from the subprime issues, but that could of course change in an instant. How concerned should everyone watching the subprime issue outside the U.S. be, and what steps are being taken to contain the credit problems so that is limited to only affecting the United States?

Thanks.

Alphonso Jackson
Here in the U.S. we have witnessed the economic push of sub-prime loans, which helped democratize credit and opened up homeownership for millions of people. But there was a risk. And for about 20 percent of those loans made over the last few years, the risk was realized. But for the other 80 percent, the loans are secure. We witnessed the economic pull of the failed sub-prime loans, which often came about through predatory lending and poor consumer preparation. We have aggressively taken steps to address difficult sub-prime loans. We are refinancing some of them through public institutions like our Federal Housing Administration. We have also promoted much wider housing counseling, with 2,300 housing counselors in the United States. Nationally and internationally, we must be on guard against predatory lending. It is nothing more than a scam, a crime, a lie. The loan process must be transparent and understandable. I see much merit in programs that help poor-and-middle class buyers with help on down payments or the cost of purchase. Worldwide, homeownership remains a viable option. You see that in Thailand, the Philippines, South Korea, Japan, and elsewhere.

Lynn, from Tampa, FL writes:
Regarding the previous question; is this only for borrower's with teaser rates or does this apply to borrower's who have a fixed rate and fixed rate non-qualifying loans who have lost their jobs?

Alphonso Jackson
Hi Lynn. FHASecure applies to those families who were forced into default because their teaser interest rates dramatically increased. To qualify for FHASecure, eligible homeowners must meet the following five criteria:

1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset; 2. Interest rates must have or will reset between June 2005 and December 2008; 3. Three percent cash or equity in the home; 4. A sustained history of employment; and 5. Sufficient income to make the mortgage payment.

Michael, from NYC writes:
Secretary Jackson, in your last appearance, (April 10, 2007) you touted The American Dream Downpayment Initiative, Homeownership Voucher Program, Housing Counseling and the Federal Housing Administration's attempts to "...modernize the FHA's mortgage insurance program so that tens of thousands of potential homebuyers have access to a safer financing tool." You also stated, in response to my question on that date "The FHAs successful lending relief program helped 75,000 families avoid foreclosure last year, and has already helped another 36,000 this year."

Doesn't logic and common sense dictate that low income families, lack the basic necessity (i.e. MONEY) needed to become a homeowner? Secondly, as the Jump in Foreclosure has happened recently, any update to the figures on FHA foreclosure victims and those saved?

Alphonso Jackson
Hi Michael. I am glad to see you are a repeat webcast watcher!

Poor is a state of mind. I grew up being the last of 12 children. We didn't have a lot of money, but we weren't poor. We had plenty - we had love, we had each other and it never seemed like we went without. But even though we had modest means, my parents worked hard and provided for us. Sure, not everyone can afford a million-dollar home, but there are plenty of hard-working Americans who have saved and have become homeowners. Becoming a homeowner is the American Dream realized. It gives you a stake in the community. When you own a home, it's yours. It's also the best single way to accumulate wealth and economic security...and that's something you can pass on to your children.

You asked about foreclosure prevention. This year, FHA's loss mitigation measures, which we require our lenders to implement, have helped almost 57,000 FHA homeowners who were in default avoid foreclosure.

Neil, from washington, d.c. writes:
1. How much will FHASecure cost the government? 2. What rule will be changed - Are homeowners not able now to refinance their existing mortgage? Don't lenders allow them to do this? 3. Won't expanding coverage for 80,000 homeowners increase the FHA's deficit - and won't the FHA have to raise premiums even more?

4. How did you come up with the 80,000 figure? It seems like there won't be that many people who have sound credit histories but are in default. 5. With 2 million people facing higher interest rates on adjustable-rate mortgages, how much of a dent will this program make? (80,000 is 4 of 2 million). Thank you.

Alphonso Jackson
Hi Neil, Let me try to respond to each of your questions.

1. FHASecure will cost taxpayers nothing. Borrowers with FHA-insured loans pay premiums on their mortgage which keeps the Insurance Fund sound and protects taxpayers from risk. This also protects lenders from losses. The Insurance Fund allows lenders to offer lower rates on FHA-backed loans, which enables millions of low- and-moderate income families who would otherwise be locked out of the mortgage market to qualify for home loans.

2. HUD is now allowing eligible borrowers who had good credit history before their teaser interest rates reset to qualify for refinance with an FHA-insured loan. Eligible homeowners not in default have always been able to refinance their existing mortgage into FHA. In fact, FHA's refinancing business has roughly doubled over the past year. We expect to help approximately 120,000 families refinance with the FHA this year.

3. FHA's Insurance Fund continues to run in the black and has more than adequate reserves to cover potential losses.

4. FHA has expert analysts and economists who are constantly studying changes in the market. You're correct, we expect FHASecure to help approximately 80,000 families, if not more.

5. According to various industry estimates, there are just under 2 million resets due in the next two years; about one-quarter, or 500,000, of those mortgages are expected to go into default. So we can help about half (about 240,000) of those hard-working families stay in their homes using FHASecure and our preexisting refinancing products.

Now, if Congress approves FHA reform legislation, we could help another estimated 200,000 families be eligible for FHA-insured loans and help many homeowners in high-cost states get the security of an FHA product -- currently we cant help them because our loan limits are too low.

Thanks again for the questions.

Alphonso Jackson
Thanks again for allowing me to participate in today’s conversation about homeownership. I hope my responses were helpful to families who are looking for ways to get out from under their exotic subprime loans. The last thing I want to see is more families lose their home to foreclosure.

Again, if you want more information about the Federal Housing Administration or want to see if you are eligible for FHASecure, please call 1-800-CALL-FHA or visit http://www.FHA.gov. Also, don’t hesitate to talk to a housing counseling agency in your area if you have questions about refinancing your home loan or are buying a home for the first time. Here’s a link that will help you find a counselor in your area: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm