Report: HUD Taking Steps to Enforce Fair Housing Act

Compared to previous administrations, the Obama Administration's efforts have proven to be more vigorous in enforcing state and local governments to comply with fair housing obligations through the Department of Housing & Urban Development (HUD). There was a recent report by three different national civil rights organizations that find Obama to be doing superior work toward improving housing conditions across the country. However, despite these high marks, the report also noted that there is plenty of "unfinished business" for HUD to attend to, including finalizing a regulation codifying its grantees' obligation to further fair housing.

“This report indicates that HUD has, for the first time, taken significant actions to enforce the Fair Housing Act’s requirement that recipients of federal housing assistance affirmatively further fair housing,” said Joe Rich, director of the Fair Housing and Fair Lending Project at the Lawyers’ Committee for Civil Rights Under Law. “Such action is important in achieving the goal of the Act to provide fair housing throughout the country. But, it is also important that HUD release its long awaited regulation addressing this requirement.”

There are plenty of things that HUD has done already, including their participation in increased enforcement in federal court cases. They've processed and investigated private fair housing complaints, and adopted a "disparate impact" rule that codifies existing court interpretation of the Fair Housing Act. HUD has also increased its review and rejection of state and local "Analyses of Impediments" to Fair Housing, which is a requirement of federal housing. Additionally, HUD has undertaken compliance reviews that have resulted in voluntary compliance agreements addressing fair housing requirements.

All in all, the civil rights groups are pleased with HUD's leadership. In the past, many of these enforcement actions were completely avoided, but today's HUD is determined to reform its own programs to improve fair housing for all.

In one case, HUD helped to persuade a suburb of New Orleans to repeal a discriminatory zoning ordinance that had previously excluded African American families from the area. HUD promotes racial integration in housing, even though it has been moving at a slow pace. If HUD can pick up the pace in the areas that are still lacking, residential integration can be reached.

“Our families, our communities, our economy and our country are all enriched and strengthened when we have open access to healthy, diverse neighborhoods,” said Shanna L. Smith, president and CEO of the National Fair Housing Alliance. “HUD has a critical role to play in making sure that state and local governments are doing all they can to create diverse communities and make sure they are open to everyone. The rule to affirmatively further fair housing is needed to provide jurisdictions with clarity about their obligations and guidance about how to achieve this important goal.”

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The Breakdown of the Fiscal Cliff

Source: cfr.org

Was the Mayan Apocalypse predicting the “Fiscal Cliff” all along? Either way, there’s been a lot of head scratching these past few days since the latest buzz word on the street has emerged as something that we should be worried about.

But what exactly is this “fiscal cliff” and why is everyone talking about it?

A definition found on cfr.org put it this way: "The "fiscal cliff" is a term used to describe a bundle of momentous U.S. federal tax increases and spending cuts that are due to take effect at the end of 2012 and early 2013. In total, the measures are set to automatically slash the federal budget deficit by $503 billion." 

The problem is that such an abrupt change to the budget in this fragile economy may bring about a second recession and cause unemployment to rise in 2013. So "going over the cliff" refers to falling back into recession, double-dipping if you will.

President Obama and House of Representatives Speaker John Boehner have been in talks to come to an agreement on how to deal with this issue. Their efforts are designed to stop the steep tax hikes and across-the-board spending cuts from going into effect at the end of December. Does this mean no tax return for 2012?

Well, the two sides are now significantly closer to agreeing on critical issues such as cuts to Social Security benefits and tax hikes for the wealthy. Obama has managed to reduce the original tax rates that President George W. Bush had in place. Both Obama and Boehner have agreed to keep the rates low for everyone except the wealthy, but they cannot agree who qualifies as "wealthy". Obama's definition included taxpayers making more than $250,000 per year, but he's compromised up to $400,000 since Boehner was thinking of a figure closer to the $1 million mark. It is speculated that he may lower that to $500,000.

Obama has also offered a "fast track" process for major tax and spending reforms that would make permanent changes in the tax code as early as January 2013, and some not until 2014. However, a cliff-avoiding agreement would no doubt bring about more targeted spending cuts in other areas. There are potential plans floating around that may cut spending for Medicare and Medicaid, but it has yet to be discussed.

We will have to wait to see what kind of deal is reached regarding the fiscal cliff. Apparently most of America has no idea what it is, but now you do! While we wait for more news from Washington, enjoy this funny video from "Jimmy Kimmel Live" about the Fiscal Cliff.

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Obama Adminstration's May Housing Scorecard

The May Housing Scorecard has been released, courtesy of HUD, the Department of the Treasury and the Obama Administration. It is a comprehensive report on the status of the nation's housing market. All indicators point to signs of stability. There's been an overall increase in the sale of existing homes across the nation. The inventory of newly constructed homes has also increased. The only slight hindrance right now comes in the form of delinquencies and underwater mortgages. However, the economy is continuing to recover. More than 180,000 borrowers have taken advantage of the Home Affordable Refinance Program to secure mortgage relief. This has helped foreclosure starts to decline.

The Obama Administration has many programs in place to aid homeowners with the woes of the housing market. So far, these programs have established some critical standards and accountability for mortgage servicers. These have forced the industry to provide struggling homeowners with more effective assistance than ever before. Millions of American homeowners have received relief from these foreclosure programs, and the Administration hopes to continue providing it. It is very important that the nation's housing market crisis can recover.

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U.S. Job Market Staggers

The U.S. economic recovery has had a bit of a slowdown in May. According to the Labor Department's Job Report for May, only 69,000 jobs were created. This is a much lower number than experts had expected for the month. With that said, the unemployment rate has also climbed up to 8.2%, which is the first time it has increased in the past 11 months. This all comes at a time when Americans are worried about the European crisis, higher gas prices and the constant problems that the housing market faces. It is important, therefore, that the U.S. economy continues to grow, especially since Europe is declining. If the U.S. has frequent slowdowns like the one in May, it could bring about a global slowdown. It had enough of an impact on the economy for the Obama administration to comment that this jobs data was unacceptable and that Congress needs to do something to strengthen the nation. Time will tell if they take action to make a difference in the lives of Americans or not.

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Government Seeks to Shut Down Fannie and Freddie

The FHFA, who oversees GSEs Fannie Mae and Freddie Mac as a conservator, has a plan to shrink their involvement in the housing market over time. They want to create a new market for mortgage-backed securities; something more privately-owned rather than government-backed. Fannie and Freddie have had a major part in keeping the housing finance market going during the country's recession and economic hardship. They currently represent 75% of all new home loans, which equals to nearly $100 billion a month in mortgages.

However, President Obama and Congress seek to shut down Fannie and Freddie so they can ultimately reduce the role that the government plays in the mortgage market. There is not yet an official plan on how to squeeze out the GSEs without causing further damage to the housing market, but the goal is to transition in a new structure of how the housing finance market works.

This all relates to the story we reported on earlier about the FHFA's acting director Edward DeMarco's new plan. It involves building a new infrastructure for the mortgage market, shrinking Fannie's and Freddie's presence in the market, and doing whatever it takes to reduce the amount of foreclosures. It is not possible to simply bring an end to Fannie and Freddie, however. Doing so without implementing a new structure would drive up interest rates and limit the availability of loans.

A year ago, a plan was proposed to slowly shut down the GSEs over a span of 5-10 years. It suggested doing this in one of three ways: providing limited government guarantees of some mortgages, providing an emergency backstop role but only during a recession, or completely pulling the federal government away from the mortgage market. A decision regarding these options has not been made.

Fannie and Freddie have relied on bailout money in recent years, and it is hindering the country's economic recovery. The housing market will continue to have issues until these government-backed mortgage-finance companies are replaced with a private-market solution. Once this is accomplished, the government hopes that efforts to repair the damage to homeowners and the housing market will boost in effectiveness.

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Obama's Optimistic Economic Recovery Budget Plan

We have reported about Obama's Economic Recovery plan in the past. Here is a breakdown of what it entails.

Basically, he wants to start decreasing debt by spending more money. It goes without saying that many people have a problem with this theory. Congressional Republicans in particular have been tearing this plan to pieces claiming that spending money we don't have is not the way to help the economy recover.

First of all, the President has very optimistic hopes for the economy. In a proposed budget plan, he expects to cut $4 trillion out of the country's deficit over the next ten years. The deficit would fall to $901 billion in 2013 and then $575 billion by 2018. However, in order to achieve this lofty goal, the administration wants to raise spending on programs that will supposedly kick-start the recovery process. The main focus is to build a "solid foundation of educating, innovating, and building," according to the administration.

This involves the following spending:

• $476 billion for transportation projects such as inner-city rail services
• $30 billion to modernize some 35,000 schools
• $30 billion to help states hire more teachers, police, rescue workers and firefighters
• Potentially $8 billion more for businesses and community colleges to train more workers in high-growth industries

According to a poll taken, however, most people do not care about lowering the deficit. Americans are more concerned with job growth. The White House is actually predicting that job growth will remain weaker than normal for the next several years, but they are optimistic that unemployment rates will fall below 6 percent by 2017.

Additionally, the budget does not include anything regarding revising the tax code. It is widely acknowledged and accepted that fundamental tax reform is vital, but the President continues to side-step the issue by leaving it out of budget proposals. Despite this, with former President Bush's tax cuts expiring this year, President Obama may have a chance to oversee one of the biggest changes to the tax code in nearly a decade. He will be able to either raise taxes by doing nothing, or he could issue a veto to extend them.

Do you think it would be smart for the President to raise taxes to help balance his budget plan? What would this do regarding the deficit problem? Leave your thoughts below!

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HUD's Plan to Improve Public Housing

The U.S. Department of Housing and Urban Development (HUD) has recently given $1.8 billion to public housing authorities that will allow these agencies to improve their public housing units. This will have an effect on all 50 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands. These grants are supplied through HUD's Capital Fund Program which annually provides funds for public housing communities to be able to build, repair, renovate and upgrade features such as roofs, plumbing and electrical systems to enhance efficiency.

HUD's budget for 2012 will ultimately help to preserve and enhance America's affordable housing, which includes public housing. They have been given the go-ahead by Congress to test a comprehensive demonstration tool to begin this preservation process. As part of President Obama's plan to keep HUD homes more affordable, HUD will initiate a Rental Assistance Demonstration (RAD) program. Public housing authorities say that they will need $26 billion in order to keep these homes safe for its inhabitants.

RAD will enable public housing authorities to continue improving and modernizing homes. This is expected to ready more than 60,0000 properties for long term rental assistance contracts. In turn, public housing authorities will then be able to raise around $6 billion in private financing to reduce the amount of capital repair needs to the homes.

Capital repair needs are defined as large-scale improvements required to make housing decent and economically sustainable, and ultimately more energy efficient. According to a study that HUD performed last year regarding Capital Needs in Public Housing, they found that of the nation's 1.2 million public housing units, it would take approximately $25.6 billion to make these much-needed capital repairs. This also includes overdue repairs such as accessibility improvements for the disabled, and water and energy conservation to make the homes more cost effective.

Many families rely on public housing in order to afford a home. Sadly, the nation loses thousands of units every year because of disrepair. Obama proposed RAD as a way to keep these homes maintained and available for rent. The federal government has invested billions in these units and keeping these in working order is fundamental for the overall housing market's stability. HUD will be announcing in the coming months the final details on RAD's timeline and application.

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Economy Impacting News from Around the World

Here on our own turf, President Obama is proposing a new "Seven Step" budget plan to Congress in hopes of cutting the country's deficit by $4 trillion over the next 10 years. He will do this by raising taxes and cutting expenditures. However, this plan is likely to cause a larger deficit first before it reduces it. The expectation is $1.33 trillion in 2012 and $1 trillion in 2013. This is mostly due to the government trying to pull the struggling economy out of the gutter, such as helping homeowners to refinance at lower rates across the board to clear up much of the underwater housing market. Here's to hoping this plan really will help the citizens and in turn reduce the deficit which is currently at a staggering $15 trillion.

Moving on to Greece. As you may know, its outraged citizens have been rioting and burning down buildings in protest to Greece's "Austerity Plans". The Greek Parliament is currently in the process of trying to receive a fresh bailout from these austerity measures. This move means that mortgage bonds will be trading lower. These plans are not yet set in stone, however. The Finance Ministers of the Eurozone will meet on Wednesday to discuss the approval of Greece's austerity plan. Greece is hoping to receive these bailout funds by the March 20th deadline, but it will not be a quick fix for all of their problems.

Lastly, we look at the Middle East. Iran is building up their nuclear capabilities against Israel. The countries are feuding and it is expected that Israel may make a pre-emptive strike on Iran because they do not appreciate Iran pointing their weapons in their direction. This affects oil prices. Now at $100 a barrel, this feud is partially to blame for that. If they go to war, who knows what may happen to the prices and how it will effect the rest of the world. It may even bring about some safe haven buying of US bonds.

The current of the Federal National Mortgage Association (FNMA) 3.5% Bonds are $103.41, + 3bp. Because of this, we do want to encourage that you exercise caution while floating.

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Obama's Foreclosure Prevention Plan

How would you like to save $3,000 per year on your mortgage? That's exactly what President Obama is working to do for American Homeowners. He announced on February 1st that he has a plan to help homeowners like you to refinance your mortgage. Why? The goal is to help stabilize and boost the housing market again. Although, this plan is expected to cost between $5 billion and $10 billion to put into effect. Obama plans to get the funds for this by putting a fee on large banks.

The programs associated with this plan will give lenders and other stakeholders the tools they need to help borrowers with their mortgage woes and to ultimately increase the country's confidence in the real estate finance system.

The Obama Administration, Congress and the National Association of Home Builders will continue looking for ways to increase refinancing opportunities, to reduce the inventory of foreclosed homes and to hopefully prevent additional homes from falling into foreclosure.

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Is Freddie Mac Betting Against You?

The Government-Owned Mortgage Company, Freddie Mac who specializes in helping homeowners get affordable mortgages, has reportedly been "betting" against homeowners. The "bet" comes in the form of investing in securities called "inverse floaters" that will receive all the interest payments from specified mortgage-backed securities. Basically, the bet will pay off if people cannot refinance. The shocking thing is that these investments are actually legal.

If people were to pre-pay their old loans and refinance them to receive cheaper new loans, Freddie Mac would lose money. However, the more people that cannot refinance, the more money Freddie makes because it will receive money from these older loans with higher interest payments.

The thing that is causing such an outrage among Americans is that Freddie Mac, and it's counter-part Fannie Mae, are not privately owned entities anymore. They are part of the government since Congress adopted them in 2008. Therefore, these highly offensive investments that Freddie is making to generate profit are using taxpayer dollars. You are paying for them to bet against you. Many Americans are already blaming these companies for the housing boom and the subsequent bust, so adding this bet to the picture does not make for happy citizens.

Popular opinion in the finance world is that the number of foreclosures would drop if Americans could refinance their high-interest rate loans. Freddie Mac is supposed to help with that. They actively campaign to get borrowers to realize the benefits of refinancing. However, this is not profitable for them which is where these bets have come into play. Despite Freddie's activity, though, President Obama himself has recently mentioned his commitment to helping homeowners with their mortgage worries.

In his State of the Union Address, he noted that he will be sending a plan to Congress that would give "ever responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates." Obama even promised that there would be "no more red tape. No more runaround from the banks."

So what do you think? Relief for homeowners is promised, but will it happen? Do you think it should be illegal for this government-owned company to be "betting" against you as a struggling homeowner?

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