Fannie Mae and Freddie Mac will need between $220 billion and $311 billion from Tax Payers. They have already received $169 Billion from Tax Payers.

Officials Say GSE Bailout Will Cost Less Than Originally Estimated

The Federal Housing Finance Agency (FHFA) has lowered its projection for just how much taxpayer funding is needed to support the nation’s two largest mortgage financiers.

FHFA estimates that Fannie Mae and Freddie Mac will need between $220 billion and $311 billion from the American people when all is said and done. Those figures represent capital assistance from September 2008, when the two mortgage giants were placed into conservatorship, through the end of 2014.
The federal agency has actually trimmed those numbers from estimates released a year ago, primarily because the GSEs have required less funding so far than officials initially thought. Projections released by FHFA in October

2010, covering a span one year shorter, ranged from $221 billion to $363 billion through the end of 2013.
Over the last three years, Fannie and Freddie have drawn $169 billion from Treasury under the Senior Preferred Stock Purchase Agreements of their conservatorship. To date, they’ve returned $28 billion in dividend payments.
To assess the GSEs’ capital needs over the next three years, FHFA has devised three what-if scenarios, taking into account expected loan performance, macroeconomic conditions, and home prices.
Based on these hypotheticals, the agency is projecting Fannie and Freddie will need another $51 billion to $142 billion, on top of the $169 billion already received.
FHFA notes that Fannie Mae’s cumulative draws are higher than Freddie Mac’s, in part because Fannie’s mortgage book of business is approximately 50 percent larger and carries a higher serious delinquency rate.
For both companies, provisions for loan losses, plus foreclosed property expenses continue to drive projected Treasury draws across all three future scenarios.
While to date, the GSEs have needed extra money each quarter from Treasury to cover dividend payments owed to Treasury, FHFA’s projections show that as each company’s financial situation improves over the coming years, at least a portion of future dividends will be paid out of comprehensive income.

Mac will need between $220 billion and $311 billion from the American people when all is said and done

Foreclosure Woes to Plague Industry for at Least Five Years

Foreclosure Woes to Plague Industry for at Least Five Years: Survey

10/03/2011 By: Carrie Bay

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A new quarterly survey of bank risk professionals from FICO paints a decidedly pessimistic picture of housing’s future. The company describes its latest results as a reversal of the growing optimism seen in late 2010 and early 2011.
The survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), shows that bankers expect delinquencies on consumer loans to rise, underwriting standards to become stricter, and the housing sector to continue struggling far into the future.

Among the 188 risk managers surveyed, 73 percent believe mortgage defaults and foreclosures will remain elevated for at least five more years.
Furthermore, 46 percent of respondents expect mortgage delinquencies to increase over the next six months, while only 15 percent anticipate a decline in mortgage delinquencies over the same period.
The negative sentiment among banks’ risk professionals also extended to property values. When asked if housing prices nationally would climb back to 2007 levels before the year 2020, 49 percent of respondents said no. Just 21 percent said yes.
“Housing has been an enormous drag on the economy for over three years as U.S. households lost trillions of dollars in equity,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs.
Data from the Federal Reserve shows that between 2005 and mid-2011, Americans lost $7 trillion in home equity.
“While the housing sector will almost certainly gain strength during the next nine years, many bankers clearly believe prices will remain depressed for half a generation,” Jennings said. “This puts the devastation of the housing crash into perspective.”

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Big Four Banks Express Interest in the HARP 2.0 program.

Big Four Set to Participate in HARP 2.0

10/27/2011 By: Carrie Bay

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The industry’s four largest mortgage servicers all say they will be taking part in the revamped Home Affordable Refinance Program (HARP).

Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program and the changes that will allow more underwater homeowners to refinance at today’s lower interest rates.
Government officials expect the program’s revisions – particularly the GSEs’ waiver on representations and warranties – to increase competition for mortgage refinancing.
An executive with JPMorgan Chase told the company’s investors this week that HARP 2.0 will facilitate “cross-servicing refinancing” because with the rep and warranty waiver, the new lender is not required to assume responsibility for underwriting deficiencies that may have occurred with the original loan.
Chase explains that HARP may be used to replace an adjustable-rate or interest-only loan with a standard fixed interest rate loan, and typically reduces the borrower’s monthly payment.
Frank Bisignano, CEO of mortgage banking at Chase, estimates that with the new HARP guidelines, thousands of Chase customers could lower their mortgage payments by an average of $2,500 a year.
Citi said in an emailed statement that it “supports the program and expects to participate.”
Wells Fargo, likewise, said in a statement that it “welcomes the addition of the new HARP features.”

Veronica Clemons, a spokesperson for Wells Fargo Home Mortgage, says the company is waiting for specific guidelines and requirements from Fannie Mae and Freddie Mac in order to put the changes into practice.
She adds that once the company’s mortgage servicing team has the guidelines in hand, “it will take us some time – depending on the complexity of the guidelines – to make the necessary systems changes to begin offering the new enhancements to our customers.”
The GSEs’ regulator, the Federal Housing Finance Agency (FHFA), says Fannie and Freddie plan to issue guidance with operational details about the HARP changes by November 15th.
“Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers, and other market participants modify their processes,” FHFA said.
Bank of America says it will participate in the enhanced Home Affordable Refinance Program announced by the administration, and it expects the new guidelines and eligibility criteria to go into effect after December 1st.
“Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage,” BofA spokesperson Rick Simon said. “HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”
The GSEs have removed the 125 percent loan-to-value (LTV) cap under the program. Now any borrower with an LTV ratio above 80 percent is eligible for a HARP refinance, as long as the loan was sold to Fannie or Freddie prior to May 31, 2009, and the borrower is not delinquent on their payments.
Since HARP was launched in 2009, nearly 900,000 loans have been refinanced through the program. Government officials estimate that an additional 1 million homeowners will receive assistance under the new guidelines.
In its announcement of the program changes, FHFA encouraged borrowers to “contact their existing lender or any other mortgage lender offering HARP refinances.”

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Author: Carrie Bay • Date: 10/27/2011 • Tags: FHFA, Foreclosure Prevention, HARP, Mortgage Rates, Negative Equity, Refinance, Underwater, Bank of America, Chase, Citigroup, Fannie Mae, Freddie Mac, JPMorgan Chase, Wells Fargo • Category: Government, Loss Mitigation • Users: Agents & Brokers, Attorneys & Title Companies, Investors, Lenders & Servicers, Service Providers

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How do you get a mortgage when you have bad credit

When you have bad credit, is it still possible to get a mortgage loan? Since the housing crash of 2008, it has become harder than ever for those with poor credit to obtain a mortgage loan. If you're ready to try, here's what you need to know.

What Lenders Look For

When you apply for a mortgage, the lender will want to look over your credit report, your employment history, your income, and the amount of debt you are carrying. Lenders will look closely at available cash. If you have cash reserves, you will be able to pay a higher down payment, sometimes as high as 20 percent or 25 percent. If this is the case, you pose a much smaller risk to the lender, and your low credit score may not matter as much.

Lenders also consider your payment history as reflected in your credit score, also called a FICO score. For more information, read "What Is a FICO Score and How Does It Affect My Mortgage Loan"?
Since the subprime lending meltdown, your credit score has become more important than ever to your ability to get a mortgage loan. Lenders are tightening their criteria for making loans, and a poor credit score can keep traditional lenders from even considering you. How can you get around this problem?
First, take steps to correct any mistakes on your credit history. Even one error could potentially make the difference in whether or not you can obtain a mortgage loan. Request reports from all the major credit companies, and review them carefully for errors. If there are errors or inconsistencies, let the credit company know and request to have your record corrected. Don't take anyone's word for the state of your credit history; see it for yourself.
Next, take steps to improve your credit score. Read "Cleaning Up Your Credit Record" to learn more about how to make yourself a better loan prospect. Improving your credit score not only improves your chances of getting a mortgage loan in the first place, but also helps you get better terms on a loan.

Subprime Lenders

You may hear about bad-credit mortgages offered by subprime lenders. Subprime lenders specialize in working with people who have bad credit. While some are legitimate, many are out to take advantage of people with poor credit scores. Since the housing crash of 2008, many subprime lenders have gone out of business. And because of the high rates they charge, even legitimate subprime lenders are a less-than-ideal solution.

FHA Loans

A better option to consider is a Federal Housing Administration loan. FHA loans are made by regular lenders but backed by the federal government. That means the lender is taking less risk by offering you a mortgage loan, because even if you default, the lender will be repaid. FHA-approved lenders are often more flexible in approving loans, which makes it more likely that people with bad credit can qualify for FHA mortgages.

What do need to know about paying overtime to your Employees

Dealing with employee overtime can be one of the most confusing aspects of small business personnel and payroll management. And the stakes are high. Failure to pay required overtime to employees who qualify can result in legal judgments and fees of tens or even hundreds of thousands of dollars against a small business.

But you also don’t want to shell out more in overtime wages to your employees than you are legally required to pay. To walk the fine line between paying too much and not enough in overtime wages, you
First enacted in 1938, FLSA includes minimum wage, overtime pay, and child labor provisions that are designed to provide protections for all workers in the United States. With regard to overtime pay, FLSA requires that covered employees be paid at an overtime rate of one and one-half times their regular rate of pay for every hour over 40 that they work in a workweek.

There are certain kinds of employees, however, to whom you are not legally required to pay overtime wages. They are referred to as “exempt employees,” and they are not entitled to the minimum wage and overtime protections of FLSA. (“Nonexempt” employees, meanwhile, are entitled to these protections.) According to FLSA sections 13(a)(1) and 13(a)(17), exempt employees include bona fide executives and administrative, professional, and outside sales employees as well as certain employees in computer-related occupations.

To be considered exempt, an employee generally must be paid at least $455 per week on a salary basis and perform certain types of work. This includes tasks that

• Are directly related to the management of the business or the general business operations
• Require specialized academic training for entry into a professional field
• Include making sales away from the physical location of the business
• Are within what would be recognized as a field of artistic or creative endeavor

In addition, hourly employees who perform certain types of work in the computer field are considered exempt if they are paid at least $27.63 per hour. It’s important to note that exemptions are based on the specific job duties performed and compensation received, not on job titles.
One common misconception among small business owners is that they or their managers must approve overtime hours for nonexempt employees to be paid overtime wages. This isn’t the case. If an employee who meets the requirements of nonexemption works more than 40 hours in a given week, he or she must be paid overtime wages.

This includes what is sometimes referred to as “off hours” work, such as training sessions, time spent coming in to work early to set up for a meeting, or time spent filling in for absent employees beyond an employee’s regular shift. Also, nonexempt employees are not allowed to waive their overtime pay rights. Legally, you must pay them overtime wages for any overtime hours they work.
So how much is too much money to spend on overtime? Every company is different, so this exact amount will vary from one business to the next. The best way for any business to keep overtime costs down is to monitor the number of hours worked each week by nonexempt employees and carefully plan their schedules so that the number of overtime hours required to perform their jobs is kept to a minimum.