Will President Obama's Plan Help You?

Meltdown 101: Will Obama's housing plan help me?
By J.W. Elphinstone

President Barack Obama's new mortgage relief plan, launched Wednesday, aims to help up to 9 million borrowers qualify for more affordable mortgages and stay in their homes.
Are you one of them?

Obama's "Making Home Affordable" program is designed to work with lenders to modify the loan terms for up to 4 million homeowners and to refinance up to 5 million homeowners into more affordable fixed-rate loans.

Here are some questions and answers about the latest round of aid for homeowners.
A: How do I know if I qualify for the refinancing plan?
Q: Only homeowners in good standing whose loans are held by Fannie Mae or Freddie Mac qualify.

The property must be owner-occupied and the borrower must have enough income to make payments on the new mortgage debt.

Borrowers can't owe more than 105 percent of their home's current value on their first mortgage. For example, if your home is worth $200,000, your first mortgage can't exceed $210,000. Borrowers with a second mortgage still can qualify as long as their first mortgage isn't more than 105 percent of their home's value.

Homeowners can't take cash out during the refinancing to pay other debt.
Borrowers have until June 2010 to apply for the program.

Q: How do I know if my mortgage is owned by Fannie Mae or Freddie Mac?
A: Call your current lender or mortgage servicer.

You can find the phone number on your monthly mortgage statement or coupon book.

You can also contact Fannie Mae at 1-800-7FANNIE and Freddie Mac at 1-800-FREDDIE from 8 a.m. to 8 p.m. EST. Or, go to http://www.fanniemae.com/homeaffordable and http://www.freddiemac.com/avoidforeclosure and fill out the online request forms.
Q: What borrowers qualify for the modification program?

A: You don't have to be behind on your mortgage payments to qualify. Delinquent borrowers and current borrowers who are at risk of imminent default are both eligible.

The program applies to mortgages made on Jan. 1 or earlier. The mortgage payment including taxes, insurance and homeowners association dues must exceed 31 percent of the borrowers' gross monthly income.

The property must be the homeowner's primary residence. It can't be investor-owned, vacant or condemned. Home loans for single-family properties that are worth more than $759,750 don't qualify.

The program is voluntary, relying on a $75 billion subsidy to encourage mortgage companies to participate. Lenders must agree to reduce the loan payments to 38 percent of a borrower's monthly income. After that, the government and lender split the cost of bringing the payment down to 31 percent.

Eligible borrowers will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the loan modification program. In the affidavit, applicants will have to cite the reasons behind their financial woes, such as job loss or a drop in income. The government will then take steps to verify the information.

Borrowers are only allowed to have their loans modified once. The program runs through Dec. 31, 2012.
Q: What if I'm in bankruptcy or in active litigation over my mortgage?

A: That doesn't necessarily keep you from qualifying for the modification program. And borrowers in active litigation can modify their home loans without waiving their legal rights.

Q: What do I do to get help?

A: For the modification program, call your lender or mortgage servicer to see if you're eligible. For the refinance program, first find out if your mortgage is held by Fannie Mae or Freddie Mac. Then contact your lender, mortgage servicer or a mortgage broker for refinancing options.

Q: How soon can I get help?

A: Both the modification and refinancing programs start immediately.

Q: What if I don't qualify for either program — is there any other way to get help with a mortgage?

A: Contact your lender or mortgage servicer regarding other modification programs or refinance options. Alternatively, contact a local housing counselor to negotiate with your lender or servicer, to help locate other local resources like rescue grants or loans, or to facilitate a short sale or deed-in-lieu of foreclosure if staying in the home isn't possible.
A short sale is where homeowners sell houses for less than the amount owed on them, and the lender then considers the debt paid off. A deed-in-lieu of foreclosure is where the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.
Local housing counselors can be found at the U.S. Department of Housing and Urban Development's Web site at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

Q: Do FHA, VA or USDA home loans qualify for modifications under Obama's plan?

A: Mortgages backed by the Federal Housing Administration, Veterans Administration or the U.S. Department of Agriculture are being modified under other programs. The Obama Administration and Congress are working on legislation that would allow modifications of these home loans consistent with the Making Home Affordable program.

On the Net:
http://www.financialstability.gov

Source: The Associated Press. All rights reserved.

Obama's Loan Modification Plan

Obama's Loan Modification Plan: 7 Things You Need to Know
The White House releases fresh details on its plan to save the housing market
Source: Luke Mullins U.S. News

As reported by U.S. News, At the heart of the President Barack Obama's ambitious plan to rescue the housing market is the conviction that restructuring distressed mortgages will keep struggling borrowers in their homes and help insert a floor beneath plummeting property values. With $75 billion dedicated to reworking troubled loans, that's a big bet—especially considering that a top banking regulator said last December that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. But supporters argue that mortgage modifications need to be properly engineered to work—and many early ones weren't. To that end, the Obama administration on Wednesday unveiled fresh details on its plan to restructure at-risk loans and help as many as four million home owners avoid foreclosure. Here are seven things you need to know about Obama's loan modification program.
1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments. Although not everyone agrees with this, billionaire investor Warren Buffett endorsed the philosophy in his most recent letter to shareholders. "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans)," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."
2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income. In lowering the payment, the servicer would first reduce the interest rate to as low as 2 percent. If that's not enough to hit the 31 percent threshold, they would then extend the terms of the loan to up to 40 years. If that's still not enough, the servicer would forebear loan principal at no interest. The plan does not, however, require servicers to reduce mortgage principal, which Richard Green, the director of the Lusk Center for Real Estate at USC, considers a shortcoming. "For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Green says. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."
3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments. Borrowers, meanwhile, can get up to $1,000 knocked off the principal of their loan each year for as many as five years if they make their payments on time. Neither party can receive the cash incentives until the modified loan payments have been made for at least three months.
4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents, such as the borrower's credit report. In addition, the program is designed to target homeowners who are undergoing "serious hardships"—such as a loss of income—which have put them at risk of default. To participate, borrowers will have to sign an affidavit of financial hardship and verify their income with documents. "If we would have had such stringent verification over the last four or five years, we probably wouldn't be in as bad a position as we are in," says Richard Moody, the chief economist at Mission Residential. But while Moody has no objection to such verification, obtaining documents from so many homeowners could be an onerous effort. "It's going to be a very time-consuming process," he says. Only loans originated on or before Jan. 1, 2009, are eligible, and modified payments will remain in place for five years. Now that the administration's plan is out, lenders are free to begin modifying loans.
5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan. Howard Glaser, a mortgage industry consultant and a U.S. Department of Housing and Urban Development official during the Clinton administration, called this component of the plan "clever," arguing that it would work to ensure broad participation. "When you apply the formula, the loans that are modified are the ones that are in the best economic interest of the investors to modify," Glaser says. "The federal subsidy for the payment on the modification…tips the scale toward modification as a better deal for the investor." More HERE

Barack Obama Keeping Promises

In the Weekly Address this morning, President Obama explains how the budget he sent to Congress will fulfill the promises he made as a candidate. On fiscal responsibility, a fair tax code, a clean energy economy, real health care reform, and education, this budget sets out a new vision for our country.

But having put his priorities on paper and having stood behind them, the President recognizes that there are those who will fight against change every step of the way.

"I realize that passing this budget won’t be easy. Because it represents real and dramatic change, it also represents a threat to the status quo in Washington. I know that the insurance industry won’t like the idea that they’ll have to bid competitively to continue offering Medicare coverage, but that’s how we’ll help preserve and protect Medicare and lower health care costs for American families. I know that banks and big student lenders won’t like the idea that we’re ending their huge taxpayer subsidies, but that’s how we’ll save taxpayers nearly $50 billion and make college more affordable. I know that oil and gas companies won’t like us ending nearly $30 billion in tax breaks, but that’s how we’ll help fund a renewable energy economy that will create new jobs and new industries. I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this:

"So am I."

Watch the full address and read the transcript below.

Remarks of President Barack Obama
Weekly Address
Saturday, February 28th, 2009
Washington, DC

Two years ago, we set out on a journey to change the way that Washington works.

We sought a government that served not the interests of powerful lobbyists or the wealthiest few, but the middle-class Americans I met every day in every community along the campaign trail – responsible men and women who are working harder than ever, worrying about their jobs, and struggling to raise their families. In so many town halls and backyards, they spoke of their hopes for a government that finally confronts the challenges that their families face every day; a government that treats their tax dollars as responsibly as they treat their own hard-earned paychecks.

That is the change I promised as a candidate for president. It is the change the American people voted for in November. And it is the change represented by the budget I sent to Congress this week.

During the campaign, I promised a fair and balanced tax code that would cut taxes for 95% of working Americans, roll back the tax breaks for those making over $250,000 a year, and end the tax breaks for corporations that ship our jobs overseas. This budget does that.

I promised an economy run on clean, renewable energy that will create new American jobs, new American industries, and free us from the dangerous grip of foreign oil. This budget puts us on that path, through a market-based cap on carbon pollution that will make renewable energy the profitable kind of energy; through investments in wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient American cars and American trucks.

I promised to bring down the crushing cost of health care – a cost that bankrupts one American every thirty seconds, forces small businesses to close their doors, and saddles our government with more debt. This budget keeps that promise, with a historic commitment to reform that will lead to lower costs and quality, affordable health care for every American.

I promised an education system that will prepare every American to compete, so Americans can win in a global economy. This budget will help us meet that goal, with new incentives for teacher performance and pathways for advancement; new tax credits that will make college more affordable for all who want to go; and new support to ensure that those who do go finish their degree.

This budget also reflects the stark reality of what we’ve inherited – a trillion dollar deficit, a financial crisis, and a costly recession. Given this reality, we’ll have to be more vigilant than ever in eliminating the programs we don’t need in order to make room for the investments we do need. I promised to do this by going through the federal budget page by page, and line by line. That is a process we have already begun, and I am pleased to say that we’ve already identified two trillion dollars worth of deficit-reductions over the next decade. We’ve also restored a sense of honesty and transparency to our budget, which is why this one accounts for spending that was hidden or left out under the old rules.

I realize that passing this budget won’t be easy. Because it represents real and dramatic change, it also represents a threat to the status quo in Washington. I know that the insurance industry won’t like the idea that they’ll have to bid competitively to continue offering Medicare coverage, but that’s how we’ll help preserve and protect Medicare and lower health care costs for American families. I know that banks and big student lenders won’t like the idea that we’re ending their huge taxpayer subsidies, but that’s how we’ll save taxpayers nearly $50 billion and make college more affordable. I know that oil and gas companies won’t like us ending nearly $30 billion in tax breaks, but that’s how we’ll help fund a renewable energy economy that will create new jobs and new industries. In other words, I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this:

So am I.

The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don’t. I work for the American people. I didn’t come here to do the same thing we’ve been doing or to take small steps forward, I came to provide the sweeping change that this country demanded when it went to the polls in November. That is the change this budget starts to make, and that is the change I’ll be fighting for in the weeks ahead – change that will grow our economy, expand our middle-class, and keep the American Dream alive for all those men and women who have believed in this journey from the day it began.

Thanks for listening.

The HUD Plan to help homeowners

Source: The White House Blog

Help for homeowners

The President’s strategy for economic recovery is a stool with several legs, as he’s said, and one of them is solving the foreclosure crisis.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," he said yesterday as he signed the American Recovery and Reinvestment Act into law.

Though communities across the country have been affected by the crisis, Arizona has been hit particularly hard -- in 2008, only two states had more foreclosures.

And President Obama is there today, in Phoenix, to unveil his "Homeowner Affordability and Stability Plan," which will help bring relief to homeowners and bring some order to the housing market.

The President will talk more about his plan a little later today. In the meantime, we’re sure you have a lot of questions, like, Am I eligible for assistance? Might I be able to modify my loan? When do I apply? We've put together an example sheet that will show you what options might be available to you, depending on the circumstances of your mortgage, as well as answers to some common questions (below).

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

• What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

• I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

• How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

• I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

• Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

• What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

• Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

• How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

• When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

• What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

• information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying balances from month to month, and
• payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

• What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

• Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

• How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

• I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

• I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

• I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

• I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

• I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

• How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

• Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

• I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

• How do I apply for a modification under the Homeowner Affordability andStability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

• What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes

• information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying balances from month to month, and
• payments on other loans such as student loans and car loans.


• My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort. More HERE

Senate Banking Cmte. Hearing on Homeowner Affordability and Stability

Housing and Urban Development Secretary Shaun Donovan testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill February 26, 2009 in Washington, DC. The committee is hearing testimony on HUD's homeowner affordability and stability plan. (Photo by Mark Wilson/Getty Images) Watch the testimony on Cspan: Senate Banking Cmte. Hearing on Homeowner Affordability & Stability with HUD Sec. Donovan

Mortgage Plan: 02-19-09 Homeowner Affordability and Stability Plan Summary

Executive Summary

Read the Homeowner Affordability and Stability Plan Fact Sheet HERE
Read Support Under the Homeowner Affordability and Stability Plan: Three Cases HERE

The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.

• Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates.
• Millions of workers have lost their jobs or had their hours cut back, are now struggling to stay current on their mortgage payments – with nearly 6 million households facing possible foreclosure.
• Neighborhoods are struggling, as each foreclosed home reduces nearby property values by as much as 9 percent.

Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affordable A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac

The Homeowner Affordability and Stability Plan is part of the President’s broad, comprehensive strategy to get the economy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs. The key components of the Homeowner Affordability and Stability Plan are:

1. Affordability: Provide Access to Low-Cost Refinancing for Responsible Homeowners Suffering From Falling Home Prices

· Enabling Up to 4 to 5 Million Responsible Homeowners to Refinance: Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time refinancing. Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to access these lower rates. As a result, the Obama Administration is announcing a new program that will help as many as 4 to 5 million responsible homeowners who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance through those two institutions.

· Reducing Monthly Payments: For many families, a low-cost refinancing could reduce mortgage payments by thousands of dollars per year:

o Consider a family that took out a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 – making them ineligible for today’s low interest rates that now generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300.

2. Stability: Create A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners

• Helping Hard-Pressed Homeowners Stay in their Homes: This initiative is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. Millions of hard-working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income – particularly those who received subprime and exotic loans with exploding terms and hidden fees. The Homeowner Stability Initiative helps those who commit to make reasonable monthly mortgage payments to stay in their homes – providing families with security and neighborhoods with stability.
• No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.
• Protecting Neighborhoods: This plan will also help to stabilize home prices for all homeowners in a neighborhood. When a home goes into foreclosure, the entire neighborhood is hurt. The average homeowner could see his or her home value stabilized against declines in price by as much as $6,000 relative to what it would otherwise be absent the Homeowner Stability Initiative.
• Providing Support for Responsible Homeowners: Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.
• Providing Loan Modifications to Bring Monthly Payments to Sustainable Levels: The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. Using money allocated under the Financial Stability Plan and the full strength of Fannie Mae and Freddie Mac, this program has several key components:
  • • A Shared Effort to Reduce Monthly Payments: For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.
    • “Pay for Success” Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive “pay for success” fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.
    • Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
    • Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
    • Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration — together with the FDIC — has developed an innovative partial guarantee initiative. The insurance fund – to be created by the Treasury Department at a size of up to $10 billion – will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.
• Institute Clear and Consistent Guidelines for Loan Modifications: Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The Guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving Financial Stability Plan financial assistance going forward will be required to implement loan modification plans consistent with Treasury Guidance. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market. The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture.
• Other Comprehensive Measures to Reduce Foreclosure and Strengthen Communities
  • Require Strong Oversight, Reporting and Quarterly Meetings with Treasury, the FDIC, the Federal Reserve and HUD to Monitor Performance
  • Allow Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options
  • Provide $1.5 Billion in Relocation and Other Forms of Assistance to Renters Displaced by Foreclosure and $2 Billion in Neighborhood Stabilization Funds
  • Improve the Flexibility of Hope for Homeowners and Other FHA Programs to Modify and Refinance At-Risk Borrowers

3. Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac:

• Ensuring Strength and Security of the Mortgage Market: Today, using funds already authorized in 2008 by Congress for this purpose, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability.
  • Provide Forward-Looking Confidence: The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.
  • Treasury is increasing its Preferred Stock Purchase Agreements to $200 billion each from their original level of $100 billion each.
• Promoting Stability and Liquidity: In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace.
  
• Increasing The Size of Mortgage Portfolios: To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSEs’ retained mortgage portfolios allowed under the agreements – by $50 billion to $900 billion – along with corresponding increases in the allowable debt outstanding.
  
• Support State Housing Finance Agencies: The Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving homebuyers.
• No EESA or Financial Stability Plan Money: The $200 billion in funding commitments are being made under the Housing and Economic Recovery Act and do not use any money from the Financial Stability Plan or Emergency Economic Stabilization Act/TARP.

H/Tip Wayne Marr

New Standard Helps Developers Go Green

Source: Globe St.com
by Sule Aygoren Carranza

WASHINGTON, DC-Multifamily developers who want to take their projects green now have a set of guidelines to refer to, with the recent approval of the National Green Building Standard by the American National Standards Institute. The ANSI endorsement, which lends credibility to the standard, was the last necessary hurdle in its development process.

The NGBS--also known as ICC 700-2008--is the first and only agreed-upon standard that covers residential properties, including apartments, condos and the residential portions of mixed-use developments, as well as land development and remodeling and renovation. Until now, multifamily firms interested in sustainable development have had to follow guidelines designed for high-rise commercial properties or single-family homes.

Expected to be published this spring, the standard was crafted according to ANSI’s strict guidelines by the National Association of Home Builders and the International Code Council, with input from a consensus committee comprised of builders, architects, product manufacturers, regulators and environmental experts. The NAHB Research Center directed the work of the committee and provides certification for green projects.

The certified body of the NGBS, the NAHB Research Center has a set fee for green multifamily projects that’s $200 per building and another $20 for each green unit in the building. Builders can team with accredited verifiers who can score the project.

But, green development is nothing new. NAHB’s Carlos Martin points out that the organization’s members had been looking at how to make projects environmentally friendly for some time, though much of the focus had been on energy efficiency. The increased concentration on the holistic approach to sustainability "is not revolutionary," says the assistant vice president. "It’s evolutionary."

In 2005, the NAHB had actually introduced the NAHB Model Green Home Building Guidelines, giving developers the first national platform to understand green techniques and incorporate them into the single-family homes they were building. Those guidelines were also meant to serve as a baseline so builders could develop local green building programs.

With the intention of "having an approved rating system that’s flexible, dynamic and practical," says Martin, the NAHB and ICC started their work with the consensus council two years ago, using those 2005 guidelines as a starting draft. The groups worked on the standard for over a year, holding four public hearings and analyzing more than 3,000 public comments, before presenting it to the Standards Institute.

"ANSI certification confirms that this standard is not an ‘industry-generated' document, but was developed through a rigorous process requiring public input, a diversity of participants, consensus and due process," says Eileen Lee, vice president of energy and environmental policy at the National Multi Housing Council.

And because the NAHB worked with the ICC to develop the standard, it is the only green rating system specifically written to be compatible with existing building codes. Not only will the NGBS give apartment developers set guidance on how to approach environmentally friendly projects, says Lee, "it is also important for the growing number of states and localities considering mandatory green building requirements. The NGBS offers a more appropriate alternative for residential properties than other non-standardized green rating systems like the US Green Building Council’s LEED criteria."

It was the option of having broader choices that spurred NAHB to become involved in this effort, explains Martin. The organization has been promoting not only "change in the way we build, but also how our building is interpreted and valued by appraisers, realtors, lenders and underwriters and even insurers. We believe that any builder who wants to go green should be able to, and having credible, practical and universally agreed-upon options is part of that process. Builders need to be able to choose options that will allow them to reach a given level of greenness that is appropriate for their practice and makes sense practically. Choice will move mountains, but in a metaphoric, environmentally friendly way."

There has indeed been a proliferation of green building initiatives nationwide, points out Paula Cino, director of energy & environmental policy for the NMHC. To date, there are 31 states, 112 cities and 12 federal agencies that have some sort of green building statutes. However, she points out, "It’s important to note that these numbers include many jurisdictions that are either incentivizing green building or only mandate green building in public projects or publicly funded buildings."

Only one state and 18 cities currently mandate sustainability in private construction, but that figure is expected to rise in coming years. That shows "we’re pretty early in the game when it comes to green building requirements in private construction, which means there are good opportunities for discussion and education at the state and local level, as mandates are proposed and considered," Cino relates.

That is where the NGBS comes into play. "We strongly believe that this standard is a better tool for green building in the multifamily sector than other green building programs currently available," she says. "Our goal is to have the NGBS specify, as a compliance option, every time legislation or an incentive program says that residential construction has to follow some kind of green building criteria."

In fact, a number of housing bills brought forward last year sought to tie federal requirements with green building. Among the federal proposals in 2008, there were new green building requirements for Hope VI projects and more energy efficiency requirements for building codes in several HUD programs. The 2009 stimulus package has a large allocation to green, and requires that states receiving grant money must update their building energy codes. And this year, comprehensive energy and climate change bills are expected to be brought to Congress.

Structured like LEED and Green Globes, some of the aspects of the NGBS are mandatory while others are point-based options that allow developers to pick and choose what features make the most sense for their projects. Builders must achieve a minimum number of points in each of the six categories of the standard, but its crafters made an effort to tie the mandatory requirements with building code requirements.

"This structure can cause some anxiety for some people, but it’s really not warranted," says Cino. "There are some point options that are more suited for single-family construction but not multifamily, and vice versa. The development committee ultimately decided that was fine, so long as there were enough points available collectively for each type of residential building to comply." Plus, the fact that the standard applies to both single-family and multifamily projects helps developers who build both types of projects in terms of time savings and efficiency. More HERE

Slums of Hope

By Howard Husock
For displaced peasants, the world’s vast urban ghettos are a gateway to a better future.

Marie Hippenmeyer/AFP/Getty Images

In the favelas of São Paulo, the World Bank is making incremental improvements, like sewers and potable water.

Close to 120 years have passed since Jacob Riis published How the Other Half Lives: Studies Among the Tenements of New York. Using stereoscopic camera, magnesium flash powder, and riveting language, the Danish-born onetime crime reporter seared bleak, iconic images of New York’s low-income neighborhoods into the American consciousness. Though today Riis is almost universally celebrated—new biographies continue to appear—he helped set housing policy on a course that would prove tragically misguided. In particular, he inspired a range of government policies that viewed slums as bleak wastelands that transformed their residents into paupers and criminals and therefore had to be radically changed or eradicated.

The problems that Riis and the housing-reform movement sparked are still relevant today, since slums, unlike many ills that worried nineteenth-century social reformers, remain very much with us. Indeed, their scale in the developing world dwarfs that of Riis-era New York. The United Nations estimates that in 2001, 924 million people, or 31.6 percent of the world’s urban population, lived in slums; the number today surely exceeds 1 billion. As Planet of Slums author Mike Davis writes, residents of the new slums constitute the “fastest-growing and most unprecedented social class on earth.”

The harrowing descriptions of the conditions in Third World slums in a tide of recent books on the subject, including Davis’s, are in the Riis tradition. But the books’ overall assessments and reform prescriptions often are decidedly not. A relative consensus has formed about how best to address the new slums’ problems, and surprisingly, it appreciates what the UN calls the “positive” elements of slum life, shaped by a population characterized not as oppressed and helpless but as resourceful and creative. Journalist Robert Neuwirth, for instance, extols slums as places where “squatters mix more concrete than any developer. They lay more brick than any government. They have created a huge hidden economy. . . . [They] are the largest builders of housing in the world—and they are creating the cities of tomorrow.” In keeping with this encouraging trend, the UN even describes the Third World’s informal settlements as “slums of hope.”

What, exactly, are slums? Some, especially in the developed world, are once-affluent neighborhoods gone to ruin; others were once public housing. But most are gigantic, tightly packed concentrations of flimsy shacks and shanties that rural migrants have built on the outskirts of cities—what the UN calls “vast informal settlements that are quickly becoming the visual expression of urban poverty.”

Most of these settlements are in the developing world. Of the 924 million slum dwellers worldwide in 2001, 554 million lived in Asia, in such cities as Mumbai and Kolkata in India and Karachi in Pakistan. Another 187 million lived in Africa, in places like Cairo, Durban, Johannesburg, and Nairobi. And 128 million lived in Latin America and the Caribbean (famously, in the favelas of Rio de Janeiro and São Paulo). Only 54 million were in developed countries.

The UN blames the massive migrations from rural areas either on population growth that the countryside cannot sustain or on economic prescriptions said to emphasize commercial agriculture over small farming, thus driving the poor off the land. Whatever the cause, this “urbanization of poverty” has resulted in the large-scale erection of primitive forms of shelter, either on public land or on private land owned by absentee landlords. Water, sanitation, and other utilities are usually lacking, making the incredible overcrowding even harder to bear.

One doesn’t forget visits to such places. When, during the late apartheid era, I traveled through black townships outside the beautiful seaside city of Port Elizabeth, South Africa, I met families living in what reportedly were converted Boer War–era British-built huts with dirt floors. Water poured only from a communal tap, and there was no electricity. UN official Naison Mutizwa-Mangiza recalls his first trip to Nairobi’s Kibera, Africa’s largest slum and home to 700,000: “There is the poor physical quality of the environment, overcrowding, houses so close together, tin-roofed, walls often of mud, with just a very small window. But it is the smell from lack of sanitation that hits you in the face. You have to jump over numerous small trickling drains, filthy and filled with smelly water mixed with other types of waste, including feces. There are no toilets; people use plastic bags in the night for defecation and then throw these out in surrounding dumps and streams.”

Riis’s Manhattan, even at its roughest, was never that squalid. True, some 20,000 shacks once squatted on the site of what became Central Park. And certainly the Lower East Side was terribly crowded. But even the worst Orchard Street tenements were actual buildings, not tin-roofed shanties with dirt floors.

For Riis, the slum’s biggest problem wasn’t population density, lack of sunlight, or even disease. It was what it did to the character of its residents. Slums were “nurseries of pauperism and crime that fill our jails and police courts; that throw off a scum of forty thousand human wrecks to the island asylums and workhouses year by year; that turned out in the last eight years a round half a million beggars to prey upon our charities . . . because, above all, they touch the family life with deadly moral contagion.” The “contagion,” Riis warned, included a lack of “domestic privacy”—meaning the potential exposure of children to adult sexuality. “His entire book,” writes Daniel Czitrom in Rediscovering Jacob Riis, “could be read as a plea for understanding how the tenement environment itself deformed character.” The slum dweller’s grim surroundings kept him from developing bourgeois virtues.

This “environmental determinism,” as housing historian Alexander von Hoffman calls it, led reformers to try to improve the behavior and prospects of the poor by replacing the slum environment altogether. A better living environment, it was felt, would produce better people. Riis himself promoted the “model tenement”: privately built apartments for the poor, constructed to higher standards made possible by investors’ willingness to forgo normal profits. No wonder Riis has wound up cast in the company of heroic reformers of the Gilded Age and early Progressive Era, such as Upton Sinclair and Ida Tarbell. In his new biography, Tom Buk-Swienty gushes: “Riis forced Americans to confront the squalor of immigrant conditions, and he demanded that those immigrants not be treated as second- or third-class citizens.”

But this uncritical view ignores how Riis’s environmental determinism led, gradually but inexorably, to the advent of large-scale public housing, which would have destructive unintended consequences. Public authorities and idealistic architects would demolish the slums and replace them with publicly financed and operated buildings that—or so it was hoped—would uplift, not degrade, by providing a clean, cheerful, well-lit environment.

With terrible irony, the replacement housing itself gradually became a blighted locus of social problems, but for seldom-understood reasons. Conventional wisdom still blames the projects’ design mistakes (the high-rise architecture criticized by Jane Jacobs and Oscar Newman) and so-called concentration of poverty. So the government keeps looking for the public-housing philosopher’s stone. HOPE VI projects, pushed by the Clinton administration (and perhaps to be revived by President Obama), replaced “distressed” public housing and mixed the middle class and the poor in indistinguishable townhouses. HUD’s Moving to Opportunity program uses housing vouchers to relocate public-housing residents to middle-class suburban neighborhoods. Such approaches still assume that an improved environment—one where poor families have both sufficient amenities and better neighborly examples to emulate—will somehow inspire uplift, and thus they continue the Riis reform impulse.

All such bestowed benefits, however, turn out to discourage beneficiaries from behaving constructively—saving money and accumulating assets, say, or making the prudent life choices, such as marriage and education, that truly help households “move up” to better neighborhoods. In other words, improved housing is an effect, not a cause, of the bourgeois virtues that Riis held dear.

That so many Americans could rise from slums into the middle class shows, moreover, that the Lower East Side was filled with such virtues. The neighborhood was a beehive of effort, including that of immigrant entrepreneurs who built and ran apartment buildings. In Riis’s book, writes Czitrom, “the complex day-to-day negotiations and textured lives of tenement dwellers simply disappear into a riot of pathology.” Czitrom quotes historian Jared Day, who described “the tenants who scraped together small sums to buy leases; they were the grocers, butchers, boarding house keepers and barbers who pooled their resources . . . and they were the immigrant bankers . . . who took the savings of average ethnic workers and invested them in local housing.” In Riis’s view, “the tendency of the tenements and of their tenants is all the time, and rapidly, downward,” as he wrote in How the Other Half Lives. But in a dynamic economy, it turned out, he had things exactly wrong. New York’s Tenement House Museum now refers to its historic building, tellingly, not as slum housing but as an “urban log cabin”—a starting point for upward mobility.

This is also how we should think of the sprawling new slums of the developing world: not as doomed, deforming environments but as the low-cost housing built for (and by) displaced, formerly rural, people drawn into the modern urbanized economy and energetically aspiring to a better life.

In Hong Kong—hardly impoverished but a powerful magnet for China’s rural poor—I was once taken to the top of one of the city’s ubiquitous four-story apartment buildings. There I found one of Hong Kong’s 50,000-plus “unauthorized building works”: three tiny boxes housing families that stole electricity from the floors below. In the event of a stairwell fire, they could escape this high-rise shantytown only by jumping off the roof. But aspiration was abundantly evident, too: I saw school uniforms neatly laid out on tiny mattresses and a kitchen table with a hot plate. In the South Africa township that I visited, similarly, one saw plenty of shacks, but also larger, self-built homes with their own Honda electric generators.

The Economist captured this atmosphere of activity and hope in a December 2007 article about Dharavi, a Mumbai slum. Dharavi had “maybe a million residents crammed into a square mile of low-rise wood, concrete and rusted iron,” yes, but its residents were also “thriving in hardship.” Small “hutment” factories, for instance, exported leather belts directly to Wal-Mart. Dharavi, the magazine observed, was “organic and miraculously harmonious. . . . intensely human.” The FinMark Trust, a South African housing think tank, has found no fewer than 335,000 businesses in one Johannesburg slum, one in seven home-based. They include everything from hairdressers and bars to welders and furniture makers.

These informal sprawls, for all their problems, may well prove to be a source of new products—and refinements and improvements of existing products—helping to fire future economic growth. Jane Jacobs envisioned this transformative churning in her landmark book The Economy of Cities—a process in which the poor, making the best of their circumstances, create substitutes for expensive imports and eventually develop superior products for export.

Happily, the debate about slums is no longer dominated by the project of replacing or eradicating them—in fact, that approach has become politically incorrect. “There is no drive to replicate the bureaucratic welfare-state housing-policy approaches of the mid-twentieth century,” observes Columbia University’s Elliott Sclar, a lead author of the UN’s 2005 Improving the Lives of Slum Dwellers. Even the Harvard Graduate School of Design—once led by followers of the architect Le Corbusier, the father of high-rise public housing—sponsored an approving exhibit last winter on the “nonformal cities of the Americas.”

Policy has shifted toward improving slum conditions incrementally, helping residents gradually become better off, even if still living within the slums. South Africa’s Reconstruction and Development Programme, for instance, has subsidized over 1 million modest, 344-square-foot single-family structures that families own and, over time, are expected to improve. The World Bank, too, whose work in developing countries long emphasized grand infrastructure projects like dams and bridges, is now financing modest but significant improvements in the world’s informal settlements. In Brazil’s favelas, it helped some 900,000 people obtain “potable water piped directly into their homes,” and about 1 million receive sewer services. Cost: just $84 per capita. Similarly, the bank has invested $192 million in the Mumbai slums to build privately managed pay toilets, used by more than 400,000 people. The UN’s Top Ten list of “slum upgrading actions” ranks “installing or improving basic infrastructure” first and makes no reference to government-subsidized replacement housing.

The incremental approach mitigates the risk of the kind of dependency that welfare states had unwittingly fostered in the poor in the past. After all, cities provide regular neighborhoods with sewage and water systems, too, so giving slums such services doesn’t give their residents an incentive to stay put. Further, incrementalism doesn’t undermine slum dwellers’ sense of personal agency. Living in a shanty that you can call your own and improve over time is preferable to moving into a spirit-killing welfare-state Potemkin village of “affordable housing.” More HERE

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American Recovery and Reinvestment Act of 2009 - Construction Breakdown

The waiting went on and on as anxious construction industry and state officials watched for months for glimmers of progress in Washington on a bill that they hoped would ease the recession’s tightening grip. On Feb. 17, the long wait ended as President Obama traveled to Denver and signed what he called "the most sweeping economic recovery package in our history," the $787.2-billion American Recovery and Reinvestment Act of 2009.

It was good news for construction, because the measure contains about $130 billion for highways, buildings and other public works. "How can you not be happy?" asks Stephen E. Sandherr, the Associated General Contractors’ CEO. "This is the most significant investment in infrastructure in my lifetime."

As industry officials scrutinize the voluminous bill, they are looking for how much money it allocates for key programs and for details on how and when the funds will be disbursed.

"It’s not a perfect package by any means," says Steve Hall, American Council of Engineering Companies’ vice president for government affairs. "But it’s hard to deny that this doesn’t represent a major, major expansion of federal investment in infrastructure across the board."

The Congressional Budget Office, Capitol Hill’s official scorekeeper, estimates the measure’s price tag at $787.2 billion. Of that, $575.3 billion is appropriations and direct federal spending. Tax cuts account for the remaining $211.8 billion. Pennsylvania Gov. Edward Rendell (D), a public-works advocate, gives the package "a pretty strong B-plus." He says, "It’s a good bill under the circumstances...given the partisanship down in D.C." He adds, "To make it a great bill, I would have significantly increased the infrastructure spending [and] decreased the tax cuts."

For construction, the package has some pleasant surprises, particularly high-speed rail, which emerged with $8 billion for a new corridor program. An earlier Senate version had $2 billion, and a version the House passed in January had zero.

But construction did not get all it wanted. Probably the biggest disappointment was that the final package has no specified funding for school construction. As the bills moved out of committee, the House- version bill had recommended $20 billion for K-12 and college facilities while the Senate’s called for $19.5 billion.

But Sen. Susan Collins (R-Maine), a pivotal player in shaping the final package, was opposed to a new federal school-construction program. To help win her vote, lawmakers stripped out the school-construction line-item funding.

House and Senate negotiators did permit school modernization projects to be eligible for some of the $39 billion in "state fiscal-stabilization" funds set aside for a broad range of educational purposes. It would be up to local school-district officials to determine how much of their shares of that $39.5 billion would go for such uses as hiring or retaining teachers or upgrading buildings. New construction would not be eligible.

Fast-Moving

The bill moved swiftly, by Capitol Hill standards. The first detailed proposal, in the House, was unveiled on Jan. 15. Final congressional action came on Feb. 13, when the House passed the measure, 246-183, and the Senate cleared it that night 60-38, the bare minimum needed for passage. Republicans lined up almost solidly against the stimulus. It got no GOP votes in the House and just three in the Senate: Collins, Olympia Snowe of Maine and Arlen Specter of Pennsylvania.

Even though much of the stimulus talk was on having the bill fund "shovel-ready" projects, only $34.8 billion, or 11% of the bill’s $308.3 billion in actual appropriations outlays, will occur by Sept. 30, the end of fiscal 2009, CBO says. After that, the pace will pick up. CBO estimates that 2010 will be a much bigger year, with $110.7 billion in appropriations-related outlays.

Some federal agencies have laid the groundwork to move the money out. At the Dept. of Transportation, Secretary Ray LaHood announced he had set up an internal Transportation Investment Generating Economic Recovery (TIGER) team. The aim, he said, is "to make sure that DOT’s portion of recovery funding goes out to states and localities as quickly as possible in order to immediately create jobs and strengthen our economy and transportation systems."

The stimulus gives DOT only 21 days to formally apportion highway-stimulus funds to the states, but LaHood may move even faster. "We’re hearing from the DOT that within seven days the money can clear Washington to the states," says Nick Yaksich, Association of Equipment Manufacturers’ vice president for global public policy. States then would put projects out for bids.

For the infrastructure stimulus money, the bill sets a goal of using at least 50% of those funds on work that can be started within 120 days of the bill’s signing. But the rules are tougher for highway and transit funds. States or localities that get the money face use-it-or-lose-it mandates. If they don’t obligate at least 50% of their allotments within 120 days after DOT apportions the money, the bill directs DOT to take away the unused money and redistribute it to other states.

The Defense and Veterans Affairs departments must report to Congress within 30 days on how they plan to spend their stimulus construction allocations. The General Services Administration has 45 days to produce its spending report but must include a list of projects it plans to fund. The bill does not penalize DOD, VA or GSA if they do not obligate money in 120 days.

Source: Engineering News Record

HOUSING/HUD [$9.6 billion]

• HUD Public Housing Capital Fund: $4 billion
• HUD redevelopment of abandoned and foreclosed homes: $2 billion
• HUD energy retrofits, "green" projects in HUD-assisted housing projects: $250 million
• HUD Community Development Block Grants (housing, services, infrastructure): $1 billion
• HOME investment partnerships: $2.25 billion
• Lead-paint abatement: $100 million

The American Recovery and Reinvestment Act of 2009

As reported by Americablog: This is the final package reached by negotiators from the House and the Senate.

United States Congress

The American Recovery and Reinvestment Act of 2009
Creating Jobs, Supporting the States and Investing in Our Country’s Future

The United States is facing its deepest economic crisis since the Great Depression, one that calls for swift, bold action. The goals of this legislation are the same as they have been from day one: to strengthen the economy now and invest in our country’s future.

This legislation will create and save jobs; help state and local governments with their budget shortfalls to prevent deep cuts in basic services such as health, education, and law enforcement; cut taxes for working families and invest in the long-term health of our economy. We do all of this with unprecedented accountability, oversight and transparency so the American people know their money is being invested responsibly.

To accomplish these goals, The American Recovery and Reinvestment Act provides $311 billion in appropriations, including the following critical investments:

Investments in Infrastructure and Science - $120 billion
Investments in Health - $14.2 billion
Investments in Education and Training - $105.9 billion
Investments in Energy, including over $30 billion in infrastructure - $37.5 billion
Helping Americans Hit Hardest by the Economic Crisis - $24.3 billion
Law Enforcement, Oversight, Other Programs - $7.8 billion

Investments in Infrastructure and Science include:

Infrastructure Improvements
- $7.2 billion for Broadband to increase broadband access and usage in unserved and underserved areas of the Nation, which will better position the U.S. for economic growth, innovation, and job creation.
- $2.75 billion for the Department of Homeland Security to secure the homeland and promote economic activity, including $1 billion for airport baggage and checkpoint security, $430 million for construction of border points of entry, $210 million for construction of fire stations, $300 million for port, transit, and rail security, $280 million for border security technology and communication, and $240 million for the Coast Guard.
- $4.6 billion in funding for the Corps of Engineers.
- $1.2 billion for VA hospital and medical facility construction and improvements, long-term care facilities for veterans, and improvements at VA national cemeteries.
- $3.1 billion for repair, restoration and improvement of public facilities at on public and tribal lands.
- $4.2 billion for Facilities Sustainment, Restoration and Modernization to be used to invest in energy efficiency projects and to improve the repair and modernization of Department of Defense facilities to include Defense Health facilities.
- $2.33 billion for Department of Defense Facilities including quality of life and family-friendly military improvement projects such as family housing, hospitals, and child care centers.
- $2.25 billion through HOME and the Low Income Housing Tax Credit program to fill financing gaps caused by the credit freeze and get stalled housing development projects moving.
- $1 billion for the Community Development Block Grant program for community and economic development projects including housing and services for those hit hard by tough economic times.
- $1 billion for the Bureau of Reclamation to provide clean, reliable drinking water to rural areas and to ensure adequate water supply to western localities impacted by drought.

Transportation
- $27.5 billion is included for highway investments
- $8.4 billion for investments in public transportation.
- $1.5 billion for competitive grants to state and local governments for transportation investments.
- $1.3 billion for investments in our air transportation system.
- $9.3 billion for investments in rail transportation, including Amtrak, High Speed and Intercity Rail.

Public Housing
- $4 billion to the public housing capital fund to enable local public housing agencies to address a $32 billion backlog in capital needs -- especially those improving energy efficiency in aging buildings.
- $2 billion for full-year payments to owners receiving Section 8 project-based rental assistance.
- $2 billion for the redevelopment of abandoned and foreclosed homes.
- $1.5 billion for homeless prevention activities, which will be sent out to states, cities and local governments through the emergency shelter grant formula.
- $250 million is included for energy retrofitting and green investments in HUD-assisted housing projects.

Environmental Clean-Up/Clean Water
- $6 billion is directed towards environmental cleanup of former weapon production and energy research sites.
- $6 billion for local clean and drinking water infrastructure improvements.
- $1.2 billion for EPA’s nationwide environmental cleanup programs, including Superfund.
- $1.38 billion to support $3.8 billion in loans and grants for needed water and waste disposal facilities in rural areas.

Science
- $1 billion total for NASA.
- $3 billion total for National Science Foundation (NSF).
- $2 billion total for Science at the Department of Energy including $400 million for the Advanced Research Projects Agency—Energy (ARPA-E).
- $830 million total for the National Oceanic and Atmospheric Association (NOAA).

Investments in Health include:

- $19 billion, including $2 billion in discretionary funds and $17 billion for investments and incentives through Medicare and Medicaid to ensure widespread adoption and use of interoperable health information technology (IT). This provision will grow jobs in the information technology sector, and will jumpstart efforts to increase the use of health IT in doctors’ offices, hospitals and other medical facilities. This will reduce health care costs and improve the quality of health care for all Americans.
- $1 billion for prevention and wellness programs to fight preventable diseases and conditions with evidence-based strategies.
- $10 billion to conduct biomedical research in areas such as cancer, Alzheimer’s, heart disease and stem cells, and to improve NIH facilities.
- $1.1 billion to the Agency for Healthcare Research and Quality, NIH and the HHS Office of the Secretary to evaluate the relative effectiveness of different health care services and treatment options.

Investments in Education and Training include:
- $53.6 billion for the State Fiscal Stabilization Fund, including $39.5 billion to local school districts using existing funding formulas, which can be used for preventing cutbacks, preventing layoffs, school modernization, or other purposes; $5 billion to states as bonus grants for meeting key performance measures in education; and $8.8 billion to states for high priority needs such as public safety and other critical services, which may include education and for modernization, renovation and repairs of public school facilities and institutions of higher education facilities.
- $13 billion for Title 1 to help close the achievement gap and enable disadvantaged students to reach their potential.
- $12.2 billion for Special Education/IDEA to improve educational outcomes for disabled children. This level of funding will increase the Federal share of special education services to its highest level ever.
- $15.6 billion to increase the maximum Pell Grant by $500. This aid will help 7 million students pursue postsecondary education.
- $3.95 billion for job training including State formula grants for adult, dislocated worker, and youth programs (including $1.2 billion to create up to one million summer jobs for youth).

Investments in Energy include:

- $4.5 billion for repair of federal buildings to increase energy efficiency using green technology.
- $3.4 billion for Fossil Energy research and development.
- $11 billion for smart-grid related activities, including work to modernize the electric grid.
- $6.3 billion for Energy Efficiency and Conservation Grants.
- $5 billion for the Weatherization Assistance Program.
- $2.5 billion for energy efficiency and renewable energy research.
- $2 billion in grant funding for the manufacturing of advanced batteries systems and components and vehicle batteries that are produced in the United States.
- $6 billion for new loan guarantees aimed at standard renewable projects such as wind or solar projects and for electricity transmission projects.
- $1 billion for other energy efficiency programs including alternative fuel trucks and buses, transportation charging infrastructure, and smart and energy efficient appliances.

Help for Workers and Families Hardest Hit by the Economic Crisis includes:

- $19.9 billion for additional Supplemental Nutrition Assistance Program (SNAP), formerly Food Stamps, to increase the benefit by 13.6 percent.
- Child Care Development Block Grant: $2 billion to provide quality child care services for an additional 300,000 children in low-income families who increasingly are unable to afford the high cost of day care.
- Head Start & Early Head Start: $2.1 billion to allow an additional 124,000 children to participate in this program, which provides development, educational, health, nutritional, social and other activities that prepare children to succeed in school.
- State and Local Law Enforcement: $4 billion total to support law enforcement efforts.
- $555 million to expand the Department of Defense Homeowners Assistance Program (HAP) during the national mortgage crisis.

Unprecedented Oversight, Accountability and Transparency

The American Recovery and Reinvestment Plan provides unprecedented oversight, accountability, and transparency to ensure that taxpayer dollars are invested effectively, efficiently, and as quickly as possible.

- Funds are distributed whenever possible through existing formulas and programs that have proven track records and accountability measures already in place.
- Numerous provisions in the bill provide for expedited but effective obligation of funds so that dollars are invested in the economy as quickly as possible.
- The Government Accountability Office and the Inspectors General are provided additional funding for auditing and investigating recovery spending.
- A new Recovery Act Accountability and Transparency Board will coordinate and conduct oversight of recovery spending and provide early warning of problems.
- A special website will provide transparency by posting information about recovery spending, including grants, contracts, and all oversight activities.
- State and local whistleblowers who report fraud and abuse are protected.

Source: AmericaBlog