Ashville HOPE VI

ASHEVILLE – Up to 320 of Asheville's poorest residents would be forced to move under a federal program to replace one of the city's most distressed public housing complexes with a mixed-income neighborhood.

Those who could be moved, as well as residents living near public housing, gave varied reactions to the HOPE VI program. The program would use private capital and about $15 million in federal money to overhaul one of two complexes: Lee-Walker Heights off Short Coxe Avenue or Aston Park Tower and Garden Apartments on South French Broad Avenue.

Getting the grant money is far from guaranteed. Asheville Housing Authority officials began the arduous and highly competitive application process last week. The federal government has not yet said when it will make a decision.

Some residents supported the program. Others, though, said it would tear apart tightly knit neighborhoods.

“I've been living in Lee-Walker Heights for six years, and I haven't had any problems,” said Celia McDow, 24, who lives in the complex just north of Mission Hospital with her son, 7, and daughter, 5. McDow works in the cafeteria at Ira B. Jones Elementary School and said she can get help from neighbors and walk to most places where she needs to go. That would change if she had to move.

“I really do love my community. Anything I need, my community is there for me,” she said.

Concentrated poverty

The concept behind HOPE VI is to disperse concentrated areas of poverty, which proponents of the program say foster crime and other social ills. Federal and private money is used to replace publicly owned housing with a mixed-income neighborhood of working- and middle-class as well as taxpayer-subsidized homes.

In past years, the grant has been difficult to get, but housing authority officials now think more money will be available. They hope to win a grant this year or next to overhaul one of the complexes.

Last year, four to five HOPE VI applicants were selected out of a field of about 30, said David Nash, the Housing Authority's chief operations officer. This year, funding was bumped up from approximately $100 million to $120 million, and there is hope that amount will rise to $600 million in years to come, he said.

The City Council has not taken an official vote on the issue, though some council members have expressed support for the program. That kind of backing will be vital in getting the grant. Housing authority officials plan to report back to the council in a month or two and will likely ask for financial help preparing the application.

One council member, Carl Mumpower, questioned whether the mixed-income model would work and said government shouldn't be spending money on such programs during a budget crisis.

Many Lee-Walker Heights residents also don't think the program would help them in the long run, resident McDow said. Officials may consider the complex dangerous, but residents feel it would be worse in other public housing, McDow said.

“They (residents) were really upset about the idea,” she said.

Housing authority officials said those who would be moved could choose to go to another public housing complex or into private housing that accepts public vouchers. They would get money to help them relocate, said Nash.

Every attempt would be made to allow relatives living in different households in one complex to stay together, he said.

Once the complex is rebuilt, people could apply to come back.

“Anybody who has a good rental history and meets the criteria, which is elderly, disabled or working, would be able to move back,” said Nash.

If all goes smoothly, construction could be finished in three years, he said. More HERE

Authors Of East Rome Redevelopment Plan Reveal Details

As reported by The Rome News Wire, Representatives from two of the firms that prepared the East Rome Revitalization Plan told city officials that they believe the project is a feasible possibility.

On Wednesday, John Skach of Urban College Inc. and Chuck Billard of TCG International presented a draft of the redevelopment plan that focuses around Maple Street and 12th Street.

“We did this in preparation for an application for HOPE VI funds,” Skach said.

The consulting team for the revitalization plan consisted of members of Urban College Inc., TCG International, Marketek and Rhodes Engineering.

The Northwest Georgia Housing Authority initially sought out proposals for the project and hoped to receive a HOPE VI grant award from HUD for the revitalization costs.

HOPE VI addresses the eradication of severely distressed public housing.

If approved, the HOPE VI award would provide $15 million in grant money while generating $47 million in total construction, new jobs and building supplies and an estimated $195,000 per year increase in property tax revenues.

The grant money could only be used on public housing, however, and not on items like railroad crossings.

Part of the plan calls for the demolition of 100 public housing units along with construction of 300 units, of which 100 would be public housing.

The other 200 units are what the consulting team are basing the source for the projected increase in property tax revenues of $195,000 per year.

The East Rome study area totaled 593 acres that extend from the north at the intersection of East 2nd Avenue and the rail line south to Hwy. 411. Maple Street closely bisects the area and is the main roadway through the study area.

Skach said creation of the draft revitalization plan consisted of five phases. More HERE

Community revitalization: Hope for tomorrow

As reported by Andrew Barksdale at The FayObserver, Anastasia Vann won’t miss her cramped, two-bedroom apartment in Campbell Terrace.

Staff photo by Octavio Jones
Anastasia Vann, a resident of Campbell Terrace Apartments, will be moving out her home in preparation for the Hope VI project. Watch an interview with Vann at fayobserver.com.

The vinyl floors are faded and gray, The concrete walls painted an egg-shell yellow. The windows look out over identical red-brick buildings.

The public housing complex, built on the edge of downtown in 1953, will be razed early next year. So will its older cousin, Delona Gardens, a block away.

For more than two generations, the housing projects have sheltered Fayetteville’s working poor and penniless. More than 90 percent of tenants today are unmarried women. About half have children living with them.

Beginning this month, they will start leaving as the city embarks on a $119
million project called Hope VI. The two housing complexes will be replaced by more than 550 apartments and 105 single-family homes throughout the Old Wilmington Road area, offering new hope for a blighted community dotted with empty lots and shuttered homes.

Vann, who is 43 and lives alone, has already begun packing, even though she hasn’t found a place to live. She would prefer to rent a house but will settle for a modern apartment. She wants to plant a garden and have more privacy.

“I want a new beginning,” she said.

About 213 families live in the two projects to be demolished. Everyone has two options: move to another Fayetteville Metropolitan Housing Authority complex or find a private apartment or rental house. The housing agency estimates that two-thirds of the tenants will leave public housing in favor of the open market. When they do, they will get federal Section 8 program vouchers to subsidize their rents.

The decision can be difficult for some families, who worry about finding another school for their children or dislike the idea of uprooting after so many years in one place.

“Some are scared, but most of us are excited,” said Vann, a member of the Housing Authority’s residential advisory board.

The residents won’t do it alone. The Hope VI program will pick up the moving tab and pay other relocation expenses, and officials will help them find apartments or rental houses.

The linchpin of the project is a $20 million federal Hope VI grant, which the Housing Authority won last year. As part of the revitalization project, a community center, a day care and a medical clinic are planned. So is a 72-unit apartment complex on Bunce Road on the other side of town.

Everything has to be built by 2013. The first wave of construction is scheduled to begin this summer or early fall.

Getting outside help

To keep the project on track and handle the mounds of paperwork, the housing agency sought an outside consultant last year. The board hired Boulevard Group Inc., an Atlanta firm with experience overseeing other Hope VI projects, to manage this one. More HERE

The $694,000 project - Part of the Alamito Hope VI project

EL PASO --

As reported by Aileen B. Flores at the Elpaso Times, The El Paso City Council recently approved the street reconstruction and drainage improvements of St. Vrain Street in Segundo Barrio.

The $694,000 project is scheduled to begin in November with a projected seven-month construction period, said Julie Baldwin, spokeswoman for the El Paso Engineering Department.

Construction crews will replace the existing road with two lanes and a parkway on both sides, new sidewalks, handicap ramps and new street lights and signs, Baldwin said.

The water lines, storm and sanitary sewers under the street will also be replaced, she said.

Construction on St. Vrain will be from Delta Drive to Father Rahm Avenue.

The project is part of the Alamito Hope VI project and will be funded by the city and Housing Authority of El Paso. Construction will be under contract to Quest Contracting Inc. of El Paso, according to a city document. More HERE

RFP: Hope VI Grant Application, Revitalization Plan and Program Management Services

RFP: Hope VI Grant Application, Revitalization Plan and Program Management Services:
The Houston Housing Authority hereby solicits proposals from qualified professional consulting firms to provide services for the Development of a Hope VI Grant Application, Revitalization Plan and provide Program Management Services for the revitalization of Kennedy Place and Kelly Village Housing Developments as specified in RFP No. 09-02.

Interested offerors may obtain the Request for Proposals package by contacting:ANNA SIMOTASPURCHASING OFFICERHOUSTON HOUSING AUTHORITY2640 FOUNTAINVIEW, SUITE 408HOUSTON, TEXAS 77057(713) 260-0554 FAX: (713) 260-0556

The Request for Proposals is available on the Internet at http://www.housingforhouston.com/.

The Pre-Proposal Conference is rescheduled for Thursday, February 12, 2009, at 3:00 p.m. (CST) in the Houston Housing Authority Boardroom, 4th Floor, 2640 Fountainview, Houston, TX 77057.

The proposals must reach the Houston Housing Authority no later than 4:00 P.M. (CST) on February 18, 2009. Proposals received after the deadline will be rejected unless the conditions allowed for late submittals exist for consideration as specified in the RFP.

A Fair Housing and Equal Employment Opportunity Agency. For assistance: Individuals with disabilities may contact the 504/ADA Administrator at 713-260-0528, TTY 713-260-0547 or 504_ADA@housingforhouston.com

The Housing Crisis - "Older Americans are getting whacked twice,"

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At 94, Sylvia Merlin is stuck.

MSN reports in it's article, Seniors crushed by housing crisis, the widow can't sell her home or fall back on her investments. She's lost $200,000 in the stock market since the beginning of 2008, she says. Like a growing number of seniors, she's been unable to move into the retirement community she had planned to because of the shattered housing market and her dwindling retirement portfolio.

And Merlin is running out of time: Her health is deteriorating, and her home is increasingly unlivable.
94 and nowhere to go

"Older Americans are getting whacked twice," says Thomas Shapiro, the director of the Institute on Assets and Social Policy at Brandeis University, and the co-author of a study titled "Living Longer on Less." "Home equity, which is their largest reservoir of wealth and their largest expense, has taken a tremendous hit. Portfolios have taken the same hit as everyone else, but seniors don't have the same length of time to dig themselves out."

Elderly Americans with fixed incomes are increasingly being compelled to make seemingly impossible decisions, Shapiro says, such as choosing between paying their housing bills or their medical costs.

More than 54% of all senior households "do not have sufficient financial resources to meet median projected expenses based on their current financial net worth, projected Social Security and pension incomes," according to the Brandeis study.

Some seniors are moving in with their children because they can't pay all the bills. Census reports show multigenerational families are on the rise in part, experts say, because of the housing and larger economic crisis. An estimated 3.6 million parents (not all of them elderly) live with their adult children, according to 2007 census data, up from 2.3 million in 2000, an increase of 57%. In those households, the number of parents 65 and older was up 62%.

Others are turning to reverse mortgages, loans available for seniors 62 and older that allow them to get cash based on the value of their home with no monthly mortgage payments. Such a loan is repaid out of proceeds from the eventual sale of the home or from the borrower's estate after his or her death. More HERE

Rebuilding Begins In New Orleans

Work finally starts after delays at New Orleans’ ‘Big Four’

By Bendix Anderson

NEW ORLEANS—Since the floodwaters of Hurricane Katrina poured into the C.J. Peete public housing complex here, Jocquelyn Marshall and her son have traveled from an emergency shelter in Tunica, Miss., to an apartment in Houston, and then to an apartment in another New Orleans neighborhood.

It’s been a long voyage for Marshall, who still hopes to return to C.J. Peete.

The possibility for that return came a little closer to reality Jan. 6, when workers started to build the first phase of new apartments at C.J. Peete. As president of the residents’ association, Marshall spoke at the groundbreaking along with developers, city and federal officials, and former residents.

“It was a beautiful, sunny day— a day of excitement,” she says.

Hope and delay

After years of protest and delay, work has begun on the first new apartments at C.J. Peete and St. Bernard, two of New Orleans’ “Big Four” public housing sites slated for redevelopment after Hurricane Katrina. The redevelopment of the other two Big Four sites isn’t far behind. As of February, officials expected work to start at the Lafitte and B.W. Cooper projects in 2Q2009.
More than 3,000 mixed-income apartments in the four redevelopments are slated to open by 2011.

That’s well behind the projects’ original time frames outlined in 2006. Lawsuits, local approvals, and the chaos in the nation’s financial markets have delayed the projects.

However, developers and officials have made good use of the extra time by including residents in the process of designing the redeveloped communities and living up to the principles of successful public housing redevelopments undertaken over the last decade under the Department of Housing and Urban Development’s (HUD) HOPE VI program.
“This investment is going to last for decades. The additional time was important,” says Vince Bennett, executive vice president for McCormack Baron Salazar, the St. Louis-based developer redeveloping C.J. Peete.

A tight time frame

In June 2006, more than nine months after Hurricane Katrina tore through the city, HUD Secretary Alphonso Jackson announced his plan to demolish 4,500 units of public housing at four of the largest public housing sites in the city and rebuild the sites as mixed-income housing in just a few years.

The plan includes a mix of homeownership, public housing apartments, housing subsidized with low-income housing tax credits (LIHTCs), and apartments renting at market rates.

Wrapping around a new gym, Railton Place serves young adults aging out of foster care
and chronically homeless adults and veterans.



Increasing Need

The demand for affordable housing continues to grow across
the nation, with no signs of easing.
• In 2006, 39 million households were at least moderately cost
burdened (paying more than 30 percent of income on housing),
and nearly 18 million were severely cost burdened (paying
more than 50 percent). From 2001 to 2006, the number
of severely burdened households alone swelled by almost 4
million.

• The number of households with “worst-case housing” needs
in 2005 was 5.99 million, comprising 13.4 million individuals.
This is an increase of 817,000, or 16 percent, from 5.18 million
in 2003. Households with worst-case needs are defined as
unassisted renters with very low incomes who are either paying
more than half of their incomes for housing or living in
severely substandard housing. The group with the largest
increase in worst-case needs from 2003 to 2005 was families
with children—475,000 households.

• The proportion of American households that had worst-case
needs in 2005 was 5.5 percent, up from 4.9 percent in 2003.
• All regions of the country shared in worst-case needs, and all
regions experienced increases: 208,000 households in the
Northeast; 143,000 in the Midwest; 338,000 in the South;
and 129,000 in the West in 2005.

Sources: Department of Housing and Urban Development and Joint Center for
Housing Studies at Harvard University

Read More HERE

Learn More About HUD Recovery Act Programs

Source: HUD.gov

The Recovery Act includes $13.61 billion for projects and programs administered by the Department of Housing and Urban Development, nearly 75 percent of which was allocated to state and local recipients on February 25, 2009 – only eight days after President Obama signed the Act into law. Recovery Act investments in HUD programs will be not just swift, but also effective: they will generate tens of thousands of jobs, modernize homes to make them energy efficient, and help the families and communities hardest hit by the economic crisis. The remaining 25 percent of funds will be awarded via competition in the coming months. Additional guidance on the implementation of all funds will be routinely provided on this website.

Promoting Energy Efficiency and Creating Green Jobs

These investments are powerful vehicles for economic recovery because they work quickly, are labor-intensive, create jobs where they are needed most, and lead to lasting neighborhood benefits. Many will also reduce greenhouse gas emissions and save Americans money by retrofitting housing to make it more energy efficient.

Public Housing Capital Fund: $4 billion invested in energy efficient modernization and renovation of our nation's critical public housing inventory.

Native American Housing Block Grants: $510 million invested in energy efficient modernization and renovation of housing maintained by Native American housing programs, and the development of sustainable communities.

Assisted Housing Energy Retrofit: $250 million invested in energy efficient modernization and renovation of housing of HUD-sponsored housing for low-income, elderly, and disabled persons.
Lead Hazard Reduction: $100 million invested in lead based paint hazard reduction and abatement activities.

Supporting Shovel-Ready Projects and Assisted Housing Improvements

These investments will support a broad range of housing and community development projects that are ready to go. Many of these projects have been held up for lack of private investment due to fallout from the broader economic crisis and credit crunch.

Tax Credit Assistance Program: $2.25 billion invested in a special allocation of HOME funds to accelerate the production and preservation of tens of thousands of units of affordable housing.

Community Development Block Grants: $1 billion for approximately 1,200 state and local governments to invest in their own community development priorities. Most local governments use this investment to rehabilitate affordable housing and improve key public facilities – stabilizing communities and creating jobs locally.

Project-Based Rental Assistance: $2 billion invested in full 12-month funding for Section 8 project-based housing contracts. This funding will enable owners to undertake much-needed project improvements to maintain the quality of this critical affordable housing.
Promoting Stable Communities and Helping Families Hardest Hit by the Economic Crisis
These investments will help communities and families that have experienced the brunt of the economic downturn. Resources will be used to stabilize and revive local neighborhoods and housing markets with heavy concentrations of foreclosed properties. Funds will also assist the vulnerable families and individuals who are on the brink of homelessness or have recently become homeless.

Neighborhood Stabilization Program: $2 billion invested in mitigating the impact of foreclosures through the purchase and rehabilitation of foreclosed, vacant properties in order to create more affordable housing and renew neighborhoods devastated by the economic crisis.
Homelessness Prevention: $1.5 billion invested in preventing homelessness and enabling the rapid re-housing of homeless families and individuals, helping them reenter the labor market more quickly and preventing the further destabilization of neighborhoods.


Overview of the Recovery Act

HUD Implementation of the Recovery Act

Learn More About HUD Recovery Act Programs

Community Development Block Grant

Project-Based Rental Assistance

Lead Hazard Reduction/Healthy Homes

Homelessness Prevention Fund

Tax Credit Assistance Program

Native American Housing Block Grant - Formula

Native Hawaiian Housing Block Grant

Public Housing Capital Fund - Formula

Funding Allocations by State

Transparency and Accountability Guidelines

Agency Plans and Reports

Weekly Report of March 3, 2009 [Excel]

HUD Sec - Personally disturbed" and even "angry" by the sluggish pace of rebuilding after Hurricane Katrina

The Washington Times reports Housing and Urban Development Secretary Shaun Donovan on Thursday told residents he is "personally disturbed" and even "angry" by the sluggish pace of rebuilding after Hurricane Katrina, while Homeland Security Secretary Janet Napolitano promised the new administration would make the Gulf Coast region a priority.

The Cabinet secretaries, sent by President Obama to assess the rebuilding efforts, said the federal government has freed hundreds of millions of dollars for affordable housing, moving assistance and rebuilding fire and police stations destroyed during the 2005 storm.

"To be honest, we have been disturbed by what we have seen and what we have not seen in terms of progress," Mr. Donovan said at a press conference with Ms. Napolitano, who said she has been asking "why" the red tape has been so thick.

"This will not be the last time we are here," Ms. Napolitano said. "This will not be the last time I ask, 'Why?'"

They announced the funding news at the conclusion of their New Orleans listening tour, drawing cheers from local officials gathered at the site of a key redevelopment project.

The tour began Thursday as both Ms. Napolitano and Mr. Donovan spent a few hours at a university that remains only 50 percent usable, a home rebuilt by a nonprofit and a crop of freshly painted affordable homes built over the leveled remains of the upper Ninth Ward.

While Mr. Donovan acknowledged the innovation of the New Desire Redevelopment project, built at the site of a construction project leveled during Katrina, but said he was frustrated that "far too little progress" has been made on housing in New Orleans.

Mr. Donovan said the rebuilding work had been "too often about programs and rules" instead of about places and people.

"We have much much more work to do and we've got to get to it today," he said.

The secretaries announced that HUD had accepted Louisiana's $438 million long-term disaster recovery plan, built around the 2008 hurricanes Gustav and Ike — which will produce affordable rental housing, business assistance and coastal restoration.

Mr. Donovan announced a new five-year, $50 million program for permanent housing for more than 1,000 homeless families and people living with substance abuse issues or mental illness.

HUD also announced $23 million in rental assistance vouchers that would help an estimated 2,000 elderly and disabled disaster victims.

Ms. Napolitano said Benjamin Franklin High School could be reopened with FEMA providing the last $2.9 million of its needed funding.

"They've waited far too long, so let's get with it and let's get with it now," she said.

She said she has cleared public assistance FEMA funding to replace two police stations and one fire station and $12 million toward repairs for a water treatment plan. She also said she would extend the department's relocation assistance program — up to $4,000 in reimbursement for moving expenses — so anyone who incurred expenses from Katrina until May 1 this year could receive the money.

Earlier, the secretaries heard the "heart-wrenching" story of Lawrence Scurich, a veteran in his 80s who waited three years before he could return to a rebuilt version of the home he loved. He wiped away tears as he showed them his home, one of a series the St. Bernard Project nonprofit has helped to rebuild.

"What we have seen today makes us disturbed, angry even, to see some of the families living the way that they have and we pledge to you our partnership to a new beginning here in New Orleans and across the Gulf," Mr. Donovan said.

He announced a program to help people who missed a key housing deadline because of poor communication, urging the city's residents to call 866/785-3239 to see whether they qualify for assistance.

Also attending the press conference was newly designated FEMA Administrator Craig Fugate, the leader of Florida's emergency team, whom Mr. Obama nominated on Wednesday to lead the agency.

Mr. Donovan was to head to Texas while Ms. Napolitano was scheduled to tour the coast in Mississippi. More HERE

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.