NEW YORK ATTORNEY GENERAL CUOMO ANNOUNCES AGREEMENT WITH FANNIE MAE, FREDDIE MAC, AND OFHEO

News from Attorney General Andrew M. Cuomo
Department of Law Department of Law120 Broadway The State Capitol
New York, NY 10271 Albany, NY 12224
FOR IMMEDIATE RELEASENew York City Press Office / 212-416-8060Albany Press Office / 518-473-5525nyag.pressoffice@oag.state.ny.us

NEW YORK ATTORNEY GENERAL CUOMO ANNOUNCES AGREEMENT WITH FANNIE MAE,FREDDIE MAC, AND OFHEO~Nation’s Two Largest Purchasers of Home Loans Agree to Only BuyMortgages From Banks That Meet Requirements of New Home Value ProtectionCode~Independent Institute Established with $24 Million from Fannie Mae andFreddie Mac to Implement and Monitor Code~Senator Schumer Praises Agreement
NEW YORK, NY (March 3, 2008) – Attorney General Andrew M. Cuomo todayannounced that the nation’s two largest purchasers of home loans,Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), have entered intocooperation agreements requiring them to only buy loans from banks thatmeet new standards designed to ensure independent and reliableappraisals.
The agreements, among the New York Attorney General, Fannie Mae,Freddie Mac and their federal regulator, the Office of Federal HousingEnterprise Oversight (OFHEO), also create an independent organization toimplement and monitor the new appraisal standards. Senator CharlesSchumer, Chair of the Senate Banking Committee’s Housing Subcommittee,praised the agreement and the reforms which he has supported.

“With this agreement, Fannie Mae and Freddie Mac have become leadersin transforming the mortgage industry,” said Cuomo. “Now nationalbanks have a clear choice: immediately adopt the new code and clean upappraisal fraud in the mortgage industry or stop doing business withFannie Mae and Freddie Mac – it is that simple.”

Fannie Mae and Freddie Mac, which purchase roughly 60 percent of allhome loans originated in the United States, have agreed to thefollowing:

● Establishment of the “New Home Valuation Protection Code,”(the “Code”), which creates requirements governing appraisalselection, solicitation, compensation, conflicts of interest andcorporate independence, among other reforms. (Full Code Attached). Underthe new Code:
o Mortgage Brokers will be prohibited from selecting appraisers;
o Lenders will be prohibited from using “in-house” staffappraisers to conduct initial appraisals and
o Lenders will be prohibited from using appraisal managementcompanies that they own or control.
● Banks will be required to adhere to Code. Beginning January 1,2009, Fannie Mae and Freddie Mac will require that lenders represent andwarrant that appraisals related to mortgage loans originated on or afterJanuary 1, 2009 conform to the code or they will not be purchased.
● Formation of the “Independent Valuation ProtectionInstitute,” (the “Institute”), a new organization which willimplement and monitor the Code. The Institute, which will be funded with$24 million from Fannie Mae and Freddie Mac, will also:
o Establish a complaint hotline for consumers nationwide to callif they believe the appraisal process has been tainted or if they havebeen harmed by appraisal fraud.
o Serve as a contact for appraisers themselves if they believetheir independence has been compromised. These complaints will behandled confidentially to protect appraisers from retaliation. TheInstitute will mediate complaints, or can forward them to theappropriate federal or state law enforcement agency or regulator.
o Report publicly on its activities to the New York AttorneyGeneral and OFHEA on a bi-annual basis.
o Appoint a Board of Directors which must be approved by both theNew York Attorney General and OFHEO.

“Today’s agreement with Fannie Mae and Freddie Mac begins to setright what had gone so horribly wrong in the mortgage industry –rampant appraisal fraud,” said Cuomo. “The integrity of our mortgagesystem depends on independent appraisals. Again and again ourindustry-wide investigation found that banks were putting pressure onappraisers to drive up the value of loans just to make a quick buck. Webelieve the new standards, and the new independent monitor agreed totoday, can begin to erase this problem from the industry. I want toparticularly thank Senator Schumer for all of his help in readying thisimportant agreement today.”
Senator Schumer worked with OFHEO to gain regulatory approval of theagreement. In January, Schumer wrote a letter to OFHEO Director JamesLockhart seeking the agency's cooperation with Cuomo's negotiations withthe GSEs. The final agreement reached today involves a major provisionof legislation introduced last May by Schumer that would imposefirst-of-its-kind regulations on mortgage brokers.

"This settlement represents one of the first major blows against thetypes of predatory lending that were so prevalent in the mortgagebusiness of the last few years. Appraisal fraud has left millions ofAmericans unable to afford their homes and has created a drag on theAmerican economy. This agreement will reduce the conflicts of interestand economic incentives that made appraisal abuse and fraud so easy andattractive to lenders," Senator Schumer said.
"Accurate, independent appraisals are very important to ensuring thesafety and soundness of Fannie Mae and Freddie Mac and the mortgagemarket," said OFHEO Director James Lockhart. “OFHEO is committed toworking closely with fellow regulators, the Attorney General, FannieMae, Freddie Mac, appraisers, lenders and other market participants toassure that the roll-out of the new code builds upon best practices,recognizes constructive comments to identify further refinements, andavoids unintended consequences."

“We are pleased to work with regulators to do our part to ensuresound, accurate, independent and reliable appraisals,” Fannie MaeGeneral Counsel Beth Wilkinson said. “As the nation’s leadingpurchaser of mortgage loans in the secondary market, Fannie Mae sharesthe interests of consumers in the integrity of the home valuationprocess, which is an important part of a well functioning market.”

"Accurate appraisals are fundamental to Freddie Mac's effective creditrisk management - as evidenced by our leadership in quality controlprograms and assistance with criminal prosecutions of mortgage fraud.The Code of Conduct announced today enhances the independence andaccuracy of the appraisal process. And it builds on our company'slong-standing efforts to fight mortgage fraud by providing strong newprotections for homebuyers, mortgage investors and the housing market.In addition, we look forward to working with the New York AttorneyGeneral, OFHEO, Fannie Mae and other mortgage market participants inlaunching the Independent Valuation Protection Institute. By fundingthe Institute, we are advancing the development and adoption of bestpractices in the appraisal process, " said Freddie Mac Executive VicePresident andGeneral Counsel Robert Bostrom.

For more than a year, the Attorney General’s office has conducted anindustry-wide investigation into mortgage fraud. On November 7, 2007,Cuomo announced he had issued Martin Act subpoenas to Fannie Mae andFreddie Mac seeking information on the mortgage loans the companiespurchased from banks, including Washington Mutual, the nation’slargest savings and loan. The subpoenas also sought information on thedue diligence practices of Fannie Mae and Freddie Mac, and theirvaluations of appraisals.

The subpoenas came on the heels of the filing of a lawsuit by theAttorney General against First American and its subsidiary eAppraiseIt.The lawsuit, announced on November 1, 2007, detailed a scheme innumerous e-mails showing First American and eAppraiseIT caved topressure from Washington Mutual to use appraisers who provided inflatedappraisals on homes. E-mails also show that executives at First Americanand eAppraiseIT knew their behavior was illegal, but intentionally brokethe law to secure future business with Washington Mutual. Between April2006 and October 2007, eAppraiseIT provided over 250,000 appraisals forWashington Mutual. The lawsuit is still pending, and the industry-wideinvestigation into mortgage fraud continues.

New California Appraisal Law is Good First Step to Protect Appraisers and Homeowners

RISMEDIA, Oct. 11, 2007-Last Friday, California Gov. Arnold Schwarzenegger signed into law, SB 223. This bill is an attempt to reform the system that puts pressure on appraisers to hit a predetermined value for a property, set by the mortgage brokers or homeowners to make a sale go through.

The American Society of Appraisers (ASA) believes that lender pressure is an ongoing problem for appraisers and is committed to supporting legislation to reform fraudulent practices in the mortgage lending industry.

The new law makes it a crime in California for any interested party in a real estate deal to pressure an appraiser to appraise a property for a predetermined amount.

“The new law in California is a good first step.” said Abel Morales, an Accredited Senior Appraiser of the American Society of Appraisers. “It recognizes that appraisers are often pressured from a variety interested parties in a real estate deal and they need to have some form of protection from that.” Morales continues “The system is so flawed that many appraisers risk being blacklisted, not paid for their work, or not being hired again if their appraisals are lower than the desired number.”

The reason it so important to have an unbiased appraisal is because the appraiser is the only objective third party involved in a real estate transaction. The appraiser can perform an important role in protecting the home buyer and financial institution by giving an accurate appraisal of a property’s value without pressure from the parties involved.

“Home buyers need to protect themselves by checking the credentials of everyone involved in the transaction and requesting that their assigned appraiser be state licensed and accredited by a national professional organization,” said Michael H. Evans, a Fellow of the American Society of Appraisers who practices in Chico, Calif. “Appraisers with advanced accreditations have more to lose if they succumb to pressure than appraisers who are new to the field or who only maintain the minimum certification required by law. They also have more experience dealing with this type of pressure and are not as affected by it.”

ASA reminds consumers to hire a qualified and professionally accredited appraiser. For information about real estate appraisals, or to find an accredited appraiser near you, log on to www.appraisers.org or call 1-800-ASA-VALU.

Foreclosure activity increased 9 percent nationally in January

Foreclosure activity increased 9 percent nationally in January
Based on RealtyTrac U.S. foreclosure-market report

Staff Report
Foreclosure activity up 57 percent from Jan, 2007Bank repossessions (REOs) up 90 percent year over year

IRVINE, Calif. – Feb. 26. RealtyTrac® (www.realtytrac.com), a leading online marketplace for foreclosure properties, today released its January 2008 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, auction sales notices and bank repossessions — were reported on 233,001 properties during the month, an increase of 8 percent from the previous month and an increase of nearly 57 percent from January 2007.

“January’s foreclosure numbers demonstrate that foreclosure activity is continuing on its upward trend, substantially increasing from a year ago in many states,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, the 8 percent monthly increase in January is not as precipitous as the 19 percent spike we saw in January of 2007, and several key states actually experienced decreasing foreclosure activity from the previous month. It could be that some of the efforts on the part of lenders and the government — both at the state and federal level — are beginning to take effect. The big question is whether those efforts are truly helping homeowners avoid foreclosure in the long term or if they are just temporarily forestalling the inevitable for many beleaguered borrowers.”

Nevada, California, Florida post top state foreclosure rates
Despite a month-over-month drop in foreclosure activity, Nevada continued to document the highest foreclosure rate among the 50 states. Foreclosure filings were reported on a total of 6,087 Nevada properties during the month, a 45 percent decrease from the previous month but still a 95 percent increase from January 2007.California’s January foreclosure rate ranked second highest among the states, and Florida’s January foreclosure rate ranked third highest. Other states with foreclosure rates ranking among the top 10 were Arizona, Colorado, Massachusetts, Georgia, Connecticut, Ohio and Michigan.

California, Florida, Texas report highest foreclosure totals
Foreclosure filings were reported on a total of 57,158 properties in California in January, the most of any state. The state’s foreclosure activity was up 7 percent from the previous month and up 120 percent from January 2007.Despite a 3 percent month-over-month decrease in foreclosure activity, Florida’s total of 30,178 properties with at least one foreclosure filing was the nation’s second highest state total. The state’s foreclosure activity was up nearly 158 percent from January 2007.The nation’s third highest January total was in Texas, where foreclosure filings were reported on 14,698 properties — a nearly 20 percent increase from the previous month, but a slight decrease from January 2007. The state’s monthly foreclosure rate was below the national average and ranked No. 13 among the states.Ohio, Michigan and Georgia all documented totals of more than 10,000 properties with foreclosure filings reported in January.

Other states in the top 10 in terms of total properties with foreclosure filings reported were Arizona, Massachusetts, Illinois and Colorado.

California and Florida cities dominate top metro foreclosure rates
California and Florida metro areas accounted for eight of the top 10 metro foreclosure rates in January. The Cape Coral-Fort Myers, Fla., metro area documented the highest January foreclosure rate among the 229 metro areas tracked in the report. The other Florida metro area in the top 10 was Port St. Lucie-Fort Pierce, which ranked No. 10. The Stockton, Calif., metro area documented the second highest metro foreclosure rate. Other California metro areas in the top 10 were Riverside-San Bernardino at No. 3, Modesto at No. 4, Merced at No. 5, Vallejo-Fairfield at No. 7 and Bakersfield at No. 9.Other cities in the top 10 were Las Vegas at No. 6 and Greeley, Colo., at No. 8.

Report Methodology
The RealtyTrac Monthly U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the month — broken out by type of filing at the state and national level. Data is also available at the individual county level. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during the month — which is extremely rare — only the most recent filing is counted in the report.

America's Rapidly Rising Foreclosure Areas

America's Rapidly Rising Foreclosure Areas
Matt Woolsey (Forbes.com)

Though delinquencies continue to mount in Detroit, Stockton, Calif., and Las Vegas, markets where the number of foreclosures are relatively low, but rapidly rising, are also causing concern.
Take the Washington, D.C., metro, the Baltimore metro and many spots that fall between the two. While the sheer number of foreclosure filings in Bethesda, Md., (a metro that includes Frederick and Gaithersburg) are about a quarter of those in Detroit, they're up a whopping 1,288% in 2007, according to a RealtyTrac's year-end report, released today. In addition, they're up 574.9% in Washington, D.C., which includes the Maryland and Virginia suburbs, and up 544% in the Baltimore metro.

While Project Lifeline, the Bush administration's plan to give delinquent borrowers 30 days to renegotiate the terms of their loans, should help, U.S. Treasury Secretary Paulson, in announcing the initiative yesterday, said that "the worst is just beginning," as "the loans resetting over the next couple years--that vintage was done under the most lax underwriting standards."

Behind The Numbers RealtyTrac's report measures foreclosure activity, or homes in three phases of foreclosure: properties in default, those with a notice of trustee or foreclosure sale, and homes known as REOs (real estate owned), which have been foreclosed and repurchased by the bank.

These distinctions are especially important following Paulson's announcement Tuesday that the government's Project Lifeline would temporarily halt foreclosures and provide refinancing and rewriting assistance for homeowners in conjunction with JPMorgan Chase (nyse: JPM - news - people ), Wells Fargo (nyse: WFC - news - people ), Countrywide Financial (nyse: CFC - news - people ), Washington Mutual (nyse: WM - news - people ), Bank of America (nyse: BAC - news - people ) and Citigroup (nyse: C - news - people ), who together hold about 50% of outstanding mortgages.

For example, a homeowner faced with a notice of default--or the subsequent "lis pendens," or suit pending--can still avoid losing his home by restructuring payments or simply catching up on overdue ones. For those with no equity as the result of a zero-down payment or piggy-back loans, it's going to be harder, since they have nothing invested in the home and may find it difficult to work with lenders.

It's important to note that these figures are the percentage change in foreclosures. In absolute terms, foreclosures in Baltimore only represent only 0.7% of the total households, while those in Detroit represent 4.9%.

What's more, foreclosures are not an invention of the last three years. Any jump in foreclosure rates is troubling, though in any healthy market there will be delinquencies.
"I always thought that an acceptable range was 1% to 3%," says Jonathan Miller, research director at Radar Logic, a New York-based real estate firm. Meaning that only a handful of markets on this list are significantly outside of what he calls the normal foreclosure range. "It's definitely a real issue in certain markets, but I think that it's being overhyped overall.

In Depth: America's Rapidly Rising Foreclosure Spots

In places that are beginning to see meteoric rises in foreclosure rates, such as the Washington, D.C., metro, a large share stem from the overbuilt ex-urbs, or commuter towns, where price drops have put people's mortgages into the red. When prices spike and then fall, the first areas affected are the "drive to qualify" exurbs.

"There's been a ton of development, and a lot of people just flat out overpaid in the ex-urbs," says Cullen Watson, a real estate broker and settlement attorney in Washington, D.C. "Those properties have become less valuable, and a lot of people found themselves upside down thanks to 95% or 100% financing."

Compounding the problem, says Watson, are banks asking market rates, or the full amount owed on a mortgage note, at foreclosure auctions, hardly a recipe for a quick sale.
"It's hard to say which bank ... it's all of them," he says. "It's gotten to the point now where I've stopped taking clients to auctions."

Among those cities in deep foreclosure trouble are Stockton, where the 2007 year-end foreclosure rate was up 271.3% over the year before. In Bakersfield, Calif., foreclosures jumped 244.8%. As a matter of perspective, foreclosures in Detroit grew by 68% last year.

Rate Rank Metro Area Foreclosure Filings Properties with Filings %Households % Change from 2006

1 BETHESDA/FREDERICK/GAITHERSBURG, MD
2 ALBANY/SCHENECTADY/TROY, NY
3 WASHINGTON/ARLINGTON/ALEXANDRIA, DC-VA-MD
4 BALTIMORE/TOWSON, MD
5 PROVIDENCE/NEW BEDFORD, RI
6 NEWHAVEN/MILFORD, CT
7 SACRAMENTO, CA
8 STOCKTON, CA
9 NORFOLK/VIRGINIA BEACH/NEWPORT NEWS, VA
10 BRIDGEPORT/STAMFORD/NORWALK, CT
11 BAKERSFIELD, CA
12 SARASOTA/BRADENTON/VENICE, FL
13 HARTFORD, CT
14 NEW ORLEANS, LA
15 CAMBRIDGE/NEWTON/FRAMINGHAM, MA
16 BOSTON/QUINCY, MA
17 VENTURA, CA
18 OAKLAND, CA
19 ESSEX, MA
20 RIVERSIDE/SAN BERNARDINO, CA

Plan targets blight from foreclosures

Plan targets blight from foreclosures
BY JAMES GELUSO (Bakersfield Californian, Feb. 19th)

Bakersfield code enforcers would work with local real estate agents to track foreclosed homes -- in an effort to limit blight -- under a plan approved Tuesday by a City Council committee.
Under the plan, the Bakersfield Association of Realtors would share its data on what homes are in foreclosure. That would help the city watch the properties and track down owners faster, said Phil Burns, city building director.

The plan will likely go to the full council for ratification in March.
Currently, the city uses Kern County's ownership listings, but when someone is foreclosed on, the listings can lag a few months, Burns said. Cleanup notices often go to owners who have been evicted instead of the lenders who have taken ownership.

And when the city tries to get a lender to clean up, it's difficult to penetrate the company's bureaucracy. The local association would help the city identify the local agent handling the property, who would be able to get the authorization to clean up the property faster than the city can through its legal process, Burns said.

The city discarded an earlier idea to create a registry of foreclosed properties. Burns said he and agents decided not to add more registration requirements to the foreclosure process.

Fed Cut: What It Means for Your Mortgage

On days like this, I think it’s important to go back to the ol’ mortgage primer and figure out exactly what all this news means to you, to your mortgage, to your home equity line and to your home’s financial future. I’ve said it before, and I’ll say it again: the 30-year fixed is not tied to short-term treasuries.

Fixed mortgage rates are tied to long-term bond yields that move based on the outlook for the economy and inflation. And guess what? The long-term outlook for the economy isn’t exactly rosy right now.

Today’s rate cut does affect short-term adjustable rate mortgages, but not really as much as you might think. Why? Because this rate cut was already priced into the market, maybe not three quarter's point, but definitely a half-point. So if you are facing a reset on your ARM, you’re in much better shape today than you were just six months ago.

For example, if your rate adjusts Feb. 1st, and your ARM is pegged to the 1-year treasury, than your reset is going to be to 5.25 percent as opposed to the 7.5 percent that it would have been in August. That’s going to make the payment much more manageable.

So does this cut stem the foreclosure crisis? Maybe a bit on the margins, but not really, and here’s why: the bulk of the folks facing foreclosure because they can't make their monthly payments have no equity in their homes and no money to put down on a refinance.

While rates might be lower, this is a market where lenders and investors are much more aware of risk and will gravitate toward borrowers that represent less risk. So many folks will still find themselves in trouble. For people who are having trouble paying the initial rate on the loan, forget it. No help there.

As for those looking to buy a home, that is, get a new mortgage, while ARM rates may be lower, the mortgage landscape is still a far far different tundra than it was just a year ago. You can’t do a stated income loan anymore, and you can’t do 100 percent financing. Tighter standards don’t change with a rate cut.

And I want to add my two cents here about a home equity line of credit. Yes, the rates are lower now, but I really don’t think that means we should all start using our homes as ATM’s again, which is what got us all in trouble in the first place. This is a time to pay off debt, not to gather more. The housing market is still in trouble.

The statement from the Federal Reserve this morning: “incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.” We all know the price correction in housing is still underway with home prices across the nation (yes, I know, some markets worse than others) expected to fall further, so this is no time to put your home in more hoc. Just my two cents, which I’m putting in the bank as we speak.

by Diana Olick
Tuesday, January 22, 2008
http://finance.yahoo.com/loans/article/104264/Fed-Cut-What-It-Means-for-Your-Mortgage

California November 2007 Home Sales

A total of 25,578 new and resale houses and condos were sold statewide last month. That's down 0.98 percent from 25,832 for October, and down 38.8 percent from 41,809 in November 2006. Last month's sales made for the slowest November in DataQuick's records, which go back to 1988. On a year-over-year basis, sales have declined the last 26 months.

The median price paid for a home last month was $414,000, down 2.4 percent from $424,000 the prior month, and down 11.9 percent from $470,000 for November a year ago. The median peaked last March/April/May at $484,000.

Price declines are greatest in inland areas such as the Central Valley and Riverside County, which absorbed spillover activity during the housing boom.
Prices in some core metro areas are off by a few percent.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers cover all sales, new and resale, houses and condos.

Indicators of market distress continue to move in different directions.
Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages have dropped sharply. Down payment sizes and flipping rates are stable, non-owner occupied buying activity had edged higher, DataQuick reported.

Data Provided By: http://www.dqnews.com