The Washington Report

In This Issue
Realtor Insider DC News and Events Report
Making Home Affordable Program Expanded to Permit Modification of Second Mortgages

Business Report
Senate Confirms Kathleen Sebelius as Secretary of Health and Human Services
FTC Announces Red Flags Rule Enforcement Delay

Conventional Residential Lending Report
House Financial Services Committee sends Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R. 1728) to the House Floor
FHFA Proposes Relaxing GSE Affordable Housing Goals

Making Home Affordable Program Expanded to Permit Modification of Second Mortgages

On April 28, 2009, the Treasury Department announced expansion of the Making Home Affordable Program to help reduce payments on second mortgages. The Obama Administration took this action because as many as 50% of all at-risk borrowers have second mortgages and without modifying them the borrowers remain at a higher risk of default. Under the Second Lien Program, if the servicer initiates a Home Affordable Modification on the first mortgage, participating servicers will automatically reduce payment on the second lien in accordance with complex, but uniform, program criteria. As an alternative, servicers may extinguish the second lien in exchange for receiving a lump sum payment.

Treasury Department Press Release on Modifying Second Mortgages under the Making Home Affordable Program
Second Lien Program Fact Sheet
Second Lien Program Case Examples

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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Senate Confirms Kathleen Sebelius as Secretary of Health and Human Services

On April 28, 2009, the Senate voted to confirm Kansas Gov. Kathleen Sebelius, as Secretary of the U.S. Department of Health and Human Services (HHS). Sebelius will lead the department responsible for the government's largest health programs. Secretary Sebelius, along with Nancy-Ann DeParle, director of President Obama's Office of Health Reform, will play a major role in the efforts to overhaul the nation's health care systems. Prior to serving as the governor of Kansas, the Secretary was the state's insurance commissioner for eight years. Sebelius was confirmed by the full Senate by a vote of 65-31.

NAR continues to advocate legislation to correct the inequities in the nation's health insurance delivery system and is working closely with members of Congress from both parties to make sure that the interests of the self-employed are represented in the expected health care reform debates in 2009 and 2010.

Marcia Salkin 202-383-1092, Ken Wingert 202-383-1196, Scott Rinn 202-383-7508

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FTC Announces Red Flags Rule Enforcement Delay

The Federal Trade Commission (FTC) announced this week that it would delay enforcement of the "Red Flags Rule" until August 1, 2009. The Red Flags Rule requires that "financial institutions" and "creditors" develop and implement written identity theft prevention programs. The Compliance date of May 1, 2009 has been delayed until August 1, 2009. The FTC also announced that it would soon release a template to help low-risk entitities comply with the Rule.

Mortgage brokers and mortgage lenders that provide credit, or arrange for credit to be provided, are required to establish policies and procedures to prevent identity theft. A real estate agent may be considered a "creditor" if s/he regularly arranges for credit to be extended, e.g. regularly pulls credit reports, suggests potential lenders, helps with the loan applications.

FTC website

Melanie Wyne 202-383-1234, Scott Rinn 202-383-7508, Ken Wingert 202-383-1196

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House Financial Services Committee sends Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R. 1728) to the House Floor

On April 29, 2009, H.R. 1728, the "Mortgage Reform and Anti-Predatory Lending Act" recieved bipartisan approval by the House Financial Services Committee (HFSC). HFSC Chairman, Barney Frank (MA), expects the bill to be voted on by the full house during the week of May 3rd, 2009. It is expected that H.R. 1728 will pass the House and be sent to the Senate Banking, Housing and Urban Affairs (SBHUA) committee for consideration.

The National Association of REALTORS� (NAR) is especially pleased with the bill as amendments to H.R. 1728 were adopted that protect real estate professionals, who do not recieve compensation from a loan originator for mortgage origination activities, and consumers, who finance the sale of their real property, from the definition of 'mortgage originator' as outlined in the original bill text.

As of Wednesday, April 29th, there was no companion legislation in the Senate; however, SBHUA Committee Chairman, Chris Dodd, has indicated that he supports mortgage reform and will bring it up in his committee.

Tony Hutchinson 202-383-1120, Jeff Lischer 202-383-1117

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FHFA Proposes Relaxing GSE Affordable Housing Goals

On May 1, 2009, the Federal Housing Finance Agency (FHFA) published a proposed rule to relax the 2009 affordable housing goals that apply to Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs). FHFA is the conservator and federal regulator of the GSEs and now has the responsibility to establish, monitor, and enforce the goals. Comments on the proposed rule are due by May 22, 2009.

FHFA considered current market conditions and determined that it is not feasible for the GSEs to meet the 2009 goals that HUD established in 2004. FHFA considered various factors, including tighter underwriting standards, higher standards established by private mortgage insurers, and the high rate of unemployment, in determining that fewer goals-qualifying loans will be made in 2009 than HUD anticipated. FHFA proposes to reduce the low- and moderate-income housing goal from 56% to 51%. In addition, the GSEs would be able to count loans that are modified under the Obama Administration's Making Home Affordable Program for purposes of the goals.

Proposed Rule Relaxing Affordable Housing Goals

Jeff Lischer 202-383-1102, Tony Hutchinson 202-383-1120

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Last Updated: 05/04/2009 Bira de Aquino