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<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>Just out this Morning. The “principal reduction”
program I mentioned over the last year has finally dawned on them. I am NOT in
favor of this nor should you be.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>THIS program will be massive and another give away of your
money.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>Write your representative now. Here it the article><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
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<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Jan. 27
(Bloomberg) -- The Obama administration’s $300 billion Hope for
Homeowners program may be retooled to help the growing number of Americans
who owe more than their properties are worth as current <a
href="http://www.bloomberg.com/apps/quote?ticker=FORLSUBP%3AIND">anti-foreclosure</a>
efforts fail to account for these “underwater” borrowers. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>The
changes would be at least the third lease on life for the program, which
began in October 2008 during the Bush administration and has so far helped
just 96 of the 400,000 homeowners <a
href="http://www.bloomberg.com/apps/quote?ticker=FORLTOSD%3AIND">originally
targeted</a>. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>The
U.S. Federal Housing Administration is considering ways to make the program
more effective, Commissioner <a
href="http://search.bloomberg.com/search?q=David+Stevens&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">David
Stevens</a> said in an interview. While he wasn’t specific about any
changes, he said Hope for Homeowners could be expanded to more directly help
borrowers with <a
href="http://www.bloomberg.com/apps/quote?ticker=ETSLMP%3AIND">negative
equity</a>. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“The
Hope for Homeowners program is unique in that it involves equity <span
class=SpellE>writedowns</span>, principal balance reductions to help the
underwater borrower,” Stevens said. “We’re going to look at
that program very closely to make sure it can be as effective as possible,
because that’s another segment of the population that needs to be
addressed.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>With <a
href="http://www.bloomberg.com/apps/quote?ticker=SPCS20SA%3AIND">home prices</a>
down as much as 30 percent from their peak in April 2006, more borrowers are
walking away from their homes even if they can afford the payments,
administration officials and analysts have said. The Treasury Department is
looking for a solution for the more than 10 million <a
href="http://www.bloomberg.com/apps/quote?ticker=DLQTDLQT%3AIND">underwater
homeowners</a> that analysts estimate may willingly let their mortgages slip
into default, which <span class=GramE>would push home prices</span> even
lower and hamper the economic recovery. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Walking
Away <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“When
negative equity gets very, very high, when people are very underwater, that
starts to have a much larger impact on people leaving their homes,” <a
href="http://search.bloomberg.com/search?q=Michael+Barr&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Michael
Barr</a>, the assistant Treasury Department secretary for financial
institutions, said in a Jan. 15 conference call with reporters. “And
the question then is which of those people is it fair and appropriate to
help.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Hope
for Homeowners was intended to help borrowers with loans of less than
$550,440, according to the original terms of the program listed on
FHA’s Web site. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>The
decline in home prices has left 15 million borrowers owing more than their
homes were worth in the third quarter, according to <a
href="http://www.loanvaluegroup.com/" target="_blank">Loan Value Group</a>,
an advisory firm in <st1:place w:st="on"><st1:City w:st="on">Rumson</st1:City>,
<st1:State w:st="on">New Jersey</st1:State></st1:place>. It says 10 million
of those loans are at risk of so-called strategic default, citing data on
mortgages that have loan-to-value ratios higher than 115 percent and where
the borrower can afford the payment. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“Strategic
default is a rational decision,” <a
href="http://search.bloomberg.com/search?q=Frank+Pallotta&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Frank
<span class=SpellE>Pallotta</span></a>, a managing partner of Loan Value
Group, said in an interview. “Are you going to pay a $500,000 mortgage
when the house is worth $250,000?” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“Walking
away is money in your own pocket,” he said. “If you’re not
getting money from the government, it’s your own self- stimulus for
borrowers.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>HAMP a
‘Failure’ <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>President
Barack Obama’s primary anti-foreclosure plan, the Home Affordable
Modification Program, or HAMP, has helped fewer than 10,000 underwater
borrowers cut their outstanding principal. HAMP is separate from FHA’s
Hope for Homeowners program, <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>HAMP
has been a “failure” so far at converting temporary repayment
plans into permanent loan reductions, said <a
href="http://search.bloomberg.com/search?q=Bose+George&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Bose
George</a>, an equity analyst at Keefe <span class=SpellE>Bruyette</span>
& Woods in <st1:State w:st="on"><st1:place w:st="on">New York</st1:place></st1:State>.
Of the 787,231 trial modification plans, 66,465 have been approved for
permanent repayment through December, according to Treasury data. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>HAMP is
designed to lower monthly mortgage payments by reducing interest, lengthening
repayment terms and deferring principal repayments for up to five years. Less
than 10 percent of the trial modifications through December actually cut
outstanding principle as opposed to deferring interest charges on it,
according to Treasury officials. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“It
looks like that’s not enough for many of these borrowers, especially the
ones with significant negative equity,” George said in an interview. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>More
Ahead <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>In
helping people with negative equity, Barr said “you have to be very
careful not to design a program that would change people’s fundamental
behavior across the country in a destabilizing way or would be widely
perceived as unfair to people who are continuing to pay.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>There
will have to be more efforts to reduce mortgage principals, as 42 percent of
borrowers may be underwater by the end of the year, said <a
href="http://search.bloomberg.com/search?q=Karen+Weaver&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Karen
Weaver</a>, the global head of securitization research at Deutsche Bank
Securities Inc. in <st1:State w:st="on"><st1:place w:st="on">New York</st1:place></st1:State>.
<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“At
the end of the day we’ll see more of it, because the government’s
attempt -- through modifications and the schemes and paradigms that have been
in place -- I think anyone has to conclude has been a failure,” Weaver
said in a Bloomberg Television interview. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>“I
don’t think we’ve seen the last of government policy trying to
address this.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>To
contact the reporter on this story: <a
href="http://search.bloomberg.com/search?q=Dawn+Kopecki&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Dawn
Kopecki</a> in Washington at <a href="mailto:dkopecki@bloomberg.net">dkopecki@bloomberg.net</a>;
<a
href="http://search.bloomberg.com/search?q=Theo+Francis&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Theo
Francis</a> in Washington at <a href="mailto:tfrancis14@bloomberg.net">tfrancis14@bloomberg.net</a>.
<o:p></o:p></span></font></p>
<p class=MsoNormal><i><font size=3 face="Times New Roman"><span
style='font-size:12.0pt;font-style:italic'>Last Updated: January 27, 2010 00:00
EST</span></font></i> <o:p></o:p></p>
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