A Visual Guide to the Financial Crisis





Improving housing quality can dramatically affect the health of residents

WASHINGTON—Several federal agencies today unveiled Advancing Healthy Housing – A Strategy for Action. White House Council on Environmental Quality (CEQ) Chair Nancy Sutley, Environmental Protection Agency (EPA) Administrator Lisa P. Jackson, Secretary of Housing and Urban Development (HUD) Shaun Donovan, Surgeon General Regina Benjamin, M.D., and Deputy Secretary of Energy Daniel Poneman discussed the new plan during an event at the National Building Museum this morning.

The initiative represents a bold new vision for addressing the nation’s health and economic burdens caused by preventable hazards associated with the home.  The Strategy for Action encourages federal agencies to take preemptive actions that will help reduce the number of American homes with health and safety hazards.

People in the United States spend about 70% of their time in a home.  Currently, millions of U.S. homes have moderate to severe physical housing problems, including dilapidated structure; roofing problems; heating, plumbing, and electrical deficiencies; water leaks and intrusion; pests; damaged paint; and high radon gas levels. These conditions are associated with a wide range of health issues, including unintentional injuries, respiratory illnesses like asthma and radon-induced lung cancer, lead poisoning, result in lost school days for children, as well as lost productivity in the labor force.  The health and economic burdens from preventable hazards associated with the home are considerable, and cost billions of dollars.

The Strategy for Action unifies, for the first time, federal action to advance healthy housing, demonstrating the connection between housing conditions and residents’ health. It also promotes strategies and methods intended to reduce in-home health hazards in a cost-effective manner.

“It is clear that unhealthy and unsafe housing has an impact on the health of millions of people in the United States, which is why we must do everything we can to ensure that individuals and families have a healthy place to call home,” said HUD Secretary Shaun Donovan. “Today’s announcement will help the federal government unify action to controlling and preventing major housing-related exposures and hazards.”

“Thanks to unprecedented collaboration across the federal family and among our many partners, we now have a specific plan for action to address radon and other preventable hazards found in homes across the country. This is important progress, especially when you consider that people spend an estimated 70 percent of their time inside a home,” said EPA Administrator Lisa P. Jackson. “At EPA we’re committed to ensuring Americans in all communities have healthy places to live, work and play, and the strategy we announced today is a critical step toward reaching that goal.”

“Healthy homes and communities are essential to our quality of life, our productivity, and our economic vitality,” said Nancy Sutley, Chair of the Council on Environmental Quality.  “Through this plan, Federal agencies have committed to working together to make sure all Americans can count on safe, healthy places to live, grow, and thrive.”

Dr. Mary Jean Brown, Chief of CDC’s Healthy Homes and Lead Poisoning Prevention Branch added, “Healthy homes lead to healthier lives. People can take simple steps to protect themselves from health hazards in the home.”

“Energy efficiency and healthy homes are inextricably linked,” explained U.S. Deputy Secretary of Energy Daniel Poneman.  “We cannot, in good conscience, pursue one in the absence of the other.  DOE is committed to ensuring that our efforts towards creating an efficient national housing stock also strive to maximize the health and safety of the families we serve.”

The overall vision for the Strategy is to reduce the number of American homes with residential health and safety hazards, achieved through five goals:

1)      Establish healthy homes recommendations
2)      Encourage adoption of healthy homes recommendations
3)      Create and support training and workforce development to address health hazards in housing
4)      Educate the public about healthy homes
5)      Support research that informs and advances healthy housing in a cost-effective manner

For more on the Strategy for Action, visit the interagency Healthy Homes website, http://healthyhomes.hud.gov.


WASHINGTON – On January 29, 2013, President Obama signed into law a bill providing “supplemental appropriations to respond to and recover from the severe damage caused by Hurricane Sandy.” Today, Shaun Donovan, Chair of the Hurricane Sandy Rebuilding Task Force, issued the following statement:

“This funding represents our commitment to doing all we can to support the families, businesses, cities and towns in this region as they rebuild their communities and make them stronger, more economically competitive and better able to withstand the next storm. ”As chair of the Hurricane Sandy Rebuilding Task Force – and a native of the region – I am grateful to Congress for supporting the President’s request, which is so vital to this rebuilding effort. I am especially appreciative to the congressional delegations from New York and New Jersey and Governor Christie, Governor Cuomo, Mayor Bloomberg and all the local elected officials for their continued leadership. ”The Hurricane Sandy Rebuilding Task Force will continue to work closely with our federal as well as state and local partners to support impacted communities as they make important decisions about rebuilding and recovery. Our focus will continue to be on ensuring that these efforts, both at the federal and the local level, are coordinated, maximizing the impact of available resources to support recovery while also mitigating against future disasters.”


HUD Grants

Funding to Cincinnati, San Antonio, Seattle & Tampa spurs nearly
$500 million in economic, community investment

WASHINGTON – U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced today that four communities will receive a combined $108.9 million to redevelop distressed housing and bring comprehensive neighborhood revitalization to blighted areas.

HUD’s Choice Neighborhoods Initiative (Choice) will help transform distressed communities in Cincinnati, Ohio; San Antonio, Tex.; Seattle, Wash.; and Tampa, Fla.  This landmark initiative promotes a comprehensive approach to transforming areas of concentrated poverty into viable and sustainable mixed-income neighborhoods. The $108.9 million federal investment of Choice Neighborhoods has generated $393 million in private investments and commitments from local jurisdictions and partners, a more than 300 percent leveraging.

“HUD’s Choice Neighborhoods Initiative supports local visions for how to transform high-poverty, distressed communities into neighborhoods of opportunity,” said Donovan. “We’re emphasizing a comprehensive approach to revitalizing neighborhoods by considering the totality of a community with regard to health, safety, education, jobs and quality housing in mixed-income neighborhoods.”

Choice Neighborhoods Initiative Implementation grants announced today:

HUD Grants

The communities announced today were selected from nine finalists HUD announced in August. Each of the finalists completed a comprehensive local planning process and ready to move forward with their plan to revitalize the housing and redevelop their target neighborhoods. Building on the successes of HUD’s HOPE VI Program, Choice links housing improvements with a wide variety of public services and neighborhood improvements to create neighborhoods of opportunity.

The Choice Neighborhoods Initiative is one of the signature programs of the White House Neighborhood Revitalization Initiative, which supports innovative and inclusive strategies that bring public and private partners together to help break the cycle of intergenerational poverty.  It encourages collaboration between HUD and the Departments of Education, Justice, Treasury and Health and Human Services to support local solutions for sustainable, mixed-income neighborhoods with the affordable housing, safe streets and good schools all families need.

Congress approved the Choice Neighborhoods Initiative with the passage of HUD’s Fiscal Year 2010 budget.  Funding is provided through two separate programs – Implementation Grants and Planning Grants.  In 2011, HUD awarded its first Choice Implementation grants for Chicago, Boston, New Orleans, San Francisco and Seattle, a combined $122.27 million investment to bring comprehensive neighborhood revitalization to blighted areas in these cities.  With this announcement, HUD has awarded a total of $231,250,000 in Choice Implementation Grants in eight cities.

Max Keiser and Steve Keen on the Debt Crisis

In this edition of the show Max interviews Steve Keen from Debtdeflation.com. It has been five years since global debt crisis began. The debt is now so great that it can no longer be hidden. Max discusses the issue with Steve to see what triggered the current debt crisis, what the response to it was and where we stand now. Steve also comments on the latest global debt crisis and banker’s role in the current situation.Steve Keen is a professor in economics and finance at the University of Western Sydney and the author of Debunking Economics.

Avoid These Top 5 Short Sale Buying Mistakes

With so many great foreclosure and short sale deals on the market, you may find it hard to resist jumping in and taking advantage. But few are aware of the expensive problems that can accompany short sales. Short sale properties often have hidden issues like structural damage, mold, and plumbing issues. Don’t let this completely discourage you; there are some hidden gems out there. Just keep the following tips in mind and don’t fall for these five mistakes short sale buyers commonly make.

5 Tips for Buying a Short Sale

Don’t Ignore The Problems

Many previous short sale owners faced financial difficulties and therefore were not able to care for the property properly. Many of these homes suffer from more than just neglect. They are leaky, moldy, have termites, have been stripped by thieves, and are dirty. Beware though, that in some areas banks are not required to disclose any of these issues to potential buyers. There have been cases when the house was constructed of defective and recalled materials and the bank did not alert the potential buyers. Many older short sale homes are in worse shape. It is likely that the previous owners had experienced financial hardship for some time and were unable to make cosmetic repairs.

Don’t Skip the Property Inspection

Make sure you are present for the inspection. The inspector will help educate you on the property. Be aggressive in asking questions because the inspector is on your side. Get estimates on expected repairs and when a problem is noted, do your research on it. Renovation costs are always underestimated. In some areas, buyers are going as far as doing property inspections before making an offer, known as a preoffer property inspection. Also, call in special inspectors for more costly issues such as damage to the house’s structural construction, mold, and termites. If the house is particularly old or damaged, consult a structural engineer.

Don’t Ignore Important Insurance and Legal Information

Because most short sales won’t come with a disclosure statement, you should do additional research independently. Try to find out whether any renovations and housing additions have been made legally, have permits and are approved. You don’t want to get fined and cited for construction you didn’t do. Checking in with the neighborhood planning department can help you ensure that there aren’t any neighbor plans to build a large structure next to your house or tear one down. This information won’t be included during a short sale.

Don’t Leave Yourself In a Time Crunch

Short sales closings take longer than traditional home sales. The seller’s lending bank will have to approve the terms and price at which the property is sold. In this economic environment, banks have a lot of short sales to review; so things will take some time.

Don’t Get Emotionally Attached to a Bad Investment

Not every short sale is a great deal. Think as an investor would and don’t get emotionally attached. Think about how much someone would pay to rent the property. Would that cover the mortgage? Also consider how much money you’ll have to put into the house to live in it. Bring along a friend or relative and ask what they think about the property. If it’s not a good investment, walk away.

This is a really great time to get a deal on a short sale property. Keep in mind the above when you are shopping. This way you’ll know for sure you’re getting a great deal and making a good investment.

Chicago Neighborhood are Working to Survive

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Although this video is from 2009, the problems are still the same in neighborhoods across the country.  This is a neighborhood in Chicago, IL, but you can see the same problems and struggles in similar neighborhoods in the Midwest.  Some areas of the country are slowly recovering, but many were so devastated by the foreclosures and the fact that houses are left empty, that it will be a long time before they are close to healthy again.

House Repossession Hotspots

Surprising as it may seem, home-owners in the South are far more likely to lose their homes than their Northern counterparts. National charitable organisation Shelter have analysed research, presumably drawn from reliable testing, and claim that the boroughs of Dagenham and Barking are at higher risk of suffering from house repossessions.

Interestingly, most of the rest of the top ten so-called hotspots are made of the more usual candidates, those being locations in the North, in particular areas of the North West. Still, three of the ten are given over to areas in and around London and that does but a different spin on things.

Generally those living in the South are viewed as being more affluent that those living in more Northern climes, and whilst many a politician and spin doctor would try to convince you otherwise, the North/South divide does exist. Southerners have always been thought of as better off, as being financially solvent, with access to a higher standard of living than residents anywhere else in the country.

However, Shelter’s current thinking sheds a slightly different perspective on the whole repossession debacle.

In a nutshell, what Shelter are trying to point out is this: no matter where you’re from, or where you live, your mortgage is still your single biggest outgoing. Unfortunately, despite lower interest rates and various attempts by the big lenders/ Bank of England to help out home owners, the cost of living continues to rise. This has a knock-on effect with regard to how far the average wage packet now has to stretch.

Once the tax man’s had his cut, he continues to dip in and out by way of stealth taxes, fuel duty, VAT and interest on loans. Then there are the utility companies, all upping their pricing bands despite warnings to the contrary. And let’s not get started on the rising cost of the weekly shop.

The beleaguered home-owner is left with an ever-dwindling pile of cash, and this then leaves him more open to repossession. Shelter’s advice? Don’t put off the need to discuss your mortgage if you’re starting to struggle. Our advice? What Shelter say.


September loan sale to include neighborhood stabilization pools in Chicago, Newark, Phoenix and Tampa as part of broader Obama Administration effort to address shadow inventory, target relief to hardest hit communities

WASHINGTON – Qualified entities interested in purchasing pools of severely distressed loans formerly insured by the Federal Housing Administration (FHA) can now submit applications for the Distressed Asset Stabilization Program, an expansion of an FHA disposition program that sells pools of defaulted mortgages headed for foreclosure and provides the opportunity for the purchaser and borrower to avoid a costly foreclosure. According to loan pool information released today, approximately 3,500 loans will be sold in four metropolitan areas that are among those hardest hit by the foreclosure crisis – Chicago, IL; Newark, NJ; Phoenix, AZ; and Tampa, FL – aligning with other neighborhood stabilization efforts to help those communities recover as quickly as possible. The program is part of the Obama Administration’s broader strategy to encourage public/private partnerships to stabilize neighborhoods and home values in critical markets. Details on the Distressed Asset Stabilization Program can be found at www.hud.gov/fhaloansales.

“The housing market has momentum not seen since before the crisis,” said HUD Secretary Shaun Donovan. “But some metro areas are still under pressure and some FHA borrowers remain seriously behind on their loans and stand to lose their homes in a matter of months. As one step towards avoiding unnecessary foreclosures and further stabilizing communities, we are increasing the number of loans beyond our original goals of 5,000 per quarter to approximately 9,000 this quarter. Providing the opportunity for borrowers to potentially stay in their home under a new sustainable mortgage or other meaningful help not only benefits that homeowner but reduces the costs to FHA and ultimately benefits the entire community.”

Under the program, loans are sold competitively at a market-determined price generally below the outstanding principal balance. FHA then processes an insurance claim, removes the FHA insurance and transfers the loan to the investor. Once the note is purchased, foreclosure is delayed for a minimum of six additional months, giving the new servicer time to work through alternatives with the borrower, possibly finding an affordable solution to allow the borrower to remain in their home. Because the loans are generally sold for less than what the borrower currently owes, the purchaser has the ability to reduce or modify the loan terms while still making a return on the initial investment. If no viable alternatives exist, the purchaser may be able to help the borrower sell the property through a short sale and avoid the costs of foreclosure.

“This program creates the opportunity for everyone – the homeowner, the new mortgage holder, FHA, and the community – to walk away a winner,” said Acting FHA Commissioner Carol Galante. “FHA not only avoids the costs associated with a long foreclosure process, but also the high costs of maintaining and selling vacant properties in already distressed markets.”

FHA began selling distressed single family loans through what is now the Distressed Asset Stabilization Program in 2010 and has successfully sold more than 2,100 single family loans to date. An FHA-approved mortgagee can file a claim for FHA insurance benefits and assign the loan to FHA if the borrower is at least six months delinquent on their mortgage; the servicer has exhausted all steps in the FHA loss mitigation process; the servicer has initiated foreclosure proceedings; and the borrower is not in bankruptcy. These assigned loans are then pooled by FHA for resale through the Distressed Asset Stabilization Program.

Neighborhood Stabilization Loan Sales

In addition to the standard note sales, the enhanced program features new neighborhood stabilization requirements to encourage investment in communities hit hardest by the foreclosure crisis. Approximately 40 percent of the 9,000 loans in the sale scheduled for September 2012 will be located in Chicago, IL; Newark, NJ; Phoenix, AZ; and Tampa, FL – four metropolitan areas where high numbers of seriously delinquent loans could expand an already large inventory of REO properties over the coming months. Designed to help stem the flow of distressed properties hitting these markets, these neighborhood stabilization requirements provide that no more than 50 percent of the loans within a purchased neighborhood stabilization pool may be sold as real-estate owned (REO) properties.

“These markets were chosen because of the high concentration of FHA loans in the pipeline for foreclosure and because each allows us to test this strategy under a variety of market conditions,” added Galante. “Further, in some of these communities, state and local leaders are already acquiring these loans and using tools like the Neighborhood Stabilization Program and the Hardest Hit Fund to offer workable solutions for homeowners and communities. And in each city, nonprofit and for-profit investors have shown great interest in using this program to help borrowers in their community find affordable solutions as quickly as possible. FHA is working with local leaders to create additional smaller pools to fit their targeted neighborhood strategies.”

All parties seeking to bid on the sale pools must first be qualified by HUD. Parties seeking to bid in the neighborhood stabilization pools are required to meet several additional criteria to ensure they will comply with the program’s goal that fewer homes end up as vacant REO properties in metro areas already struggling with high numbers of foreclosures. Eligible investors must have experience in asset management and property management, as well as a proven track record in helping borrowers seriously delinquent on their loans to re-perform or to achieve an affordable alternative to foreclosure. An emphasis will be placed on experience within the metro area in which the bidder is interested.

Bidder qualification materials and guidelines for the Distressed Asset Stabilization Program bidding process can be found at www.hud.gov/fhaloansales.

Problems in Foreclosure Outreach Program

The Government Accountability Office or GAO is of the view that current foreclosure outreach program which has been designed to help troubled property owners is not doing enough to reduce foreclosures in United States.

High rate of Foreclosure

Since the rate of foreclosure is still a major hurdle in the economic and housing recovery, a study was conducted by GAO to find ways of enhancing foreclosure mitigation effort. They came out with a report that suggested that government agencies that are a part of foreclosure mitigation program must make changes in their strategies to help existing borrowers.

Significant Negative Equity

The report released by GAO specifically addressed the United States Department of Agriculture, Federal Housing Administration and Government Sponsored Enterprises. Even though these agencies have modified more than 2 million loans, the number of loans that are in foreclosure are still very high which is weakening the American real estate market. An analysis of the mortgage data showed that about 2 to 3 million loans have characteristics that are associated with high probability of foreclosure like significant negative equity and serious delinquency. Significant negative equity means the ratio of loan-to-value of the property mortgaged is 125 percent or more.

These loans that have significant negative equity are concentrated in states like Florida and Nevada. Also, the recent signals like strong home equity and home prices does not mean that real estate market in US has recovered because the prices of some of the properties is still close to their post-bubble lows. Another worrying factor is that total household mortgage debt is $3.7 trillion more than the household’s equity. This means that household wealth is declining and the value of most properties are not rising.

Problems in Loan Modification

Also, thousands of borrowers who had requested assistance did not receive modification. The applications of about 2.75 million borrowers who had requested HAMP loan modification was denied which has decreased the volume of federal loan modifications. Even though efforts have been made to improve the reach of the refinance programs, low participation of the borrowers in these programs has raised questions on the need for the Treasury to offer financial support for these programs. GAO is of the view that funding given to underused programs must be re-evaluated.

Even though several agencies have stepped up their efforts to monitor the outreach of the services to struggling borrowers, most agencies are not conducting analysis to evaluate the benefits and effectiveness of the foreclosure mitigation programs. GAO is of the view that better analysis of the data collected is needed to improve the effectiveness of mortgage mitigation effort. These efforts will not only reduce cost but also improve the effectiveness of the outreach program.

Suggestions of GAO

The report has also suggested that principal taken by a few homeowners must be forgiven especially loans that have significant negative equity. However, this must be used as one time measure as some borrowers may misuse this benefit.

GAO has also come out with suggestions to help agencies and enterprises that are a part of the outreach program. The report has also called for detailed analysis of the borrower profile and loan data which can help them find effective solutions.