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October 6-8, 2008 

The 4th Annual 

Mortgage Lending Industry 

Strategic Markets 

and Diversity Conference 

Refocus on Consumer Protection & Affordable Housing 

Gaylord National Resort & Convention Center 

201 Waterfront Street, National Harbor, MD 20745

Fourth Annual Mortgage Lending Industry Strategic Markets and 

Diversity Conference 

MONDAY OCTOBER 6, 2008 

Tab1 Agenda 

Tab2 Sponsors 

OCTOBER 6-8, 2008 

TABLE OF CONTENTS 

Tab 3 Pre-Conference Workshop I 

HMDA Data Mining for CRA and Minority Origination Opportunities 

Tab 4 Pre-Conference Workshop II 

Successful Sales Tools for Loan Originators in Today’s Market 

TUESDAY OCTOBER 7, 2008 

Tab 5 Welcome Address 

Tab 6 General Session I: Why Diversity is Important to the Mortgage Lending Industry 

Tab 7 General Session II: Impact of Housing Legislation on Minority Homeownership 

Opportunities 

Tab 8 Diversity Luncheon 

Tab 9 Concurrent Session I: Market Psychology around Homeownership: 

Perceptions versus Realities 

Tab10 Concurrent Session II: Trends in Loss Mitigation

Fourth Annual Mortgage Lending Industry Strategic Markets and 


OCTOBER 6-8, 2008 

TABLE OF CONTENTS 

CONTINUED 

Tab 11 Concurrent Session III: Non-Profit’s Role in Early Intervention 

Foreclosure Prevention 

Tab 12 Concurrent Session IV: Responsible Sustainable Lending across the Credit 

Spectrum 

Tab 13 General Session III: Tactics and Strategies to Preserve Minority 

Homeownership 

Tab 14 Best in Industry Dinner 

WEDNESDAY OCTOBER 8, 2008 

Tab 15 General Session IV: Affordable Housing, CRA & Strategic Markets 

Tab 16 Town Hall Meeting: Consumer Protection

TAB 

AGENDA

Monday, October 6, 2008 

Fourth Annual Mortgage Lending Industry 

Strategic Markets and Diversity Conference 

AGENDA 

1:00 p.m. – 6:00 p.m. Registration 

3:00 p.m. – 5:00 p.m. Workshop I: HMDA Data Mining for CRA 

and Minority Origination Opportunities 

3:00 p.m. – 5:00 p.m. Workshop II: Successful Sales Tools for 

Loan Originators in Today’s Market 

6:00 p.m. – 7:00 p.m. Opening Reception 

Tuesday, October 7, 2008 

7:30 a.m. – 5:00 p.m. Registration 

7:30 a.m. – 8:30 a.m. Continental Breakfast 

7:30 a.m. – 6:00 p.m. Hospitality Room 

8:30 a.m. – 9:00 a.m. Welcome Remarks 

9:00 a.m. – 10:15 a.m. General Session I: Why Diversity is 

Important to the Mortgage Lending Industry 

10:15 a.m. – 10:30 a.m. Refreshment Break 

10:30 a.m. – 11:45 a.m. General Session II: Impact of Housing Legislation 

on Minority Homeownership Opportunities 

11:45 a.m. – 1:15 p.m. Diversity Luncheon 

1:15 p.m. – 2:30 p.m. Concurrent Sessions: 

• Market Psychology around Homeownership: 


• Trends in Loss Mitigation - Maximizing Home 

Retention Strategies 

2:30 p.m. – 2:45 p.m. Refreshment Break 

2:45 p.m. – 3:45 p.m. Concurrent Sessions: 

• Non-Profit’s Role in Early Intervention Foreclosure 

Prevention 

• Responsible Sustainable Lending across the Credit 

Spectrum 

3:45 p.m. – 4:00 p.m. Refreshment Break

Tuesday, October 7, 2008 cont. 



AGENDA 

4:00 p.m. – 5:00 p.m. General Session III: Tactics and Strategies to 

Preserve Minority Homeownership 

6:30 p.m. – 7:30 p.m. Strategic Markets & Diversity Reception 

7:30 p.m. – 9:30 p.m. Best in Industry Dinner 

Wednesday, October 8, 2008 

8:00 a.m. – 9:00 a.m. Continental Breakfast 

8:00 a.m. – 10:00 a.m. Registration 

8:00 a.m. – 10:00 a.m. Hospitality Room Open 

9:00 a.m. – 10:15 a.m. General Session IV: Affordable Housing, 

CRA & Strategic Markets 

10:15 a.m. – 10:30 a.m. Refreshment Break 

10:30 a.m. – 12:00 p.m. Town Hall Meeting: Consumer Protection

TAB SPONSORS

SPONSORS 

We wish to thank our sponsors for their generous support of the 4th Annual Mortgage Lending Industry Strategic Markets & 

Diversity Conference.. Be sure not to miss the chance to have your company’s name and logo prominently displayed during 

next year’s Mortgage Lending Industry Diversity Conference. For more information on sponsorship opportunities for the next 

conference, please call (202) 552-7408. 

O F F I C I A L C O N F E R E N C E S P O N S O R S 

G O L D S P O N S O R 

S I L V E R S P O N S O R S 

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(USED FOR BENCHMARKING AND FAIR LENDING ANALYSIS) 

THE RACESTIMATOR 

(USES SURNAME DATABASE AND MODELS TO CODE RACE IN 

RECORDS WHERE IT IS UNKNOWN) 

ComplianceTech 

Transforming data into compliance management information 

ComplianceTech studies the processes and relationships of people, information technology and 

regulatory compliance associated with housing and credit programs. Our strength has been identifying 

regulatory compliance issues in lending and devising high-tech and innovative solutions to study 

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RESEARCH STUDIES 

STATISTICAL ANALYSIS & MODEL 

DEVELOPMENT 

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sponsor of the Mortgage Lending Industry 

STRATEGIC EMERGING MARKETS AND DIVERSITY CONFERENCE 

2120 Washington Blvd. • Arlington, VA 22204 • www.compliancetech.com 

1325 G Street, NW, Suite 500 • Washington, DC 20005 • www.compliancetech.com 

Contact: jourdainearl@compliancetech.com 

Contact: jourdainearl@compliancetech.com

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Our success is based on meeting your needs. Why not 

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especially in challenging times and markets? 

This information is for use by mortgage professionals only and should not be distributed to or used by consumers or other third-parties. Information is 

accurate as of date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2008 Wells 

Fargo Bank, N.A. All rights reserved. #61066 9/08-12/08

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© 2008, Fannie Mae. All rights reserved. 

Diverse communities are feeling the strain of today’s challenging housing market. 

To help more borrowers get and stay in a home,Fannie Mae is working with our partners 

to respond to today’s tough market conditions. We are committed to providing 

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Program rate, terms and conditions are subject to change without notice. 

THIS INFORMATION IS INTENDED FOR MORTGAGE AND REAL ESTATE PROFESSIONAL 

USE ONLY AND SHOULD NOT BE DISTRIBUTED OR SHOWN TO CONSUMERS OR 

OTHER THIRD PARTIES. Bank of America, N.A. Member FDIC. Equal Housing Lender. 

©2008 Bank of America Corporation AD-TL-T3

TAB HMDA DATA 

MINING

HMDA Data Mining for CRA and Minority Origination Opportunities 

3:00 p.m. – 5:00 p.m. 

Chesapeake 2 

Too many financial institutions are sitting on top of a gold mine of underutilized data. Much of 

this data comes from compliance reporting and as a byproduct of the originations process. Your 

ComplianceTech conference sponsor will walk you through; 1) the process for identifying useful 

data; 2) the methods for combining different sources of data directed at CRA and minority 

origination opportunities; and 3) insightful report from the latest 2007 HMDA data. 

Speaker: Maurice Jourdain-Earl 

Managing Director 

ComplianceTech

Maurice Jourdain-Earl 

Maurice Jourdain-Earl is founder and Managing Director of CLC Compliance 

Technologies, Inc. (ComplianceTech). Formed in 1991, ComplianceTech specializes in 

strategic fair lending and emerging markets consulting. ComplianceTech’s emerging 

market services help lenders assess opportunities to lend to minority and low-to-moderate 

income homebuyers. The company’s fair lending services help lenders use technology to 

comprehensively manage fair lending compliance. ComplianceTech is also the organizer 

of Lending Industry Diversity Conference, Inc. which sponsors the Annual Mortgage 

Lending Industry Diversity and Emerging Markets Conference. 

Mr. Jourdain-Earl has over 33 years of experience in the financial services business, 

including prior stints at Citicorp Mortgage, Inc., PMI Securities Co., and Continental 

Bank. He helps clients navigate the regulatory and operational complexities of emerging 

markets, diversity and fair lending issues. For the last 15 years, he has been actively 

involved in projects with clients to detect and minimize discrimination in, underwriting, 

pricing and marketing mortgage, auto and consumer loans. Throughout his career, he has 

evaluated the operational and lending platforms of many lenders including the review of 

various types of loans. 

Mr. Jourdain-Earl is a noted speaker on lending and banking issues, particularly HMDA 

and fair lending practices. He has spoken at events sponsored by the Federal Reserve 

Bank, The Federal Home Loan Bank, America’s Community Bankers, Practicing Law 

Institute and the Mortgage Bankers Association of America. A native of Chicago, 

Illinois, he holds a B.A. degree in Social Science from DePaul University.

The Demographic Impact of the 

Subprime Mortgage Meltdown 

By Maurice Jourdain-Earl

Table of Contents 

Purpose ....................................................................................................1 

About HmdA data ...............................................................................1 

Limitations Of HmdA data ..................................................................2 

Subprime Rate Loans And The Current Mortgage 

Foreclosure Crisis ...................................................................................3 

Methodology ............................................................................................6 

Summary Of Findings .............................................................................7 

Highlights Of 2004-2006 Subprime Rate Lending By Race 

And Ethnicity ...........................................................................................8 

Distribution Analysis Of 2006 Subprime Rate Loans .........................12 

Subprime Rate Loans By Loan Purpose ...........................................14 

Subprime Rate Loans By Borrower Income ......................................16 

Gender distribution Of Subprime Rate Loans ..................................19 

Subprime Rate Loans By Census Tract Income ...............................22 

Subprime Rate Loans By Race And Census Tract 

Percent minority ................................................................................24 

Conclusion .............................................................................................26 

About The Author ..............................................................................27 

About ComplianceTech .....................................................................27 

About Lending Patterns ..................................................................27 

Page i The Demographic Impact of the 

Subprime Mortgage Meltdown

Index of Tables 

Table 1: Loan Type and Percent of Foreclosures started ..........................4 

Table 2: 2006 “Loans” with a HmdA Spread by Race .............................12 

Table 3: Percent of Loans by Race and Percent of Loans with 

a Spread by Race ....................................................................................13 

Table 4: Loan Purpose by HmdA Spread ................................................14 

Table 5: 2006 Loans with a Spread by Borrower Income ........................16 

Table 6: Gender and 2006 Loans with a Spread .....................................19 

Table 7: 2006 Subprime Rate Loans by CENSUS Tract Income.............22 

Table 8: Tract Percent minority and Loans with a Spread .......................24 

Page ii The Demographic Impact of the 


Index of Figures 

Figure 1: 2004-2006 Percent of Subprime Rate Loans by Race ...............8 

Figure 2: 2004-2006 Average Spread on Subprime Rate Loans 

by Race .....................................................................................................9 

Figure 3: 2004-2006 Count of Subprime Rate Loans by Race ...............10 

Figure 4: 2004-2006 Percent of Subprime Rate Loans by 

Tract Percent minority .............................................................................11 

Figure 5: 2006 Frequency and magnitude of Loans with a 

HmdA Spread by Race ...........................................................................12 

Figure 6: 2006 Subprime Rate loans by Loan Purpose ..........................15 

Figure 7: Loans with Spread by Borrower Income ..................................16 

Figure 8: 2006 Subprime Rate Loans by Race and Income ...................17 

Figure 9: Percent distribution of Subprime Rate Loans by 

Race and Income ....................................................................................17 

Figure 10: Percent of Subprime Rate Loans by Race and Gender .........20 

Figure 11: Subprime Rate Loans by Race and Gender ...........................21 

Figure 12: 2006 Subprime Rate Loans by Census Tract Income ............23 

Figure 13: 2006 Count of Subprime Rate Loans by Race and 

Tract Percent minority .............................................................................25 

Figure 14: 2006 Percent of Subprime Rate Loans by Race and 

Census Tract Percent minority ................................................................25 

Page iii The Demographic Impact of the 


Purpose 

The purpose of this study is to develop an understanding of the 

potential impact of the current mortgage crisis on minorities 

and to dispel erroneous assumptions about subprime lending 

that could make emerging housing policies less effective. 

A common assumption is that subprime rate lending1 is 

more prevalent with minorities and low-income borrowers. 

The problem with portraying subprime rate lending and 

the foreclosure crisis, as a minority and low-income issue 

is its effects on how solutions will be approached. If, it is 

believed that subprime rate loans were predominately made 

to marginal segments of society (Black, Hispanic or lowincome) 

housing policymakers may approach solutions with 

bias assumptions about minorities and minority qualifications 

(low education, bad credit, and low-paying jobs, etc.). Thus, 

there may a tendency to write-off the subprime lending 

debacle as a type of affirmative action gone bad. 

This study will show that subprime rate lending occurred 

more with non-Hispanic Whites and upper income borrowers. 

Therefore, the current housing crisis is a broader problem 

than just with minority and low-income borrowers. This is 

accomplished by using 2006 Home mortgage disclosure Act 

data (HmdA) 2 to analyze the demographic distribution of 

subprime rate loans in order to understand the impact of the 

“Subprime mortgage meltdown” on different income, racial 

and ethnic groups. It is hoped that this information will be 

used strategically by congress, lenders, servicers, federal 

and state bank regulators, state attorney generals, state and 

local housing organizations, home loan counseling groups, 

researchers, community organizations and other interested 

parties to improve the formulation of housing policy, fair 

lending enforcement, consumer protection initiatives, and 

the implementation of loss mitigation activities to help keep 

families in their homes. 

The premise of this report is that beliefs about the demographic 

distribution of subprime rate loans influence ideas about the 

housing crisis. Therefore the focus of this study is to analyze 

the demographic distribution of subprime rate loans as a 

means to influence housing policy. In addition, the study 

seeks to use the distribution of subprime rate loans as an 

indicator of the expected future pattern of mortgage default 

and foreclosure activity. With these goals in mind, this study 

is an analysis of the distribution and cost of higher-priced 

2006 loans by ethnicity, race, gender and income, as well as 

1 In this study subprime rate loans are limited to transactions with a 

HmdA reportable spread that are “conventional, 1st lien, 1-4 family unit, 

owner occupied, home purchase and refinance loans. Government, home 

improvement, and multifamily loans are excluded. 

2 http://www.ffiec.gov/HMDA/pdf/regulationc2004.pdf, pg.1 

geographically by census tract percent minority. 

A lot is at stake. The impact of the subprime market and 

subprime foreclosures matter because homeownership is by 

far the most important wealth-building tool in this country. 

For millions of families, it ultimately makes the difference 

between merely surviving between paychecks, or building 

savings for a better future. Nearly 60 percent of the total 

wealth held by middle-class families resides in their home 

equity—the value of their home minus the amount they owe 

on it. For African-American and Hispanic families, the share 

is much higher, topping 88 percent for both groups. 3 

About HmdA data 

Congress enacted HmdA in 1975 to: “provide the public 

with information to judge whether lenders are serving their 

communities; to enhance enforcement of laws prohibiting 

discrimination in lending; and to provide private investors 

and public agencies with information to guide investments 

in housing.” 4 HmdA requires mortgage lenders located 

in metropolitan areas to collect data on their mortgage 

application transactions, report the data annually to the 

government, and make the data publicly available. 

HmdA requires reporting of the geographic location of 

originated and purchased home loans. HmdA data also 

includes information about denied home loan applications 

and the race, sex and income of the applicant or borrower. 

Subsequent to the 1990 amendment to HmdA that required 

race and sex information to be reported, some lenders were 

accused and sued for discrimination, alleging that minorities 

were disproportionately denied access to home mortgage 

credit compared to non-Hispanic Whites. 

Since the 2004 reporting year, HmdA requires lenders to 

report loan price information in the form of a “rate spread.” 

Lenders must report the spread between the annual 

percentage rate (APR) 5 on a loan and the rate on a Treasury 

security of comparable maturity. Lenders are only required 

3 Testimony of Josh Nassar, Center for Responsible Lending Before 

the U.S. House Committee on Oversight and Government Reform, pg. 

2 “Foreclosure, Predatory mortgage and Payday Lending in America’s 

Cities”, march 21, 2007 

4 http://www.ffiec.gov/HMDA/pdf/regulationc2004.pdf, pg.1 

5 The APR represents the cost of credit to the consumer. It captures not 

just the contract-based interest rate on a loan, but also the points and fees 

a consumer pays and other finance charges such as premiums for private 

mortgage insurance. Lenders must calculate and disclose the APR to 

consumers under a separate law, the Truth in Lending Act. 

Page 1 of 27 The Demographic Impact of the 


Purpose 

to report spreads on loans above designated thresholds. 

Therefore, rate spreads are not reported for lower cost 

loans. 

The threshold set by the Board in Regulation C for first-lien 

loans is three percentage points above the Treasury security 

of comparable maturity. For second-lien loans, which tend to 

have higher prices, the threshold is five percentage points 

above the Treasury security of comparable maturity. The 

Board chose these thresholds in the belief that they would 

exclude the vast majority of prime-rate loans and include 

the vast majority of subprime rate loans. From year-to-year, 

however, the proportion of subprime-rate loans that have 

prices reported might vary because of changes in the interest 

rate environment. 6 

The growth of the higher-priced mortgage market has raised 

concerns that consumers lack the information needed to 

negotiate the best terms and therefore might be vulnerable 

to unfair or deceptive practices. In addition, the wider range 

of prices in this market has raised concerns that price 

differences might reflect unlawful discrimination rather than 

legitimate risk- and cost-related factors. Lastly, the growth 

of the higher-priced mortgage market is believed to be 

contributing greatly to an increase in mortgage defaults and 

foreclosures. 

In short, the requirement to report the HmdA spread is 

designed to distinguish subprime rate loans from prime rate 

loans. Subprime lenders in contrast to prime lenders, attract 

applicants who either have impaired credit or perceive 

themselves to have bad credit. Theoretically, subprime 

lenders charge higher interest rates to compensate for the 

additional credit risk. However, subprime borrowers may 

often be exposed to non-risk related discretionary charges. 

In recent years, an increased use of risk-based pricing has 

blurred the line between prime and subprime lenders. The 

HmdA rate spread information was created to illuminate the 

distinction and bring more clarity to prime and subprime rate 

lending. The HmdA rate spread is focused on higher cost 

loans as opposed to lenders who may be classified as highcost 

lenders. This enables users of HmdA data to identify 

higher cost subprime rate loans, whether prime or subprime 

lenders originate them. 

6 Frequently Asked Questions About The New HmdA data, Federal 

Reserve Board, April 3, 2006 

Limitations Of HmdA data 

HmdA data are the most complete dataset used to analyze 

home mortgage lending in America by race, ethnicity and 

gender. The most significant limitation of HMDA data is 

borrower credit qualification information is not available. 

Credit criteria, such as credit score, loan-to-value, debtto 

income ratios, and housing payment ratios used by 

lenders to underwrite and price home mortgage loans, is not 

available. 

HmdA data also do not include information on loan terms 

and features needed to ascertain how loans are structured. 

For example, HmdA data do not include whether loans 

have features such as prepayment penalties, interest-only, 

negative amortization, or balloon payments. HmdA data also 

do not include whether loans are fixed rate or adjustable rate 

mortgages (ARms). It is suspected that many ARm loans 

originated in recent years have discounted initial teaser 

rates that will reset in two or three years. Finally, HmdA 

data do not reveal how loans are sourced by lenders, i.e. 

by retail loan officers who work as employees of a lender 

or by independent mortgage brokers. Loans with many of 

the aforementioned features and attributes are known to 

be major contributors to the current increase in mortgage 

defaults and foreclosures. 

These HmdA data limitations limit the ability to know 

important details about loan transactions. For example, how 

loans are underwritten and priced, whether Yield Spread 

Premiums (YSP) or overages7 contribute to the origination 

of higher-priced loans, or whether higher-priced loans are 

based on borrowers’ legitimate credit criteria or whether the 

overcharges were purely discretionary. Given these HmdA 

data limitations, this study has a single focus – to report on 

the demographic disparities in the 2006 distribution of higher 

priced subprime rate loans. 

7 YSP or overages are extra compensation paid by a lender to loan 

officers or brokers for delivering an interest rate on a loan higher than the 

risk-based price. 




Foreclosure Crisis 

The subprime market is intended to provide home loans to 

people with impaired or limited credit histories. However, 

there is evidence that many families who receive subprime 

mortgages could qualify for prime loans, but are instead 

“steered” into accepting higher-cost subprime loans. The 

belief that some subprime loan recipients’ could qualify 

for prime rate loans suggests that some borrowers are 

overcharged for mortgage credit, above what their riskbased 

price may warrant. If this is true, the overcharges 

drain money from homeowners and communities. 

To what degree prime eligible borrowers misplaced into 

subprime has contributed to the foreclosure crisis is unknown. 

Also unknown is the extent of illegal steering occurring on a 

prohibited basis, i.e. whether borrowers are steered to higher 

cost subprime rate loans on a prohibited basis, such as race 

or ethnicity. 8 The subprime misplacement question, steering 

issues as well as fraud concerns highlights the need for 

effective regulatory enforcement by the lending regulatory 

community. 9 

The Federal Reserve and other federal bank regulators 

have been criticized by lawmakers for lax regulation of the 

mortgage market. On July 18, 2007 the New York Times 

reported that “Representative Barney Frank, chairman of 

the House Financial Services Committee, threatened to strip 

the Federal Reserve of its authority to write rules against 

mortgage abuses if the central bank did not act quickly.” The 

article further reported that Christopher dodd, who leads 

the Senate Banking Committee, said that “a chronology of 

regulatory neglect allowed the problems in the subprime 

market to go unchecked.” 

many factors contributed to the growth of subprime lending, 

such as increases in capital made possible by securitization, 

8 mike Hudson and E. Scott Reckard, more Homeowners with Good 

Credit Getting Stuck in Higher-Rate Loans, L.A. Times, p. A-1 (October 

24, 2005). For most types of subprime loans, African-Americans and 

Latino borrowers are more likely to be given a higher-cost loan even after 

controlling for legitimate risk factors. debbie Gruenstein Bocian, Keith S. 

Ernst and Wei Li, Unfair Lending: The Effect of Race and Ethnicity on the 

Price of Subprime mortgages, Center for Responsible Lending, (may 31, 

2006) at http://www.responsiblelending.org/issues/mortgage/reports/page. 

jsp?itemId=2937 1010; 

9 The terms “bank regulator” or “lending regulator” is used 

interchangeably to refer to the enforcement arms of: the Board of 

Governors of the Federal Reserve (FRS or Fed) regulating lending affiliate 

of bank holding companies and state chartered member banks; the 

Federal deposit Insurance Corporation (FdIC) regulating state-chartered 

non-member banks; the Office of the Comptroller of the Currency 

(OCC) regulating national banks; the Office of Thrift Supervision (OTS) 

overseeing federal savings and loans and federal savings banks; the 

National Credit Union Administration (NCUA) regulating federally charted 

credit unions and department of Housing and Urban development (HUd). 

an increase in risk-based pricing facilitated by technological 

advances, and the deregulation of the banking industry.” 10 

Banking deregulation enabled lenders to offer more 

varied loan products, which were attractive to more varied 

consumers, and further gave incentives for more lenders to 

enter the market. Numerous laws opened the door for the 

development of the subprime market. Following is a synopsis 

of various laws and party Administrations that contributed to 

the growth of the subprime mortgage market: 

depository Institutions deregulation and monetary Control 

Act (“dIdmCA”). dIdmCA, 1980 (Carter Administration) 

• Helped the Savings and Loan (“S&L”) industry stay 

competitive with non-federally chartered banks where 

consumers received higher rates of return. 

• Enabled the S&Ls to recoup the higher interest rates they 

were paying by allowing them to preempt state usury laws for 

loans to consumers secured by first liens on their homes. 

Alternative mortgage Transaction Parity Act, 1982 (Reagan 

Administration) 

• Extended federal mortgage-lending regulations to most 

residential loans, including the permitted use of variable 

interest and balloon payments. At the time this law helped 

to standardize a wide variety of variable rate mortgages. 

Nevertheless, it left room for lenders to create variable rate 

loans that would be more risky in a Subprime context. 

Tax Reform Act of 1986 (“TRA”) (Reagan Administration) 

• Increased the demand for mortgage debt because it 

prohibited the deduction of interest on consumer loans, 

yet allowed interest deductions on mortgages for a primary 

residence as well as one additional home. This fueled the 

growth in home equity lending, a major component of the 

subprime lending industry. 

Financial Institutions Reform Act of 1989 (“FIRREA”) (Bush, 

George H.W.) 

• Addressed the costly S&L failures of the 1980’s and created 

incentives for S&Ls to operate as thinly capitalized mortgage 

brokers relying on the secondary market for loans. 

Gramm-Leach-Bliley Act, 1999 (Clinton) 

• Permitted financial service providers to merge with 

insurers. 

10 Howell, Benjamin, Exploiting Race and Space: Concentrated Subprime 

Lending as Housing discrimination, California Law Review, January, 2006. 





“Some 80 percent of outstanding U.S. mortgages are prime, 

while 14 percent are subprime and 6 percent fall into the 

near-prime category. These numbers, however, mask the 

explosive growth of nonprime/subprime mortgages. The 

subprime market sector grew from $150 billion in 2000 to 

$650 billion in 2007, or roughly 25 percent of the overall 

mortgage market. Subprime and near-prime loans increased 

dramatically, from 9 percent of newly originated securitized 

mortgages in 2001 to 40 percent in 2006.” 11 

The relationship between subprime rate loans and defaults 

and foreclosures is undeniable. Numerous surveys and 

reports point to a strong relationship between subprime rate 

loans and the foreclosure crisis. The delinquency Survey of 

the mortgage Bankers Association, and two recent reports, 

one entitled “Analysis of Subprime mortgage Servicing 

Performance” (data Report 1 and 2) by The State Foreclosure 

Prevention Working Group (State Working Group) 12 and 

another entitled “OCC mortgage metrics Report – Analysis 

and disclosure of National Bank mortgage Loan data” by the 

Office of the Comptroller of the Currency all point to subprime 

rate loans as a major reason for the foreclosure crisis. 

11 The Rise and Fall of Subprime mortgages by danielle dimartino and 

John V. duca ,Vol. 2, No. 11, November 2007, Economic Letter—Insights 

from the Federal Reserve Bank of dallas 

12 The State Foreclosure Prevention Working Group, formed in the 

summer of 2007, consists of the Attorneys General of 11 states (Arizona, 

California, Colorado, Iowa, Illinois, massachusetts, michigan, New York, 

North Carolina, Ohio, and Texas), two state bank regulators (New York 

and North Carolina), and the Conference of State Bank Supervisors. 

On June 5, 2008, the mortgage Bankers Association of 

America released its latest delinquency Survey. The survey 

reported that “the seasonally adjusted total delinquency 

rate is the highest reported in the mBA survey since 1979” 

and that “the rate of foreclosure starts and the percent of 

loans in the process of foreclosure are at the highest levels 

ever.” 13 According to the mBA’s National delinquency 

Survey, “the delinquency rate for mortgage loans on oneto-four-unit 

residential properties stood at 6.35 percent of all 

loans outstanding at the end of the first quarter of 2008 on 

a seasonally adjusted (SA) basis, up 53 basis points from 

the fourth quarter of 2007 and up 151 basis points from one 

year ago. The survey also reported that “the percentage 

of loans in the foreclosure process was 2.47 percent of all 

loans outstanding at the end of the first quarter, an increase 

of 43 basis points from the fourth quarter of 2007 and 119 

basis points from one year ago.” 14 Finally, and of most 

significance to this study, the survey included a table that 

shows prime and subprime rate loans as a percent of loans 

outstanding relative to the percent of foreclosures started: 

TABLE 1: LOAN TYPE AND PERCENT OF FORECLOSURES STARTED 

13 delinquencies and Foreclosures Increase in Latest mBA National 

delinquency Survey, mortgage Bankers Association of America, pg. 

1,June 5, 2008 

14 Ibid 





Table 1 shows that “while subprime ARms represent 6 

percent of the loans outstanding, they represent 39 percent 

of the foreclosures” started. Subprime fixed rate loans 

also represent 6 percent of the loans outstanding and 11 

percent of foreclosures started. Together, subprime loans 

represent 12 percent of loans outstanding, but 50 percent of 

foreclosures started. 

Several studies during the years have shown subprime 

loans have been disproportionately used by minorities. For 

example, a study by the department of Housing and Urban 

development (HUd) of the 1998 Home mortgage disclosure 

Act (HmdA) data of almost one million mortgages reported 

nationwide, concluded that there was a disproportionate 

concentration of subprime lending in minority and lowincome 

neighborhoods. 15 

more recently, an article in the Washington Post on June 

30, 2008, entitled “Subprime mortgages and Race: A Bit of 

Good News may Be Illusory” by Shankar Vedantam refers 

to subprime rate loans “as the original domino that set off 

America’s current economic crisis. But the loans – typically 

made to people with poor credit – have long been hailed 

for one reason: They were thought to be a powerful way to 

increase homeownership rates among minorities, and to 

provide a mechanism to undo the “redlining” policies of past 

decades, in which some banks refused to extend loans in 

predominantly minority neighborhoods, even to applicants 

with good credit.” 

The article also references research conducted by George 

Washington University sociologist Gregory d. Squires, 

“who, has been looking at rates of subprime loans issued 

in about 350 U.S. metropolitan areas”. Squires’ preliminary 

findings show that subprime loans were indeed more likely 

to be issued to people with poor credit and those with limited 

incomes. In the article, Squires’ is credited with saying “we 

see these loans heavily concentrated in poor neighborhoods 

and targeted to minority neighborhoods,” “There is some 

evidence that these neighborhoods were actually targeted 

– that lenders have gone after people whom they think are 

15 U.S. department of Housing and Urban development, UNEQUAL 

BURDEN:INCOME & RACIAL DISPARITIES IN SUBPRIME LENDING IN 

AmERICA 

less sophisticated borrowers, including single women and 

the elderly.” 

In addition, the 2007 Annual minority Lending Report 

by ComplianceTech also reported that loans to Blacks 

and Hispanics were disproportionately subprime. This 

concentration of subprime activity leaves these homeowners 

with significant costs of subprime loans. The Center for 

Responsible Lending (CRL) recently published numerous 

research reports that show African Americans and Latinos 

receive a disproportionate share of subprime loans, even 

when they have similar credit scores to non-Hispanic White 

borrowers. In december 2007, CRL issued a report showing 

how subprime home loans are resulting in a devastating 

epidemic of foreclosures. 16 

despite overwhelming evidence that support the above 

findings, this report reveals that the majority of subprime rate 

loans originated in 2006 were granted to non-Hispanic Whites 

and upper income borrowers. The same pattern occurred in 

2005. In 2004, more subprime rate loans were originated 

for non-Hispanic Whites, but middle-income borrowers 

had the highest share. These findings are contrary to the 

way subprime rate lending is commonly portrayed. Popular 

media myths and erroneous assumptions about subprime 

rate loans are continuously presented as if subprime rate 

lending was predominately in the domain of minorities and 

low-income borrowers. 

16 Testimony of Josh Nassar, Center for Responsible Lending Before 

the U.S. House Committee on Oversight and Government Reform, pg. 

2 “Foreclosure, Predatory mortgage and Payday Lending in America’s 

Cities”, march 21, 2007 



Methodology 

LendingPatterns , an online HmdA analysis tool developed 

by ComplianceTech, was used extensively to mine the HmdA 

data to analyze the lending patterns of all HmdA reporting 

lenders in the United States by race, income, gender and 

geography. The online system produces reports by the 

entire United States, metropolitan Statistical Areas (mSA), 

states, counties, census tracts and for the 2006 HmdA data, 

by Congressional districts of the 110th Congress. Using 

LendingPatterns conventional, 1st lien, 1 to 4 family, owneroccupied, 

home purchase and refinance loans with a HMDA 

reported spread were isolated. 

The study describes the overall distribution of the frequency 

and magnitude of subprime rate loans for the years 2004 

to 2006. Looking back at prior years, the study provides a 

recent historical perspective on the distribution of subprime 

rate loans. The remainder of the study focuses only on loans 

originated in 2006. The 2006 loans are analyzed by race and 

ethnicity, income of borrowers, gender, census tract income, 

and census tract percent minority. 

Race and ethnicity is limited to White, Black, Hispanic, 

Asian, Native American and Hawaiian. multi-race, unknown 

and Not Available (NA) race categories are excluded. 

Income of borrowers and census tracts are characterized 

by the Community Reinvestment Act (CRA) 17 classifications 

of low, moderate, middle and upper income. These income 

classifications are calculated using borrower and census 

tract income relative to the median income of metropolitan 

Statistical Areas (mSA). 

Gender distribution is based on whether the primary 

applicant’s gender is male or female or, male or female 

without a co-applicant. It is not known whether borrowers 

without co-applicants are in fact single. HmdA data only 

show that no co-applicant was on the loan application. 

Same gender, unknown and NA are included in the gender 

analysis. 

17 The Community Reinvestment Act is intended to encourage depository 

institutions to help meet the credit needs of the communities in which they 

operate, including low- and moderate-income neighborhoods, consistent 

with safe and sound banking operations. It was enacted by the Congress 

in 1977 (12 U.S.C. 2901) and is implemented by Regulations 12 CFR 

parts 25, 228, 345 and 563e 

The loan amount categories are conforming and jumbo. 

Conforming loans are those that conform to the loan 

purchase limits of Fannie mae and Freddie mac (less than 

or equal to $417,000 in 2006). Jumbo loans are those with 

a loan amount exceeding $417,000. Although jumbo loans 

demand a higher price, they are not analyzed separately 

because the focus of this study is on the 1st lien loans that 

exceed the three percentage point threshold for HmdA 

spread reporting. 

Finally, the census tract percent minority analysis uses 2000 

Census data to stratify census tracts by their percent of 

minority inhabitants. All subprime rate loans are distributed 

cross census tracts in 10 percent increments, i.e. a range 

from 0% to 100% minority. 



Summary Of Findings 

• The overall rate of subprime rate lending in 2006 was 

27.42% with an average spread of 5.18%. 

• During the period of 2004-2006, Whites had more subprime 

rate loans than all minorities combined. However, in each 

year, the White percent of subprime rate loans was lower 

than all minorities, except Asians. Whites and Asians had 

average spreads less than the overall average at 5.09% 

and 4.95%, respectively. 

• Whites had 70.82% of the 2006 loans and 56.23% of 

the subprime rate loans with a spread. Asians share of 

overall loans at 4.48% was higher than their 2.85% share 

of subprime rate loans. By contrast, Blacks and Hispanics, 

and Native Americans and Hawaiians, albeit at much 

lower volumes, had a higher share of subprime rate loans 

than their share of loans overall. For example, Blacks and 

Hispanics had 9.97% and 13.92% of the overall pool of 

loans, but had 19.18% and 20.76% of the subprime rate 

loans, respectively. The Native American share of overall 

loans was 0.32% and 0.40% of subprime rate loans. 

Finally, the Hawaiian share of overall loans was 0.51% 

and 0.58% of the subprime rate loans. 

• In 2006, the White and Asian percent of subprime rate 

loans was below the national average at 21.78% and 

17.43% respectively. Conversely, Blacks, Hispanics, 

Native Americans, and Hawaiians all had subprime rate 

loans above the national average at 52.76%, 40.91%, 

33.98%, and 31.46%, respectively. 

• From 2004 to 2006, compared to all other racial groups, 

Blacks had the highest jump in subprime rate lending. 

during this period the Black incidence of subprime rate 

loans increased by 71% from 30.84% in 2004, to 50.96% 

in 2005, and to 52.76% in 2006. Similarly, from 2004 to 

2006 the average cost of this high cost lending to Blacks 

increased by 29%. The Black average spread was 4.28% 

in 2004, 4.97% in 2005, and 5.50% in 2006. 

• Of the 1,917,809 subprime rate loans in 2006, upperincome 

borrowers had the highest share at 39.37%, 

followed by 27.55% for middle-income borrowers and 

20.99% for moderate-income borrowers. Contrary to 

popular belief, low-income borrowers had only 149,173, or 

7.57%, of 2006 subprime rate loans. 

• Upper-income borrowers from all racial groups had the 

largest number of subprime rate loans, followed by middle, 

moderate and low-income borrowers. 

• Middle-income borrowers from all racial groups had the 

second highest use of subprime rate loans, followed by 

moderate-income borrowers. 

• The 2006 gender distribution shows a pattern where 

males and females without co-applicants had the highest 

use of subprime rate loans in 2006 at 32.60% and 

32.21%, respectively. Combined, these presumably single 

borrowers accounted for 64.81% of the 2006 subprime 

rate loans. 

• Middle-income census tracts had the largest number and 

share of subprime rate loans at 1,049,232, or 53.2%. 

moderate and upper-income census tracts were almost 

even at 21.87% and 21.40%, respectively. Low-income 

census tracts had the second highest proportion of 

subprime rate loans (47.51%), the highest average spread 

(5.43%), but the smallest share of all select 2006 subprime 

rate loans at 3.15%. 

• Non-Hispanic White subprime rate loans were concentrated 

in predominately White areas. Of the 1,108,679 non- 

Hispanic White subprime rate loans originated in 2006, 

868,806 or 78.36% were located in census tracts less than 

30 percent minority. The largest block of non-Hispanic 

White subprime rate loans (473,397 or 42.70%) were 

located in census tracts less than 10% minority. 

• Black subprime borrowers were located both in 

predominately White census tracts as well as highly 

concentrated in predominately minority census tracts. In 

fact, the Black volume of subprime rate loans in census 

tracts less than 30% minority totaled 97,693, slightly more 

than the 91,906 subprime rate loans in census tracts 

90-100% minority. Interestingly, the Black low (20,307) 

and high (39,092) was in census tracts

Highlights Of 2004-2006 Subprime Rate Lending By 

Race And Ethnicity 

during the period of 2004-2006, Black Americans, compared 

to other racial groups, experienced the largest percentage 

build-up of subprime rate loans. (Figure 1) 

FIGURE 1: 2004-2006 PERCENT OF SUBPRIME RATE LOANS BY RACE 

The vast build-up of higher cost subprime rate loans with 

Blacks is likely to translate into a disproportionately larger 

percent of loans that will experience mortgage defaults and 

foreclosures. In 2004, the first year HMDA pricing information 

was reported by lenders, more than 30 percent of the Black 

conventional first lien 1 to 4 family home purchase and 

refinance loans were comprised of higher-cost subprime rate 

loans. This was followed by a frequency greater than 50% in 

2005 and 2006. during the same period, Blacks also had the 

highest average spread on subprime rate loans. (Figure 2) 





FIGURE 2: 2004-2006 AVERAGE SPREAD ON SUBPRIME RATE LOANS BY RACE 

The trend with Hispanics, Native Americans and Hawaiians, 

while similar to Blacks, was not as high. Each of the above 

groups however, had a higher frequency and higher average 

spread on subprime rate loans than Whites or Asians. In 

fact, Asians had the lowest frequency and magnitude of 

loans with a HmdA reported spread. Thus, percentage-wise, 

Hispanics, Native Americans and Hawaiians are also more 

likely to experience a higher proportion of mortgage defaults 

and foreclosures. 

With respect to the number of subprime rate loans during 

the three-year period, there is a large difference by race. 

In each year, Whites had more subprime rate loans than 

all minority groups combined. (Figure 3) Among minorities, 

Hispanics had the largest volume of subprime rate loans, 

followed by Blacks, with much smaller numbers for Asians, 

Native Americans and Hawaiians. 





FIGURE 3: 2004-2006 COUNT OF SUBPRIME RATE LOANS BY RACE 

White homeowners are not going to be insulated from the 

subprime mortgage meltdown. The massive numbers of 

White subprime rate loans indicate that it is highly probable 

that Whites will also experience an increase in mortgage 

defaults and foreclosures. Percentage-wise, however, 

the incidence of foreclosures in Black and Hispanic 

neighborhoods is predicted to be more concentrated than in 

White communities. Blacks and Hispanics had a significant 

number of higher-cost subprime loans and they had a much 

higher proportion of such loans. Thus, the high concentration 

of subprime rate loans in Black and Hispanic communities 

is likely to translate into a higher number and percent of 

mortgage defaults and foreclosures. 

Foreclosures in the subprime market have eroded and 

are projected to continue to erode some of the gains in 

homeownership rates for minority households. For example, 

CRL estimates “that the 2005 vintage of subprime loans will 

lead to 98,025 foreclosures by Black homeowners relative 

to only 50,925 new Black homeowners, or a net reduction 

in 47,101 Black homeowners.” 18 Similarly, CRL estimates “a 

net decline in homeownership among Hispanic families of 

18 Center for Responsible Lending, “Subprime Lending: A Net drain on 

Homeownership,” CRL Issue Paper No. 14, march 27, 2007, available at 

http://www.responsiblelending.org/page.jsp?itemId=3203203 1. 

37,693.” 19 These findings are evidence that recent gains in 

Black and Hispanic homeownership rates are likely to be lost. 

CRL studies show that “foreclosures can have a significant 

impact in a community where the foreclosed property is 

located. This is particularly true when the factors that led to 

one foreclosure drive a concentration of foreclosures in the 

same neighborhood, for example in a spatial concentration 

of subprime lending. A concentration of home foreclosures 

in a neighborhood hurts property values in several ways. A 

glut of foreclosed homes for sale depresses home market 

values for the other owners. Neighboring businesses often 

experience a direct monetary loss from reduced sales and 

neighborhood landlords experience a loss or reduction in 

rental income. moreover, house price declines can also 

affect economic activity through their effect on household 

wealth. Econometric work has established that household 

wealth, along with income, helps to determine the level of 

aggregate consumption. Higher levels of wealth lead to 

higher consumption, all things being equal. Since declines 

in home prices reduce wealth, they reduce consumption and 

thus output and employment.” 20 

19 Ibid 





In conclusion, the pattern and trend of subprime rate lending 

during 2004-2006 indicate that Whites are likely to have 

a higher volume of loans that might experience mortgage 

defaults and foreclosures, but Blacks and Hispanics are 

more likely to be disproportionately impacted, and these 

events are more likely to be heavily concentrated in high 

minority neighborhoods. (Figure 4) The HmdA data show 

a consistent pattern where the percent of subprime rate 

loans increase as census tracts become increasingly more 

minority. 

FIGURE 4: 2004-2006 PERCENT OF SUBPRIME RATE LOANS BY TRACT PERCENT MINORITY 

20 The Subprime Lending Crisis, The Economic Impact on Wealth, 

Property Values and Tax Revenues, and How We Got Here, Report and 

Recommendations by the majority Staff of the Joint Economic Committee, 

Senator Charles E. Schumer, Chairman, Rep. Carolyn B. maloney, Vice 

Chair, October, 2007, pg. 13-14, http://jec.senate.gov/documents/Reports/ 

10.25.07OctoberSubprimeReport.pdf 



Distribution Analysis Of 2006 Subprime Rate Loans 

In 2006, the HmdA data reported 7,191,015 conventional, 

1st lien, 1 to 4 family, owner occupied, home purchase and 

refinance loans where the race of the borrower was known. 

Of these, a HmdA spread was reported on 1,971,809 or 

27.42%. The overall average spread on the loans was 5.18% 

or 218 basis points above the 3 percent 1st lien threshold 

for reporting. The frequency and magnitude of higher cost 

subprime rate loans varied widely by race as shown in Table 

2 and graphically in Figure 5 below: 

TABLE 2: 2006 “LOANS” WITH A HMDA SPREAD BY RACE 

FIGURE 5: 2006 FREQUENCY AND MAGNITUDE OF LOANS WITH A HMDA SPREAD BY RACE 




The White frequency (percent) of subprime rate loans was 

21.78% with a magnitude (average spread) of 5.09%. Using 

the White frequency and magnitude of subprime rate loans 

as a benchmark, Blacks had the highest difference among all 

minorities with a 52.76% frequency and an average spread 

of 5.50%. Blacks, therefore, received higher cost subprime 

rate loans 2.42 times the frequency in which Whites received 

such loans. The difference between the White and Black 

average spread was 41 basis points. 

Hispanics had the second highest disparity in the frequency 

and magnitude of subprime rate loans compared to Whites. 

Hispanics had a subprime rate loan frequency of 40.91% or 

1.88 times the 21.78% frequency for Whites. The Hispanic 

average spread was 5.18% or 9 basis points higher than 

Whites. 

Asians were the only minority group whose frequency and 

magnitude of receiving higher cost subprime rate loans was 

less than Whites. Asians received higher cost loans 17.43% 

of the time or 20% less often than Whites. Asians had an 

average spread of 4.95% or 14 basis points lower than the 

White average spread. Native Americans and Hawaiians 

received higher cost loans 33.82% and 31.46% of the time, 

with an average spread of 5.21% and 5.18%, respectively. 

despite the racial disparities in the frequency and magnitude 

of 2006 subprime rate loans, Whites had more loans overall 

and more subprime rate loans than all minorities combined. 

This is expected since Whites comprise a large majority of 

the U.S. population. Whites had 70.80% of the loans and 

56.23% of the loans with a spread as shown in Table 3 

below: 

TABLE 3: PERCENT OF LOANS BY RACE AND PERCENT OF LOANS WITH A SPREAD BY RACE 

The large number of White subprime rate loans suggests 

that the problem with increased defaults and foreclosures is 

not likely to be isolated to minority communities. many White 

Americans will be adversely affected as well. 




Subprime Rate Loans By Loan Purpose 

In 2006, more subprime rate loans were used to refinance 

an existing mortgage than to purchase a new home. Of the 

1,971,809 subprime rate loans in 2006, refinance loans 

accounted for 55.82% and home purchase loans 44.18%. 

Refinance loans had a higher frequency of being higher-cost 

subprime rate loans at 29.85%, but a lower average spread 

of 5.11%. The subprime rate frequency for home purchase 

loans was 24.86% with a higher average spread of 5.27%. 

(Table 4) 

TABLE 4: LOAN PURPOSE BY HMDA SPREAD 




By race and ethnicity, Hispanics and Asians had a higher 

percent of subprime rate loans for home purchase at 56.15% 

and 55.19%, respectively. Other racial groups had a higher 

percent of subprime rate lending for refinance transactions. 

The distribution of 2006 subprime rate loans by loan purpose 

is shown in Figure 6: 

FIGURE 6: 2006 SUBPRIME RATE LOANS BY LOAN PURPOSE 




Subprime Rate Loans By Borrower Income 

Overall, the number of loans and the number of loans with 

a HmdA spread, decrease as borrower income decreases. 

For example, low-income borrowers had fewer loans than 

moderate, middle and upper-income borrowers, but of the 

loans obtained by low-income borrowers, a higher percent 

were subprime rate loans. Surprisingly, this pattern was not 

the same for average spread. moderate and middle-income 

borrowers had a higher average spread than low-income 

borrowers. Upper-income borrowers had the highest share 

(39.37%), but the lowest frequency and lowest average 

spread of subprime rate loans by borrower income. Table 5 

and Figure 7: 

TABLE 5: 2006 LOANS WITH A SPREAD BY BORROWER INCOME 

FIGURE 7: LOANS WITH SPREAD BY BORROWER INCOME 




The income distribution pattern for each racial group mirrors 

the overall pattern; the highest number of subprime rate loans 

was with upper-income borrowers. As income decreases, 

the number of subprime rate loans decreased. (Figure 8) 

FIGURE 8: 2006 SUBPRIME RATE LOANS BY RACE AND INCOME 




Percentage-wise, however, the pattern was most pronounced 

with Asians and Hawaiians, where 62.21% and 57.81% of 

the respective upper-income borrowers from the two racial 

groups obtained subprime rate loans. Almost half of upperincome 

Hispanics had subprime rate loans (49.59%) with 

differences of 10 to 15% between the other income brackets. 

Subprime rate loans for upper-income Whites were 37.35% 

with differences of 6-to-14 percent between the other income 

brackets. 

Unlike other racial groups, Blacks received subprime rate 

loans fairly evenly across all income brackets. Upperincome 

Blacks had 30.29% of subprime rate loans while 

the difference between moderate, middle and upper-income 

was no more than 2.17%. Low- income Blacks were the only 

racial group with a double-digit percent of subprime rate 

loans (11.29%). (Figure 9) 

FIGURE 9: PERCENT DISTRIBUTION OF SUBPRIME RATE LOANS BY RACE AND INCOME 




Gender distribution Of Subprime Rate Loans 

All racial groups had a high number and percent of men 

and women without co-applicants that made up a significant 

portion of the subprime rate loan population in 2006. Rising 

real estate costs and home property values apparently 

prompted many single persons to enter the real estate 

market. Some entered for the sake of homeownership while 

others might have made speculative investments, suspecting 

that home prices would continue to rise. Either way, with a 

single income, many single borrowers might have sought 

more creative ways to obtain home loan financing. 

The mortgage market accommodated this market segment 

with loan features that made it easier to qualify. Loans, such 

as 2/28 and 3/27 adjustable rate mortgages (ARms) started 

with low teaser rates for the first two or three years of the loan 

with a rate reset in later years. In all instances the rate resets 

will produce significant mortgage payment increases. Other 

non-traditional loan features, such as, pay option ARms, 

interest only and underwriting features like “no income” and 

“no asset” verification enabled borrowers to “buy now, but 

borrow trouble later. “ 

The gender distribution of subprime rate loans and as a 

pattern indicator of mortgage defaults and foreclosures might 

have a significant impact on policy discussions at the federal, 

state and local level. Single men or women without children 

who might have difficulty making mortgage payments is one 

thing, but if a large portion of the subprime rate borrowers 

are single men or women head of households with children, 

the implications of mortgage foreclosures become much 

more bleak. Families with children could become homeless. 

The 2006 gender distribution of subprime rate loans 

show a pattern whereby males without co-applicants and 

females without co-applicants (presumably single) had a 

higher frequency and higher average spread than males 

or females listed as primary borrowers. There is however, 

very little disparity between single men and single women 

in the percent and average spread on subprime rate loans. 

The frequency of subprime rate loans for males without coapplicants 

and females without co-applicants was almost 

even at 32.60% and 32.21%, respectively. The same is true 

for the average spread on loans made to males without coapplicants 

and females without co-applicants at 5.23% and 

5.24%, respectively. 

However, a much wider disparity exists when females were 

listed as the primary borrower compared to when men were 

listed as primary. The frequency of subprime rate loans with 

females as the primary borrower was 29.55% with an average 

spread of 5.20%. By contrast, when men were listed as the 

primary borrower, the percent of subprime rate loans was 

only 18.62% with an average spread of 5.03%. (Table 6) 

TABLE 6: GENDER AND 2006 LOANS WITH A SPREAD 




The distribution pattern by race and gender is varied. For all 

minority groups, except Blacks, males without co-applicants 

followed by females without co-applicants had the highest 

percent of subprime rate loans. This is especially true with 

Hispanics where 75.86% of 2006 subprime rate borrowers 

were either single men without co-applicants (46.69%) or 

single females without co-applicants (29.17%). (Figure 10) 

FIGURE 10: PERCENT OF SUBPRIME RATE LOANS BY RACE AND GENDER 




A male as the primary borrower was ranked third with all 

minorities with respect to subprime rate loans by gender. 

For blacks however, the highest proportion of subprime 

rate loans was with females without co-applicants (42.10%) 

followed by males without co-applicants (33.08%) and then 

by male as the primary borrower (15.33%). 

For Whites, the pattern of subprime rate loans was male 

dominated. White males without co-applicants accounted 

for 35.67% of the White subprime rate loans followed by 

White men as primary borrower at 28.62%. The number of 

subprime rate loans to White men (395,441) was more than 

half the number of subprime rate loans to all minority males 

without co-applicants combined. White females without coapplicants 

had 25.32% of the White subprime rate loans, and 

that proportion accounts for more than 48% of all subprime 

rate loans received by females without co-applicants in 2006. 

(Figure 11) Females as the primary borrower had the lowest 

percent of subprime rate loans for all racial groups ranging 

from a low of 5.48% for Hispanics to a high of 10.56% for 

Hawaiians. 

FIGURE 11: SUBPRIME RATE LOANS BY RACE AND GENDER 




Subprime Rate Loans By Census Tract Income 

In 2006 there was an inverse relationship between census 

tract income and the percent of subprime rate loans. As 

census tract income increased, the frequency and magnitude 

of subprime rate loans by census tract income decreased. 

Low-income census tracts had the highest frequency and 

highest magnitude of subprime rate loans at 47.51% and 

5.43%, respectively. By contrast, upper-income census 

tracts had a frequency of 18.25% with an average spread of 

5.03%. Table 7 and Figure 12 shows the overall distribution 

of the 2006 subprime rate loans by census tract income: 

TABLE 7: 2006 SUBPRIME RATE LOANS BY CENSUS TRACT INCOME 




despite the inverse relationship of census tract income and 

spread frequency and magnitude, the volume of subprime 

rate loans is skewed dramatically towards middle-income 

census tracts. middle-income census tracts had 53.21% of 

the higher cost loans, more than twice the volume of subprime 

rate loans in all other census tract income categories 

combined. moderate and upper census income tracts had 

an almost even percentage of higher priced loans at 21.87% 

and 21.40%, respectively. Low-income census tracts had the 

smallest number and percent of 2006 subprime rate loans. 

FIGURE 12: 2006 SUBPRIME RATE LOANS BY CENSUS TRACT INCOME 




Subprime Rate Loans By Race And Census Tract 

Percent minority 

The incidence of higher-cost subprime rate loans is more 

prevalent in census tracts with a higher percentage of 

minorities. The frequency and magnitude of higher-cost 

subprime rate loans increase as the proportion of minorities 

in a community increase. 

The frequency/average spread range from a low of 

22.25%/5.10% in census tracts < 10% minority to a high 

of 47.51%/5.36% in census tracts 90 to100% minority. 

Throughout the range of census tract strata, the pattern of the 

incidence and magnitude of subprime rate loans is linear. 

The overall volume of loans and the volume of subprime rate 

loans however, are clearly skewed towards largely White 

areas. Census tracts that are less than 30% minority account 

for 55.61 % of higher price subprime rate loans. Census 

tracts < 10% minority had the largest share of subprime 

rate loans at 26.47%. By contrast, despite the fact that high 

minority census tracts had a higher incidence and higher 

average spread, census tracts >70% minority accounted 

for only 18.87% of the 2006 subprime rate loans. (Table 8, 

Figure 13, and Figure 14). 

If the incidence of higher-priced lending is a predictor of 

future delinquencies, then the subprime rate loan distribution 

by census tract percent minority is an indication that the 

mortgage meltdown might be a hurricane in predominately 

White census tracts, but it will be a tsunami in predominately 

minority census tracts, especially for Blacks and Hispanics. 

TABLE 8: TRACT PERCENT MINORITY AND LOANS WITH A SPREAD 




FIGURE 13: 2006 COUNT OF SUBPRIME RATE LOANS BY RACE AND 

TRACT PERCENT MINORITY 

FIGURE 14: 2006 PERCENT OF SUBPRIME RATE LOANS BY RACE AND CENSUS TRACT 

PERCENT MINORITY 



Conclusion 

The demographic impact of the Subprime mortgage meltdown 

has been under-analyzed. A common theme expressed in 

newspaper articles and periodicals on the subject suggest that 

the foreclosure crisis is a minority and low-income borrower 

problem. For example, an article in the Washington Post on 

June 17, 2008 credits former Federal Reserve Chairman 

Edward Gramlich with saying “the subprime market, for all 

its warts, is a promising development, permitting low-income 

and minority borrowers to participant in credit markets” 21 

But he added, “a majority of loans are made with very little 

supervision.” 22 The same theme is presented in many other 

articles, reports and publications. 

Although it is true that disproportionate shares of minority 

loans are subprime, it is also true that more subprime rate 

loans are made to non-Hispanic Whites. To suggest that the 

subprime mortgage meltdown and the foreclosure crisis is 

a minority and low-income problem is tremendously flawed. 

Indeed, in 2006, non-Hispanic Whites and upper income 

borrowers had the highest share of (conventional, 1st lien, 

1-4 family, owner-occupied, home purchase/refinance) 

subprime rate loans. moreover, the majority of subprime 

rate loans originated in 2006 were clearly skewed towards 

predominately-White areas (census tracts less than 30 

percent minority). 

The problem with portraying the foreclosure crisis as a 

minority and low-income problem is that it affects how 

solutions will be approached. If, on one hand, it is believed that 

subprime rate loans were predominately made to marginal 

segments of society (Black, Hispanic or low-income) housing 

policymakers may approach solutions with bias assumptions 

about minorities and minority qualifications (low education, 

bad credit, and low-paying jobs, etc.). Thus, there may a 

tendency to write-off the subprime lending debacle as a type 

of affirmative action gone bad. On the other hand, if it is 

believed that the foreclosure crisis affects broader and more 

demographically diverse segments of society then a more 

21 Washington Post, June 17, 2008 “The Bubble –How homeowners 

missed mortgage payments set off widespread problems and woke up the 

Fed”, pg.A9 

22 Ibid. 

politically responsible approach is likely, thereby changing 

the tone, climate and context of how solutions are crafted. 

Besides race and ethnicity, understanding the gender 

distribution is also relevant in formulating policy solutions 

to the subprime rate lending and foreclosure crisis. The 

2006 HmdA data show a pattern where males and females 

without co-applicants had the highest use of subprime rate 

loans at 32.60% and 32.21%, respectively. Combined, 

these presumably single borrowers accounted for 64.81% 

of the 2006 subprime rate loans. These presumably single 

borrowers do not have two income sources to support the 

mortgage. If the single borrowers, in trouble of making their 

mortgage payments, are single-head of households, what 

about the children? 

Not enough research and media attention has been devoted 

to other causes of the subprime crisis that may have race 

and gender effects. Issues of steering, weak underwriting, 

fraud, and discrimination have not been aggressively 

investigated. despite the presence of federal regulation 

and periodic examinations for safety and soundness, 

Community Reinvestment Act compliance and fair lending 

compliance, efforts to uncover whether subprime rate loans 

can be explained by legitimate business justifications will 

be impaired based on erroneous assumptions about the 

demographic distribution of subprime rate loans. 

Last, if it is believed that subprime rate lending is 

predominately an urban minority problem, officials will fail 

to see that in 2006 non-Hispanic Whites had 1,108,676 

subprime rate loans of which 868,806 or 78.36% were in 

census tracts

Conclusion 

About The Author 

maurice Jourdain-Earl has over 35 years of experience in 

the financial services business. He began his career in 1973 

as a Registered Representative for IdS Financial Services 

and obtained licenses to offer insurance and investment 

services to individuals and small businesses. After 3 years 

he joined Continental Illinois National Bank as a Bond 

Investment Banking Associate where he offered municipal 

and Government Bonds to commercial banks and regional 

investment banks. In 1979 he joined PmI Securities Co. (a 

subsidiary of PmI mortgage Insurance Co.) as a director of 

Sales marketing. At PmI, he was responsible for packaging 

and selling private placement mortgage-backed securities to 

institutional investors. 

From 1982 to 1985 he owned and operated a boutique 

Investment Brokerage Company facilitating the packaging 

and selling of private placement mortgage-backed securities, 

direct from Banks and Savings and Loan Associations to 

Pension Funds. After doing business with Citicorp, he joined 

the company as a Vice-President to help form a newly 

developed Treasury marketing Unit responsible for packaging 

and selling loans in portfolio as mortgage-backed securities. 

The Treasury marketing Unit later became Citimortgage’s 

Correspondent business. 

In 1991 mr. Jourdain-Earl formed CLC Compliance 

Technologies, Inc. (ComplianceTech). ComplianceTech 

began as a due diligence portfolio analysis company 

analyzing the asset value of loans for secondary market 

disposition. After becoming an established contractor for the 

RTC, FdIC and private sector companies, ComplianceTech 

was asked by a lender to analyze their HmdA data. That 

project led to ComplianceTech’s development into a premier 

provider of lending intelligence services, specializing in 

strategic fair lending and emerging markets consulting. 

For the last 17 years mr. Jourdain-Earl has provided thought 

leadership in developing consultative and technological 

solutions to help clients navigate the regulatory and 

operational complexities of strategic markets, diversity and 

fair lending issues. He has been actively involved in client 

projects to detect and minimize discrimination in underwriting, 

pricing and marketing mortgage, auto and consumer loans 

and to assess opportunities to lend to minority and low-to- 

moderate income homebuyers. ComplianceTech is also 

the organizer of Lending Industry diversity Conference, 

Inc. which sponsors the Annual mortgage Lending Industry 

Strategic markets and diversity Conference. 

mr. Jourdain-Earl is a noted speaker on lending and banking 

issues, particularly on HmdA and fair lending practices. He 

has spoken at many events, included some sponsored by 

the Federal Reserve Bank, The Federal Home Loan Bank, 

America’s Community Bankers, Practicing Law Institute, and 

the mortgage Bankers Association of America. A native of 

Chicago, Illinois, he holds a B.A. degree in Social Science 

from dePaul University. 

About ComplianceTech 

Since 1991, ComplianceTech has provided specialized lending 

intelligence services to financial institutions nationwide. With 

its multi-disciplined expertise in lending, research, statistical 

analysis, law and economics, ComplianceTech is uniquely 

equipped to identify market patterns; unveil opportunities; 

formulate lending benchmarks; and implement best practices 

for all aspects of consumer lending. The company’s passion 

and expertise in data analysis is renowned, and press, 

academia, government and private organizations frequently 

call on ComplianceTech to share its insights and expertise in 

consumer lending intelligence. 

About LendingPatterns 

LendingPatterns is a web-based data mining and exploration 

tool developed by ComplianceTech that analyzes millions 

of records for thousands of lenders to produce executive 

level reports on numerous aspects of mortgage lending in 

America. It is a powerful analytical tool and is the only fully 

accessible national HmdA database on the internet. 

To request additional print copies of this report; or for more 

information about ComplianceTech or LendingPatterns; visit 

www.compliancetech.com, www.lendingpatterns.com, or 

call 1-800-499- 4632. 



TAB 

SUCCESSFUL TOOLS FOR 

LOAN ORIGINATORS

Successful Sales Tools for Loan Originators in Today’s Market 

3:00 p.m. – 5:00 p.m. 

Chesapeake 3 

This program is the first specialized program in the mortgage industry designed to increase the 

sales effectiveness and production of originators who serve affordable, diverse and emerging 

markets: This pre-conference workshop sponsored by Genworth Mortgage Insurance includes 

an overview of a ten-step, high impact sales training and professional development system 

designed to help loan originators and production managers increase their day-to-day efficiency, 

individual accountability, and closed production. Affordable, diversity, and emerging markets 

executives will find this system to be an essential element in supporting corporate production 

goals and objectives. 

Speaker: Lynn Richardson 

President and Chief Executive Officer 

Lynn Richardson Enterprises

Lynn Richardson 

Wife, mother of 3 beautiful daughters, and fondly known to many happy homeowners as 

“The Mortgage Guru” – Lynn Richardson has met the expectations of many, yet 

surpassed the achievements of most in the mortgage industry, having closed over 100 

million her first few years in the business and helped thousands of families achieve the 

dream of homeownership in the Chicagoland area. 

After completing her education at Northwestern University and Loyola University, Lynn 

began to carve her own pathway to success in the mortgage business by mastering 

innovative approaches to securing hard to get mortgages for urban first time buyers. One 

of her most notable cases is that of a single mother who became a homeowner after 4 

previous bankruptcies, 2 foreclosures, and 2 divorces. After completing Lynn's 

Mortgage Approval Plan (MAP), she received a low interest rate and a low down 

payment for her new home purchase! Accordingly, Lynn created a college level 

curriculum for knowledge-seeking consumers, The Road to Homeownership and 

Creating Family Wealth, which are offered through the City Colleges of Chicago. 

As a result of branding her unique approach in the community she serves, Lynn 

Richardson became the host of “Wealth ‘n Real Estate” on WVON 1690 am talk radio in 

Chicago, where she currently broadcasts Sundays from 9am until 11am. Lynn believes 

that the foundation for 21 st Century racism is based on economics, and accordingly, 

continues to educate minorities about the benefits of homeownership as the foundation 

for building wealth and eluding poverty. 

As the Vice President of Emerging Markets National Strategic Partnerships for JP 

Morgan Chase, the founder of Emerging Markets Academy for Mortgage and Real Estate 

Professionals, member of Delta Sigma Theta Sorority, Inc. and National Coordinator for 

the DST Homeownership Initiative, Chase relationship manager for the AKA Keys to 

Homeownership Initiative, member of Les Brown’s Speaker’s Network, Professor for the 

Toyota/Black Star Project Parent University and the author of “Living Check to 

Monday: The Real Deal About Money, Credit, and Financial Security,” Lynn's 

mission is to increase the homeownership rate in emerging market communities while 

promoting financial literacy, economic empowerment, and social and racial equality in 

underprivileged communities worldwide.

TAB 

WELCOME ADDRESS

Speakers: Maurice Jourdain-Earl 


Compliance Tech 



Mark Goldhaber 

Senior Vice President 

Government Relations 

Genworth Mortgage Insurance 

John Courson 

Chief Operating Officer 

Mortgage Bankers Association 

October 6-8, 2008 

Welcome Address 

Annapolis Ballroom 1 & 2

John A. Courson 

John A. Courson is Chief Operating Officer of the Mortgage Bankers Association (MBA) 

and will become the Association’s President on January 1, 2009. Courson has been 

involved in the mortgage industry for more than 40 years and served as Chairman of 

MBA in 2003. 

Courson began his lifelong career in mortgage banking working for Kassler & Co., in 

Denver, Colorado, during summers in high school and college. Before completing his 

degree, he began originating loans as a producing branch manager in a two-person 

production office in a Denver suburb. After graduation, Courson worked as a loan officer 

on both commercial and residential loans at a Denver, Colorado branch of Fort Wayne 

Mortgage where he would later take over managing the branch office and eventually he 

became the company’s President and Chief Executive Officer in its Detroit, Michigan 

headquarters. Courson also served as President and Chief Executive Officer of Central 

Pacific Mortgage Company, President and Chief Executive Officer of Westwood 

Mortgage Corporation, and as President and Chief Operating Officer of Fundamental 

Mortgage. 

From 2004 to 2008, Courson served as Chairman of the Board of Directors of the 

California Housing Finance Agency, a position for which he was appointed by Governor 

Arnold Schwarzenegger. 

Prior to serving as MBA’s Chairman in 2003, Courson served as a member of MBA's 

Board of Directors, as well as on both the Residential Board of Governors (RESBOG) 

and the Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG). 

He served as Chairman of RESBOG from 1999 to 2000. Additionally, he served as 

Chairman of MBA's Legislative Steering Committee, MORPAC, MBA's State and Local 

Liaison Committee and Mortgage Reform Task Force. He also served as President of the 

California Mortgage Bankers Association from 1997 to 1998 and Michigan Mortgage 

Bankers Association from 1978 to 1979, and as a Director of the Texas Mortgage 

Bankers Association from 1986 to 2000. 

Courson received his undergraduate degree in business and finance from the University 

of Colorado. He is married to Marcia Courson. They have two children and four grand 

children.

TAB 

WHY DIVERSITY 

IS IMPORTANT

Why Diversity is Important to the Mortgage Lending Industry 

9:00 a.m. – 10:15 a.m. 

Annapolis Ballroom 1 & 2 

The mortgage lending industry has made great strides in the past decade in terms of workforce 

diversity. Minorities, while still a small percentage of the lending workforce, are no longer 

invisible in the industry. The current lending environment is threatening to rollback the recent 

gains even though lending to minorities is still likely to outpace loans to non-minorities. Join us 

in this session as we hear industry professionals provide their insights on: What senior managers 

need to know about diversity & inclusion, diversity and inclusion as a core value, implementing 

the “all levels of business activities” mandate in the new housing legislation, managing diversity 

in a down market, new opportunities to diversify workforce and re-thinking supplier diversity 

strategies. 

Opening Remarks: Stacey Stewart 

Chief Diversity Officer and Senior Vice President 

Office of Community and Charitable Giving 

Fannie Mae 

Moderator: Jackson Davis 

Director 

Office of Diversity & Inclusion 

Fannie Mae 

Speakers: John Browning 

Area Manager 

Wells Fargo Home Mortgage 

Karen J. Collins 

Corporate Vice President, Chief Diversity Officer 

The First American Corporation 

Chairman/President – The 1st American 

Homeownership Foundation

Why Diversity is Important to the Mortgage Lending Industry 

Speakers continued: 

9:00 a.m. – 10:15 a.m. 


Terri Fowlkes 

Director, Consumer Segment Management 

REL Strategic Markets 

Citi 

Jack PenaSoto 

Senior Vice-President 

Community Lending Business Leader 

Wachovia Mortgage, FSB

STACEY D. STEWART 

Chief Diversity Officer 

and 

Senior Vice President, Office of Community and Charitable Giving 

Stacey D. Stewart is Fannie Mae’s chief diversity officer, Office of Diversity and 

Inclusion, and senior vice president, Office of Community and Charitable Giving. 

Stewart leads Fannie Mae’s diversity and inclusion strategy and the overall corporate 

giving strategy and programs. 

As chief diversity officer, Office of Diversity and Inclusion, Stewart is responsible for 

development and implementation of strategies that foster a diverse and inclusive 

workplace and business environment. She serves as an advisor to the chief executive 

officer, Board of Directors, and senior leadership team to leverage diversity as a key 

business driver and foster an inclusive work environment. Additionally, she works with 

her team and key stakeholders to align and demonstrate Fannie Mae’s diversity and 

inclusion commitment externally with customers, partners, and suppliers. 

As senior vice president, Office of Community and Charitable Giving, Stewart addresses 

housing and homelessness issues in Washington, DC, works to improve education and 

schools across the city, addresses housing challenges nationwide through housing and 

community development initiatives, and advances efforts to prevent and end 

homelessness in America. Stewart designs and implements Fannie Mae’s philanthropic 

initiatives to advance the company’s business goals, objectives, and mission. 

Prior to joining Fannie Mae in February 2007, Stewart was president and chief executive 

officer of the Fannie Mae Foundation. In that role, she directed the largest foundation in 

the U.S. dedicated to affordable housing and community development and the largest 

foundation in the Washington, DC, metropolitan area with a 2006 budget of $61 million. 

From 1995 to 1999, Stewart was vice president, Housing and Community Development, 

for Fannie Mae’s Atlanta, GA, office, and public affairs director from 1992 to 1995. 

Stewart was a vice president for Pryor, McClendon, Counts & Co., Inc., Atlanta, GA, 

from 1990 to 1992. Before that, she was a senior associate with Merrill Lynch. 

Stewart has a master of business administration from the University of Michigan and a 

bachelor of arts in economics from Georgetown University. 

She is currently co-chair of the Board of the DC Education Compact, serves on the 

advisory committee of the National Mitigation Counseling Program, is Secretary of the 

District of Columbia College Access Program, and is on the Boards of Aidan Montessori, 

the Federal City Council, DC Chamber of Commerce, Greater Washington Board of 

Trade, Survivors Fund of the Community Foundation for the National Capital Region, 

Hands on Network’s Corporate Service Council, National Coalition for Black Civic 

Participation, and One Economy.


Chief Diversity Officer 

The First American Corporation 

Karen J. Collins has been a driving force in the corporate culture and overall success of The First 

American Corporation since she joined First American in 1988. Under her leadership and with 

the full support of The First American Corporation, First American is actively forging an 

enterprise-wide cultural diversity and inclusion strategy. 

The cultural diversity strategy is designed specifically to foster an environment where all people 

are valued, challenged to think as leaders and are engaged for their diverse viewpoints, 

experiences, talents and ideas. This initiative, championed by Collins, will promote First 

American’s more than thirty-thousand employee workforce and its suppliers to transform the way 

its customers, investors, and communities served view and value First American. 

Prior to her current position, Collins managed senior-level strategic sales professionals and served 

as a senior strategist leading the direction of First American’s Client Relations division. She 

served as senior vice president and director of sales for strategic accounts, providing focus to First 

American’s sales organization, which serves mortgage lending and servicing organizations, and 

spans many of the company’s key business segments. She holds a bachelor’s degree in Business 

Administration from North Carolina A & T State University where she is also a Board of Trustee 

member and has completed executive education curriculum at the University of Chicago. 

Collins frequently speaks on leadership panels around the country and serves on various advisory 

councils. She is also a past recipient of the National Eagle Leadership Institute’s CareerFOCUS 

Eagle Award which is presented annually to a select group of African American and Latino 

executives who embody excellence in both corporate and community leadership. She and her 

family reside in the Chicagoland area. 

The First American Corporation, a FORTUNE 500 ® company with revenues of $8.2 billion in 

2007, combines advanced analytics with its vast data resources to supply businesses and 

consumers with valuable information products to support the major economic events of people’s 

lives, such as getting a job, renting an apartment, buying a car or house, securing a mortgage and 

opening or buying a business.

Terri J. Fowlkes 

Terri J. Fowlkes is a Senior Vice President and Director of CitiMortgage’s Strategic 

Markets Group. In this capacity, she is responsible for developing strategies, initiatives 

and partnerships to grow mortgage business among minority and low- and moderateborrowers 

across Citi’s national footprint. Prior to joining Citi, Ms. Fowlkes has served 

as Mortgage Director for the National Federation of Community Development Credit 

Unions and as Vice President and Residential Lending Manager for Carver Federal 

Savings Bank. Ms. Fowlkes also serves as an adjunct professor at York College, where 

she teaches mortgage banking classes. Ms. Fowlkes has numerous years of experience in 

mortgage lending, corporate lending and venture capital. She has a strong commitment to 

increasing and sustaining homeownership for homeowners and potential homeowners 

across the nation. 

Ms. Fowlkes holds a B.S. and an M.B.A. from New York University's Stern School of 

Business.

Jack PenaSoto 

Community Lending Business Leader, SVP 

Wachovia Mortgage, FSB 

Charlotte, North Carolina 

Jack PenaSoto is currently the Community Lending Business Leader for Wachovia 

Mortgage, FSB. Jack and his team manage the affordable mortgage lending strategy, 

emerging market strategy, and regulatory compliance both externally and internally for 

Wachovia Mortgage. 

Jack has a wealth of banking experience and has worked for Bank of America as a 

Community Impact Manager, Retail Mortgage Account Executive, Premier Banker and 

Banking Center Manager. While at Bank of America Jack was active in corporate 

diversity initiatives. 

Jack PenaSoto is a Kinston, NC native and currently resides in Charlotte, NC. Jack is 

active in the community and serves on the boards of The J. Anthony Brown Foundation, 

The Charlotte Small Business Enterprise Loan Fund and The NC Initiative Capital. 

Jack has a passion for affordable housing and financial literacy issues. He often speaks to 

community groups and churches on these issues. Jack has volunteered to facilitate 

financial literacy classes in the Charlotte community. He is married and has two children.

The First American 

Corporation 

Deploying Supplier Diversity 


Chief Diversity and Inclusion Officer

2 

First American Five-Prong Strategy 

for Diversity 

Embed Diversity 

Into Client 

Relations 


Into Community 

Relations 

Reflect the 

Available 

Labor Force 


Into Human 

Resources 


Into Supplier Relations

What is Supplier Diversity at First 

American? 

� A strategic focus by corporations to ensure the 

inclusion of minority and women owned companies 

in the procurement of goods and services. 

� The creation of a base of suppliers and business 

partners that are highly representative of the 

customer. 

� Takes root as part of the procurement 

infrastructure and seeks to create an inclusive 

vendor pool for contracting.

Strategies For First American’s Supplier 

Diversity Initiative 

� CEO Commitment 

� Develop a Compelling Business Case 

� Examine the Existing Supplier Base 

� Declare Clear Goals 

� Provide All Stakeholders with Value 

� Internally Market Supplier Diversity

DIVERSITY 

Transformation 

Over 

Time!


Chief Diversity and Inclusion Officer 

Thank you

Developing a Winning 

Diversity Business Plan 

October 7, 2008 

Jack Penasoto, SVP 

Community Lending Business Leader

Ask Yourself… 

� What is your business strategy? 

� Why is it important to tap into diverse segments to achieve growth 

in customer acquisition, retention and loyalty? 

� How can your enterprise position itself to capture the enormous 

potential revenue growth represented by diverse segments? 

� What are your competitors doing to capture diverse customers? 

� What metrics and reporting are available to build the case for 

diversity business and sustain the business strategy? 

� So, what’s next? 

2

Know the Facts 

� Minority groups' share of $10 trillion U.S. consumer market is growing 

steadily, according to annual buying power study from Terry College's Selig 

Center for Economic Growth 

Minority Buying Power press release, Selig Center for Economic Growth at the University of Georgia’s Terry 

College of Business, 2007 

� The buying power of Hispanics -- now the nation's largest minority group -- will 

exceed $860 billion in 2007 and is whizzing its way to more than $1.2 trillion five 

years from now. 

� African American buying power will total $845 billion in 2007 and is projected to 

top $1.1 trillion by 2012 -- a 34 percent increase over the five-year period. 

� Americans of Asian ancestry, representing the third largest minority group, will 

see their purchasing power grow almost as fast as Hispanics over the next five 

years. Asian buying power is forecast to grow 45.9 percent, versus 46.3 percent 

for Hispanics. In dollars, Asian buying power will total $459 billion in 2007, rising 

to $670 billion by 2012. 

� Emerging Diverse Markets …...…a multibillion dollar marketplace 

3

Know the Facts – The Mortgage Opportunity 

2007 Mortgage Transactions -- Purchase/Refinance 

Applications 

� Asian $204,129 Million 

� Black $335,148 Million 

� Hispanic $478,518 Million 

Source September 19, 2008 

Inside Mortgage Finance 

Originations 

� Asian $105,618 Million 

� Black $123,858 Million 

� Hispanic $187,085 Million 

Source September 19, 2008 


4

Data Sources -- Building The Case 

Regulatory Data Industry Data 

� Census 

� CRA Reports 

� FFIEC 

� HMDA Reports 

� Industry publications 

� Industry Research Reports 

� Trade Associations 

5

Build Your Strategy 

Strategy 

Executive Support 

Marketing & 

Communications 

Accountability 

Assess your markets 

� Strengths, Weaknesses, Opportunities, Threats 

(SWOT Analysis) 

� Consumer Product Needs 

� Business Process Implications 

Develop a compelling business case using data/research 

� Obtain “Buy in” from Leaders 

� Enlist an Executive Sponsor for the strategy 

Collaborate with key internal partners to develop 

Marketing, Messaging and Brand Strategy 

� Brand Relevance, Advertising 

� Marketing & Sales Programs and Collateral 

� Community Outreach & Advocacy (internal & 

external) 

� Define Success Measures 

� Identify Incentives, Rewards and Responsibilities 

6

Example: Relevant Marketing Collateral 

7

Go Get the Business! 

Questions? 

8

Diversity and Inclusion in Mortgage 

Lending 

Draft 

John Browning 

Area Sales Manager 

Wells Fargo Home 

Mortgage 

October 7, 2008

Who Is Wells Fargo? 

Our Vision 

To satisfy all of our customers’ financial needs, 

help them succeed financially, be the premier 

provider of financial services in every one of 

our markets, and be known as one of America’s 

great companies. 

2

Our Commitment to Diversity and 

Inclusion 

Wells Fargo’s commitment to diversity began 

with Henry Wells and William Fargo…. 

3


Inclusion… 

From Our Beginnings 

• Wells Fargo was founded in 1852 and 

immediately adopted the ethic of being 

"Universal Friend and Agent" to all 

• In 1852 we began serving diverse communities 

as customers and as skilled employees 

• In the 1880s we maintained an "Instruction to 

Agents" booklet which insisted upon the fair 

treatment of all our customers 

4

Our Commitment to Diversity and Inclusion 

Vision & Values… 

� “Proper respect must be shown to all. Let them be men, women, 

children, rich or poor, black or white.” (Employee Manual, 1888); 

� By making diversity a competitive advantage, we can make the 

company a better place to work, . . . give customers and communities 

outstanding service and deliver more value . . . . We must increase the 

number of people of color, women and other diverse groups in senior 

management. . . . We’ll continue to provide learning in diversity for all 

managers and supervisors. (Richard M. Kovacevich, The Vision and 

Values of Wells Fargo.) 

� “We don't want our team simply to represent our communities. We 

want it to be of our communities.” (John Stumpf, Speech to Senior 

Executives, Feb. 2006) 

5


Inclusion… 

Continues Today with 

Commitment to Diverse Communities in… 

• Home Mortgage Seminars 

• Commitment to Wealth Building 

• Diverse Growth Segments 

• Commitment to a Diverse, Inclusive Workplace 

• Diversity Councils 

• Lending to Diversity Home Buyers and Small Businesses 

• Financial Education 

• CollegeSteps Program 

• Philanthropy 

• Joint Venture Partnerships 

6


Financial Education 

Seminars/Tours 

� Realtors, consumers and industry partners 

� Wealth Building Strategies 

� First Time Homebuyer Seminars 

� Down Payment Assistance Programs 

7


Financial Education 

Hands On Banking 

� Designed to teach the basics of good 

money management; 

� Developed by Wells Fargo as a free 

public service 

Specialized Financial Literacy Outreach 

� Youth & Young Adults (13-21 yr old): budgeting and smart 

shopping, grants & loans appropriate use of credit, 

importance of savings) 

� Women (single, head-of-household): credit, 

homeownership, savings & investments 

� Seniors & Retirees (pending): wills, estate planning, reverse 

mortgages, trusts 

8

Our Commitment has resulted in this Wells 

Fargo Mortgage Track Record… 

• In the Period 2003 - 2007, Wells Fargo was the 2 nd highest 

originator of mortgages to the minority and low and moderate 

income segments 

• During this period, Wells Fargo originated more than 2.7 

million loans to these segments 

• In 2007 alone, Wells Fargo originated 391,610 mortgage 

loans to the minority and low-to-moderate income segments 

9

Diversity - A Critical Success Factor… 

� “ We view diversity and inclusiveness not just as the right 

thing to do, but as a market share growth opportunity. 

The more diverse we are, the more responsive we can be 

to the financial needs of our diverse customers and the 

better we’ll be able to help them succeed financially.” ( 

John Stumpf, Diversity Magazine) 

� Workforce diversity is a key component of Wells Fargo’s 

success 

� Hence…Wells Fargo strives to reflect the communities we 

serve. 

10

Recruiting Diverse Talent – a Critical 

Success Factor 

� Mortgage company’s principle goal: Grow 

market share 

� Real time activity requiring experienced 

sales professionals 

� Challenge therefore…. 

11

Finding Experienced Diverse Sales 

Professionals 

What we know… 

� Minority business opportunity has always 

been there 

� Mortgage brokers have historically 

dominated the diverse mortgage segments 

� Major lending institutions investment in this 

segment has really only increased in the 

last 10 years 

12

Finding Experienced Diverse Sales 

Professionals 

� Recruiting diverse talent is challenged by: 

� time in the industry 

� dominance of the Broker model in diverse 

communities 

� lack of presence in major lending institutions 

� retail/broker business model differences 

� referral source focus 

� lack of candidate awareness 

13

Retaining Diverse Sales Professionals 

� Retaining Diverse Sales talent is 

challenged by market volume shifts: 

� Refinance boom experience 

� Contracting credit market experience 

� Focus on sustaining the commitment to the 

business opportunity vs. the regulatory 

imperative 

14

Best Practices in Recruiting Diverse 

Talent 

� When recruiting diverse talent 

� Hire diverse Branch managers with existing teams 

experienced in mortgage production with major lending 

institutions 

� Hire diverse talent that possesses an extensive 

referral base 

� Leverage your currently existing internal network of 

successful diverse talent to identify and recruit diverse 

candidates 

� Establish Realtor outreach initiatives focused on 

identifying diverse lending talent 

15

Best Practices in Retaining Diverse 

Talent 

� Increase retention of diverse talent by ensuring 

your diverse talent 

� has a balanced book of business 

� cultivates productive referral sources 

� establishes internal connectivity with top producers 

(Mentor) and other successful diverse producers 

� is supported by management that is informed and 

exposed to the diverse talent and lending opportunity 

16

Thank you 

John Browning 

Area Sales Manager 


john.browning@wellsfargo.com 

17

Why Diversity & Inclusion are 

Important to the Mortgage 

Lending Industry 

Mortgage Lending Industry Strategic Markets 


Terri J. Fowlkes 

Director, Strategic Markets 

CitiMortgage 

October 7, 2008

Confidential - Copyright © Citi 2008 All Rights Reserved 

Overview 

• Why is Diversity and Inclusion Important to CitiMortgage and the 

Mortgage Lending Industry? 

– Diverse Customer Base 

• Mix of our workforce to mirror the markets that we serve (better understanding of 

the needs of the customers that we serve) 

• Customers often feel more comfortable working with people that are of like 

backgrounds and speak the same language 

– Growing Diverse U.S. Population 

– Increased Income and Buying Power of Ethnic Minorities and Women 

– Regulatory / Fair Lending Obligations 

• Equal Credit Opportunity Act 

• Fair Housing Act 

– It is the Right Thing to Do! 

2


DiversityInc 

Citi is ranked 45th on DiversityInc’s 2008 Top 50 

Companies for Diversity! 

The 50 Companies were chosen based on remarkable and consistent 

strength in 4 critical areas of diversity management: 

• CEO Commitment 

• Human Capital 

• Corporate and Organizational Communications 

• Supplier Diversity 

3

• Mortgage Market Dislocation 

• Regulatory Intervention 

• Many Lenders Exiting the Business 

• Tightened Credit Standards 

– Higher FICO scores required 

– Lower debt-to-income ratios allowed 

– Higher down payments required 

– Less uses of non-traditional / alternative credit 

• Declining Markets 


Current Mortgage Environment 

• Increased Housing Inventory due to Foreclosure / 

Downward Pressure on Home Prices 

• Depleted Home Equity 

4


Impact 

• Release of 2007 HMDA Data Reflects: 

• Decline in loan originations to Hispanics and African Americans 

• Home Lending activity fell more than 20% in 2007 compared with the prior year 

• Differences in the incidence of higher-priced lending between racial and ethnic 

groups continued as did the differences in denial rates on loan applications 

• Home purchase loans to Hispanic and Black borrowers fell 49% and 35%, respectively 

• Loans to non-Hispanic white borrowers fell 22% over the same period 

• FEAR! 

• Many potential and existing homeowners are fearful of homeownership and new 

home purchases 

5

1. Dedicated / Focused / Diverse Strategic Markets Team 

2. Strategic Partnerships / Alliances 

3. Focused Initiatives 

4. Competitive Products 

5. High Level of Integrity and Fair Practices 


Citi’s Citi s Strategic Focus 

6

• Dedicated / Focused / Committed / Diverse 

Strategic Markets Team within CitiMortgage 

• Mission: 

- To meet the mortgage needs of ethnic minority (African- 

Americans, Asians and Hispanics) 

and low- and moderate-income (LMI) consumers 

• Leverage Citi’s wealth of resources for the 

benefit of the consumer 


Strategic Markets Team 

7

• GSEs 

• MI Companies 

• Non-Profit Organizations 

• Community Development Organizations 

• Real Estate Professionals 

– Title Companies 

– Realtors 

– Builders 

– Insurance Brokers 

• Trade Organizations 

• Technology / Data Companies 

• Community Leaders 

• Other Lenders 

– Mortgage Brokers 

– Correspondent Lenders 

• Internal Citi Team Members 

• And More… 


Strategic Partnerships/ Alliances 

8

• Home Buyer / Home Owner 

• Faith Based Focus 


Education Focus 

• Employer Based Focus 

• Community Based Outreach Focus 

• Trusted Adviser Focus 

Focused Initiatives 

9

• Access 

• R-HOME 

• Home Run 


Unique and Competitive Products 

Aim to serve the unique needs 

of the diverse consumer 

segment better than anyone 

else via the right mix of 

products, processes and 

customer service. 

10


High Level of Integrity and Fair Practices 

We aim to: 

• Provide stability in the midst of chaos and 

uncertainty about whom you can trust and 

what businesses will be around for the longterm. 

• Provide high-standards of excellence both in 

terms of our product offerings and our 

customer service. 

• Be the best in Diverse Lending! 

11

TAB 

IMPACT OF HOUSING 

LEGISLATION

Impact of Housing Legislation on Minority Homeownership 

Opportunities 

10:30 a.m. – 11:45 a.m. 


The new paradigm brought on by the groundbreaking Housing and Economic Recovery Act of 

2008 (HERA) is likely to radically transform the minority and affordable lending landscape. 

New resources will be made available for troubled borrowers through the Hope for Homeowners 

provisions. The stock of affordable housing will be stimulated by emergency assistance 

provisions that will provide billions of dollars to states for acquiring foreclosed properties to 

rehabilitate and resale. Lending operations are expected to be dramatically altered by new 

originator licensing standards; FHA modernization, risk based pricing, and enhanced mortgage 

disclosures to consumers. Affordable housing and minority lending are also likely to be impacted 

by the following: The expected transformation of the GSE’s, CRA-like GSE affordable housing 

goals, the use of new tax credits, and affordable housing trust funds. 

Moderator: Michael Taliefero 



Speakers: Tim Doyle 

Vice President 

Conference of State Bank Supervisors, Inc 

Tom Goyda 


Research and Analysis 

Wells Fargo 

Joseph Pigg 

Vice President and Senior Counsel 

Mortgage Finance 

American Bankers Association

Michael Taliefero 

Michael Taliefero is Managing Director and co-founder of the Washington D.C.based 

Compliance Technologies, Inc. (ComplianceTech). ComplianceTech is an 

innovative consulting firm specializing in fair lending and risk analysis services to banks, 

thrifts, mortgage companies and government agencies. Mr. Taliefero has spent his entire 

professional career studying the housing industry activities in a regulatory context. In 

recent years he has been involved in integrating social science research methods with 

legal analysis to improve executive decision-making. Mr. Taliefero supervises lender 

self-evaluations, compliance audits, compliance technology development, and 

compliance-related statistical analyses and research for clients nationwide. 

Mr. Taliefero formerly held the position of Staff Vice President, Government Agency 

Relations for the Mortgage Bankers Association of America (MBAA). In the various 

MBAA positions he led lobbying efforts on a wide range of bank/thrift regulatory and 

secondary market issues. 

Prior to his tenure at the MBAA, Mr. Taliefero served as Ginnie Mae's Section Chief 

Attorney, a supervisory position in the Office of the General Counsel at HUD. Previous 

attorney positions at HUD include tax-exempt bond financing attorney and Fannie Mae 

regulatory oversight attorney. Mr. Taliefero holds a J.D. degree from Northwestern 

University School of Law and a B.S. degree in Business Management (Finance) from 

Indiana University. He also has also completed two years of graduate study in public 

finance at The American University. Mr. Taliefero has over 26 years experience in the 

housing and mortgage finance industry.

Tom Goyda 


Wells Fargo 

Tom Goyda currently manages research and analysis for the Government and Industry 

Relations team at Wells Fargo’s Home and Consumer Finance Group, and has 20 years 

of experience in the financial services industry through positions with companies 

including Citigroup and Mercantile Bancorporation,. Prior to joining Wells Fargo, Tom 

spent six years with Weber Shandwick, a major global public relations agency, were he 

managed accounts for clients including the Federal Reserve Banks Retail Payments 

Office, MasterCard International, CIGNA, Deutsche Bank and CitiMortgage. A graduate 

of Northwestern University with a degree in Radio-TV-Film, Tom began his professional 

career in 1984 on the Washington, D.C. staff of U.S. Senator John C. Danforth.

Tim Doyle is a Vice President of Industry and Agency Relations with the 

Conference of State Bank Supervisors (CSBS). At CSBS, Mr. Doyle is 

responsible for coordinating state mortgage regulators in developing 

Nationwide Mortgage Licensing System (NMLS). In this capacity, Mr. Doyle 

is responsible for the legislative and regulatory policies that seek to create a 

system of strong and efficient regulation. 

Prior to joining CSBS, Mr. Doyle was a Senior Director in the Government 

Affairs department of the Mortgage Bankers Association (MBA). At MBA, Mr. 

Doyle managed policy issues concerning residential loan production, 

including government lending, affordable housing, licensing, and mortgage 

fraud issues. 

Previous to working at MBA, Mr. Doyle worked for the U.S. Department of 

Agriculture (USDA) Rural Development, where he worked on community 

development issues, with responsibilities throughout New York State. Mr. 

Doyle has also worked at the Community Preservation Corporation, a notfor-profit, 

multi-family affordable housing lender, where he originated loans 

and consulted on HUD’s Mark-to-Market program, evaluating Section 8 

subsidized properties for debt restructuring. He began his housing career 

working with the Federal Housing Administration (FHA) in the Single Family 

Housing Programs and Policies Division. 

Mr. Doyle, a native of Virginia, is a graduate of the College of William & Mary 

and holds a master’s degree in public administration from the Maxwell 

School of Citizenship and Public Administration at Syracuse University.

BIOGRAPHICAL INFORMATION FOR JOSEPH PIGG 

Joseph Pigg is Vice President and Senior Counsel for the American Bankers Association. In this capacity 

Joe serves as legislative counsel on housing, real estate finance, Federal Home Loan Bank and other 

government sponsored enterprise related issues as well as on general financial industry issues. 

Prior to joining the ABA, Joe was a legislative representative for Mayor Rudolph Giuliani of New York 

City and a banking aide to U.S. Representative Doug Bereuter of Nebraska. Joe worked closely on the 

development of the HUD Section 184 Indian Housing Loan Guarantee program as well as the development 

and implementation of a variety of rural housing programs. 

A native of Homer, Nebraska, Joe graduated with honors from the University of Nebraska where he 

received a B.A. in English Literature, and Georgetown University Law Center where he earned his J.D. 

He lives in Washington, DC.

Housing and Economic Recovery Act of 2008, 

H.R. 3221 

NCSHA Summary 

Housing Assistance Tax Act of 2008 

(Housing Bond and Credit Cap Increase and 

Modernization Provisions)

Housing and Economic Recovery Act of 2008, H.R. 3221 

NCSHA Summary 

Housing Assistance Tax Act of 2008 

(Housing Bond and Credit Cap Increase and Modernization Provisions) 

Housing Credit Modifications 

• Provides a 20-cent per capita Housing Credit cap increase for 2008-2009 and increases 

the small state minimum by 10 percent for those same years. 

• Repeals permanently the Alternative Minimum Tax on Housing Credits for buildings 

placed in service after December 31, 2007. 

• Sets the 70 percent present value (“9 percent”) Credit applicable percentage at the 

greater of current law and 9 percent, with a sunset date of December 31, 2013, effective 

for buildings placed in service after date of enactment. 

• Eliminates below-market federal loans from the definition of federally subsidized 

properties, allowing the 9 percent Credit on all federally subsidized properties, except 

for tax-exempt bond financed properties, effective for buildings placed in service after 

date of enactment. 

• Clarifies that the eligible basis of a building shall not include any costs financed with the 

proceeds of a federally funded grant, effective for buildings placed in service after date 

of enactment. 

• Eliminates the prohibition on the 30 percent basis boost for HOME-assisted properties in 

qualified census tracts (QCT) or difficult development areas (DDA), effective for 

buildings placed in service after date of enactment. 

• Authorizes allocating agencies to award a 30 percent “basis boost” to buildings that 

states determine need the boost to be economically feasible, effective for buildings 

placed in service after date of enactment. 

• Clarifies the general public use test to explicitly allow Credit developments that 

establish tenancy restrictions for persons with special needs, tenants who are involved 

in artistic or literary activities, and persons who are members of a specified group under 

a Federal or state program or policy that supports housing for such a specified group, 

effective for buildings placed in service before, during, and after date of enactment. 

• Repeals the Housing Credit ten-year (anti-churning) rule for acquisition of Housing 

Credits for projects currently subsidized pursuant to certain specified HUD and USDA 

housing programs and similar state assisted programs, effective for buildings placed in 

service after date of enactment. 

o Programs included are HUD Section 8, Section 221(d)(3), Section 221(d)(4), 

Section 236, and USDA Section 515 and any other housing program 

administered by HUD or the Rural Housing Service of the Department of 

Agriculture. 

• Modifies HUD’s income limit methodology for calendar years after 2008 to require HUD 

to increase applicable area median incomes by the amount area median incomes rise, 

even if the HUD-determined area median incomes would be frozen under HUD’s 2007 

and 2008 income limit methodology. 

Revised, 8/6/08

• Adds energy efficiency and historic character to items that must be factored into state 

QAPs, effective for allocations made after December 31, 2008. 

• Modifies the Housing Credit student rule to make children who received foster care 

assistance eligible for Housing Credit apartments, effective for determinations after date 

of enactment. 

• Defines area median income in rural areas as the greater of the area median income and 

the national non-metropolitan median income, effective for income determinations 

made after date of enactment, applicable only to 9 percent Credit developments. 

• Increases the minimum rehabilitation threshold for acquisition and rehabilitation 

Credits to the greater of 20 percent of eligible basis and $6,000 per unit, effective for 

Housing Credit allocations made after date of enactment for non-bond-financed 

developments and effective for bonds allocated after date of enactment for bondfinanced 

developments. Adjusts per unit limit for inflation in future years. 

• Expands the allowable basis for community service facilities, effective for buildings 

placed in service after date of enactment. 

• Relaxes the Housing Credit related party rule restricting investment in properties 

owned by related parties, effective for buildings placed in service after date of 

enactment. Expands allowable related party interest to 50 percent from 10 percent. 

• Allows Housing Credits on properties financed with HUD’s Section 8 Moderate 

Rehabilitation program, effective for buildings placed in service after date of enactment. 

• Extends the time developers have to meet the 10 percent carryover allocation test to one 

year from allocation, effective for buildings placed in service after date of enactment. 

• Eliminates the annual income recertification requirement for 100 percent qualified unit 

developments, applicable for years ending after the date of enactment. 

• Repeals the Housing Credit recapture bond rule, effective for future dispositions and 

past dispositions if: a) it is reasonably expected the building will continue to be 

operated as a qualified low-income building; and b) the taxpayer elects to be subject to 

the new longer statute of limitations. 

• Excludes military employees’ basic allowance for housing from the definition of income 

if they are housed in a building located in a county with a military base that had its 

population grow by 20 percent or more between December 31, 2005 and June 1, 2008, or 

any county adjacent to such a county. Applies to new and existing 9 percent Credit 

buildings for determinations made after date of enactment and before January 1, 2012. 

GAO Study 

• Directs the GAO to complete a report analyzing the implementation of the bill’s 

Housing Credit changes and the distribution of Housing Credit allocations before and 

after the effective date of such modifications by December 31, 2012. 

Housing Bond Provisions 

• Provides $11 billion in new tax-exempt Housing Bond authority in 2008 for single-family 

and multifamily housing activities. Authority is available through 2010. 

• Clarifies that unused authority in 2008 and 2009 can be carried forward, but amounts 

carried forward must be used for housing issues. 

Revised, 8/6/08

• Makes refinancing an eligible MRB activity for 2008-2010 for adjustable rate singlefamily 

mortgages made after December 31, 2001, and before January 1, 2008, that the 

bond issuer determines would be reasonably likely to cause financial hardship to the 

borrower if not refinanced. 

• Exempts permanently Housing Bonds from the Alternative Minimum Tax, effective for 

bonds issued after date of enactment. 

• Allows HFAs to use Housing Bonds for single-room occupancy units, effective for bonds 

issued after date of enactment. 

• Modifies the tax-exempt bond next available unit and student rules to make them 

consistent with the Credit rules, effective for bonds issued after date of enactment. 

• Extends MRB disaster relief by waiving the first-time homebuyer rule and increasing 

purchase price and income limits to targeted area requirements in presidentially 

declared disaster areas established on or after May 1, 2008 and on or before January 1, 

2010, effective for bonds issued after May 1, 2008. 

• Permits recycling of tax-exempt multifamily bonds— 

o If the second (refunding) bond is issued within six months of loan repayment and 

not later than four years of original issuance. 

o Second bond (refunding bond) does not generate new Housing Credits. 

o Effective for loan repayments made after date of enactment. 

First-Time Homebuyer Credit 

• Establishes a first-time homebuyer refundable tax credit equal to 10 percent of the 

purchase price of a principal residence, not to exceed $7,500. 

• Phases out the credit for taxpayers with incomes over $75,000 ($150,000 for joint 

returns). 

• Prevents credit from being allowed to any taxpayer for any taxable year if: 

o The taxpayer receives the District of Columbia first-time homebuyer credit. 

o The residence is financed by the proceeds of a tax-exempt MRB. 

o The taxpayer is a nonresident alien. 

o The taxpayer disposes of such residence before the close of the taxable year. 

• Allows the credit for purchases on or after April 9, 2008 and before July 1, 2009. 

• Requires taxpayers receiving the credit to repay it over 15 years in equal installments by 

imposing a surcharge on the taxpayers’ annual income tax. 

Revised, 8/6/08

Emergency Assistance for the Redevelopment of Abandoned and Foreclosed Homes 

(Neighborhood Stabilization Funding) 

Key Provisions for HFAs 

• Appropriates $3.92 billion for grants to states and localities for the redevelopment of 

abandoned and foreclosed homes and $180 million for housing counseling. 

• Requires HUD to establish a funding allocation formula based on the number and 

percentage of home foreclosures, subprime mortgages, and homes in default or 

delinquency in each state or locality. 

• Amounts appropriated will be treated as though such funds were community 

development block grant (CDBG) funds. This implies 70 percent of the funds will be 

distributed to localities and 30 percent to states, as under the CDBG program. 

• Establishes a minimum state allocation of 0.5 percent of the funds ($19.6 million based 

on $3.92 billion amount). 

• Requires all funds be used with respect to individuals and families whose income does 

not exceed 120 percent of area median income (AMI). 

• Requires that at least 25 percent of the funds be used for the purchase and 

redevelopment of homes and properties that will be used to house individuals and 

families with incomes not greater than 50 percent of AMI. 

• Requires states and local governments to give priority emphasis and consideration to 

areas with the greatest need, including those: with the greatest percentage of home 

foreclosures, the highest percentage of subprime mortgages, and those at risk of 

increased foreclosures. 

• Directs states and local governments to use their allocation within 18 months of receipt. 

• Directs entities approved by HUD or the Neighborhood Reinvestment Corporation 

(NRC) and state housing finance entities receiving foreclosure mitigation counseling 

funds to identify and coordinate with nonprofit organizations operating national or 

statewide toll-free foreclosure prevention hotlines. 

Other Significant Provisions 

Eligible Uses 

• Allows funds to be used for establishing financing mechanisms for purchase and 

redevelopment of foreclosed homes, purchasing and rehabilitating properties that have 

been abandoned or foreclosed, establishing land banks for foreclosed homes, 

demolishing blighted structures, and redeveloping demolished or vacant properties. 

• Purchases of foreclosed homes must be at a discount from the current market appraised 

value of the home or property. 

• Sales of these homes and properties to an individual as a primary residence must be in 

an amount equal or less than the cost to acquire and rehabilitate such home or property. 

• Creates a five-year reinvestment period in which revenue from the sale, rental, 

redevelopment, rehabilitation, or other eligible use in excess of the cost to acquire and 

rehabilitate the home or property must be used by the state or locality in accordance 

with the provisions of this Act. 

• No matching funds are required. 

Revised, 8/6/08

• Requires the Secretary ensure, to the maximum extent practicable and for the longest 

feasible term, that the homes and properties remain affordable. 

Housing Counseling 

• Appropriates $180 million to the NRC to remain available until September 30, 2008 for 

foreclosure mitigation activities. 

• Requires the NRC to use $30 million of the $180 million in counseling funds to make 

grants to counseling intermediaries or to hire attorneys and assist homeowners with 

legal issues directly related to the homeowner’s foreclosure, delinquency, or short sale. 

• Requires that at least 15 percent of counseling funds be provided to counseling 

organizations that target loss mitigation counseling services to minority and low-income 

homeowners or provide such services in neighborhoods with high concentrations of 

minority and low-income homeowners. 

Revised, 8/6/08


FHA Modernization Act of 2008 

• Increases the FHA loan limit from 95 percent to 115 percent of area median home price, 

up to 150 percent of the GSE conforming loan limit, or $625,000, effective January 1, 

2009. 

• Requires a down payment of at least 3.5 percent for any FHA loan. 

• Places a 12-month moratorium on HUD implementation of risk-based premiums. 


• Prohibits seller-financed down payments. 

• Allows down payment assistance from family members. 

• Imposes a 100 percent loan-to-value (LTV) ratio cap on FHA-insured mortgages. Adds 

the FHA upfront mortgage insurance premium to the insured mortgage, including it in 

the calculation of the LTV ratio. 

• Expands HUD’s Home Equity Conversion Mortgage (HECM) program. 

• Establishes a pilot program to test alternative automated underwriting systems for 

borrowers without sufficient credit history. 

• Directs HUD to consult with industry, the Neighborhood Reinvestment Corporation 

(NRC), and other entities involved in foreclosure prevention activities to develop and 

implement a plan to improve FHA’s loss mitigation process. 

• Establishes a three-year pre-purchase homeownership counseling demonstration. 

Multifamily Insurance Premiums 

• Prevents HUD from increasing FHA multifamily premiums until October 1, 2009. 

Manufactured Housing 

• Restructures FHA’s manufactured housing insurance program and increases consumer 

protections for manufactured home residents. 

Revised, 8/6/08


Federal Housing Finance Regulatory Reform Act of 2008 

(Government-Sponsored Enterprises (GSE) Reform) 

• Establishes a GSE-financed housing trust fund to provide grants to states for rental and 

homeownership activities targeted to extremely low-income families. 

• Requires Fannie Mae and Freddie Mac to set aside an amount equal to 4.2 basis points 

for each dollar of the unpaid principal balance of its total new business purchases and to 

transfer 65 percent of that amount to HUD to fund the new Housing Trust Fund and 35 

percent to Treasury to fund the new Capital Magnet Fund. 

• Directs all the GSE set-aside funds the first year, half of the funds the second year, and 

25 percent of the funds the third year to a special fund to offset the costs of the new FHA 

refinancing program. 

• Increases Fannie Mae and Freddie Mac’s high-cost area loan limits to the lesser of 115 

percent of the median house price and 150 percent of the conforming loan limit, or 

$625,000, effective January 1, 2009. 

• Strengthens Fannie Mae and Freddie Mac’s affordable housing goals by lowering the 

income limit on qualifying mortgages from 100 percent of area median income (AMI) to 

80 percent of AMI; requiring Fannie Mae and Freddie Mac to serve a variety of 

underserved markets, such as rural areas, manufactured housing, and preservation; and 

expanding the regulator’s enforcement powers. 


New Regulator with Expanded Powers 

• Creates a new, independent GSE regulator named the Federal Housing Finance Agency 

(FHFA). 

• Gives the FHFA director banking regulator-type powers over Fannie Mae, Freddie Mac, 

and the Federal Home Loan Banks (FHLBs). 

• Requires the director to establish criteria for the portfolio holdings of the GSEs and to 

establish risk-based capital requirements for the GSEs and FHLBs. 

• Gives the Federal Reserve Board a consultative role in advising the new GSE regulator 

on capital standards and other regulations. 

• Requires each GSE to obtain initial approval from the director before offering any new 

product. 

• Sets the conforming loan limits for Fannie Mae and Freddie Mac at $417,000 for a 

mortgage on a single-family home. Allows the FHFA to adjust the limit on January 1 of 

each year to recognize price changes. 

• Gives Treasury temporary authority to purchase obligations and securities issued by the 

GSEs, if the Treasury Secretary determines the action is necessary to provide stability to 

the financial markets, prevent disruptions in the availability of mortgage finance, and 

protect the taxpayer. 

Revised, 8/6/08

Mission Improvement 

• Requires the director to give full credit toward the achievement of the multifamily 

special affordable housing goal to units in multifamily housing that otherwise qualify 

under the goal and that are financed by tax-exempt or taxable bonds issued by a state or 

local housing finance agency, if the bonds, in whole or in part, are secured by a 

guarantee of the enterprise or are purchased by the enterprise (with the exception that 

less than full credit may be given for purchases of investment grade bonds, to the extent 

that such purchases do not provide a new market or add liquidity to the existing 

market). 

• Requires new affordable housing goals similar to those that apply to Fannie Mae and 

Freddie Mac for FHLB mortgage purchase programs and requires the FHLBs to create a 

public-use database for the programs. 

• Allows Treasury-certified Community Development Financial Institutions (CDFIs) to 

join FHLBs. Allows CDFI FHLB members to use FHLB advances for community 

development purposes. 

Affordable Housing Trust Fund 

• Establishes a Housing Trust Fund to provide grants to states for use: 

o To increase and preserve the supply of rental housing for extremely low and very 

low-income families, including homeless families; and 

o To increase homeownership for extremely low and very low-income families. 

• Allows states receiving grants to designate a state housing finance agency, housing and 

community development entity, tribally designated housing entity, or any other 

qualified instrumentality of the state to receive the grant funds. 

• Requires the HUD Secretary to establish a needs-based formula for distributing funds to 

the states within 12 months of enactment of the bill. 

• Establishes a minimum state allocation of $3 million. 

• Requires the state or state-designated entity receiving grant funds to establish an 

allocation plan. 

• Defines eligible activities as production, preservation, and rehabilitation of rental 

housing and production, preservation, and rehabilitation of housing for 

homeownership, including down payment assistance, closing cost assistance, and 

assistance for interest rate buy-downs. 

• All assistance must be used to benefit very low- income families (with incomes not 

greater than 50 percent of area median income (AMI)) and at least 75 percent of 

assistance received must be used to benefit extremely low-income families (with 

incomes not greater than 30 percent of AMI). 

• Limits state spending on homeownership activities to not more than 10 percent of total 

assistance provided. 

• Requires state grantees to use or commit all funds within two years of when they 

become available. 

• Requires state grantees to submit an annual report to the Secretary describing the 

activities funded by the grants and compliance with established allocation plans. 

Capital Magnet Fund 

Revised, 8/6/08

• Establishes the Capital Magnet Fund within the Treasury’s Community Development 

Financial Institutions Fund. 

• Directs Treasury to carry out a competitive grant program to attract private capital and 

increase investment for: 

o The development, preservation, rehabilitation, or purchase of affordable housing for 

primarily extremely low, very low, and low-income families; and 

o Economic development activities or community service facilities which, in 

conjunction with affordable housing activities, stabilize or revitalize a low-income 

area or underserved rural area. 

• Defines eligible grantees as Treasury-certified community development institutions and 

nonprofit organizations having as one of their principal purposes the development or 

management of affordable housing. 

Set-Aside Provisions 

• Allows the Director to suspend the set-aside requirement if it would contribute to the 

financial instability of the enterprise, would cause the enterprise to be undercapitalized, 

or would prevent the enterprise from successfully completing a capital restoration plan. 

• Prohibits Fannie Mae and Freddie Mac from passing the cost of the set-asides to lenders. 

Revised, 8/6/08


HOPE for Homeowners Act of 2008 

(FHA Foreclosure Prevention Refinancing Program) 

• Authorizes the FHA to insure refinance loans for distressed borrowers to prevent 

foreclosures. 

• Authority goes into effect for mortgage commitments on or after October 1, 2008 and 

expires September 30, 2011. 

• Limits the aggregate original principal obligation of all mortgages insured to $300 

billion. 

• Limits mortgage amounts to not more than 90 percent of the appraised value of the 

property. 

• Requires existing mortgage holders to accept the proceeds of the insured loan as 

payment in full for all indebtedness. 

• Mortgages must bear interest at a single rate that is fixed for the entire term of the 

mortgage and have a maturity of not less than 30 years. 

• The principal obligation amount of each mortgage shall not exceed 132 percent of the 

2007 FHA mortgage insurance program limit for the area in which the property is 

located. 


• Restricts eligibility to mortgages on principal residences. 

• Creates a Board, composed of the HUD Secretary, the Secretary of the Treasury, the 

Chair of the Board of Governors of the Federal Reserve System, and the Chair of the 

Board of Directors of the Federal Deposit Insurance Corporation, to establish program 

requirements and standards and to provide necessary guidance. 

Requirements for Insured Mortgages 

• The mortgagor must lack the capacity to pay the existing mortgage. 

• The mortgagor must certify that there was not intentional default on the mortgage or 

other debt and that no false information was used to obtain any eligible mortgage. 

• The mortgagor must have had a mortgage debt-to-income ratio, including all existing 

mortgages, greater than 31 percent as of March 1, 2008. 

• Requires lenders to waive or forgive all penalties for prepayment or refinancing and all 

fees and penalties related to default or delinquency on the eligible mortgage. 

• A mortgagor may not grant a new second lien on the mortgaged property during the 

first five years of term of the newly insured mortgage, with exceptions for second liens 

necessary to ensure the maintenance of property standards. Second liens cannot reduce 

the value of the Government’s equity in the borrower’s home and, when combined with 

the mortgagor’s existing mortgage indebtedness, cause total indebtedness to exceed 95 

percent of the home’s appraised value at time of the second lien. 

• Establishes a 3 percent upfront mortgage insurance premium and a 1.5 percent annual 

premium for all mortgages insured under this program. 

Revised, 8/6/08

• Directs the Board to establish reasonable limits on origination fees and procedures to 

ensure that interest rates are commensurate with market interest rates. 

• Establishes an equity-sharing system applicable if a HOPE mortgage property is sold or 

refinanced within five years, as follows: 

o Within one year, the Secretary is entitled to 100 percent of the equity. 

o After one year but within two, the Secretary is entitled to 90 percent of the equity 

and the mortgagor is entitled to 10 percent. 

o After two years but within three, the Secretary is entitled to 80 percent of the equity 


o After three years but within four, the Secretary is entitled to 70 percent of the equity 


o After four years but within five, the Secretary is entitled to 60 percent of the equity 


o After five years, the Secretary is entitled to 50 percent of the equity and the 

mortgagor is entitled to 50 percent. 

HOPE Fund 

• Establishes within FHA a revolving fund called the Home Ownership Preservation 

Entity (HOPE) Fund to be used for mortgage insurance obligations. 

• Requires the Board to submit monthly reports to Congress identifying progress of the 

HOPE for Homeowners Program. 

• Authorizes Ginnie Mae to guarantee securities based on and backed by a trust or pool 

composed of HOPE mortgages. 

• Authorizes HUD to insure mortgages under this program effective for commitments 

made on or after October 1, 2008 and on or before September 30, 2011. 

Study of Auction or Bulk Refinance Program 

• Directs the Board to study the need for an auction or bulk refinancing mechanism to 

refinance existing mortgages that are at risk of foreclosure. 

Revised, 8/6/08

Mortgage Foreclosure Protections for Servicemembers 

• Temporarily increases the maximum loan guarantee for Veterans Affairs-guaranteed 

loans to 25 percent of the higher of the applicable GSE loan limit and 125 percent of the 

area median price for a single-family residence (provided the amount does not exceed 

175 percent of the conforming loan limit), whichever is higher. 

• Directs the Secretary of Defense to develop and implement a program to advise 

members of the Armed Forces who are returning from service on active duty abroad on 

actions to take to prevent or forestall foreclosure. 

• Extends, effective from date of enactment until December 31, 2010, the period a lender 

must wait before starting foreclosure proceedings from three months to nine months 

after a serviceperson returns from service. 

• Suspends increases in mortgage interest rates in excess of 6 percent during the service 

period and for one year after a serviceperson ends his/her service. 

o Interest includes service charges, renewal charges, fees, or any other charges 

(excepting bona fide insurance) with respect to an obligation or liability. 

o This provision sunsets on January 1, 2011. 

Secure and Fair Enforcement for Mortgage Licensing Act of 2008 

• Encourages the Conference of State Bank Supervisors and the American Association of 

Residential Mortgage Regulators to create a Nationwide Mortgage Licensing System 

and Registry that would establish minimum national standards for all residential 

mortgage brokers and lenders. 

• Requires that the federal banking agencies create a system for registering employees of 

depository institutions or subsidiaries as registered loan originators with the 

nationwide system and registry. 

• Requires states to establish state licensing and registration systems. 

• Prohibits lenders from issuing loans if they have not registered with the national and 

state systems. 

• Grants HUD the authority and enforcement power to back up the national system and 

registry or create its own nationwide system and registry if the above nationwide 

system fails or is not established. 

• Requires the Secretary to submit, within 12 months of enactment, a report to Congress 

on the root causes of default and foreclosure of home loans. 

Conversion of Project-Based Rental Assistance Contracts 

• Allows the Secretary to convert, at the request of an owner of a multifamily housing 

project that exceeds 5,000 units to which a contract for Section 8 project-based rental 

assistance and a Rental Assistance Payment contract is subject, such contracts to a 

Section 8 project-based rental assistance contract. 

Revised, 8/6/08

Mortgage Disclosure Improvement Act 

• Amends the Truth-in-Lending Act (TILA) to expand the types of home loans subject to 

early disclosures and improve loan disclosures given to individuals and families on 

original and refinancing home loans. 

• Requires that mortgage loan terms be disclosed no later than seven days before closing, 

and if terms change, not later than three, including the maximum loan payment for 

adjustable rate mortgages. 

Reforms Related to Real Estate Investment Trusts (REITs) 

• Modernizes REIT rules to liberalize the regulation of real estate investment trusts. 

General Provisions 

Revenue Provisions 

• Extends and expands certain Gulf Opportunity (GO) Zone incentives to provide 

assistance to taxpayers located within the GO Zone. 

• Expands the use of the bonus depreciation provision enacted as a part of the Economic 

Stimulus Act of 2008. 

• Allows taxpayers to elect to accelerate the recognition of a portion of their historic AMT 

or research and development (R&D) credits in lieu of the bonus depreciation tax benefit 

that was included in the Economic Stimulus Act of 2008. 

Revenue Offsets 

• Contains the following revenue-raising provisions: 

o Establishes information-reporting requirement on payment card and third-party 

network transactions; 

o Excludes gain on sales of a principal residences not to apply to nonqualified use; 

o Delays implementation of the worldwide interest allocation rules for two years; and 

o Modifies corporate estimated tax payment rules. 

Revised, 8/6/08


Housing Tax Credit Coordination Act of 2008 

• Requires state Housing Credit allocating agencies to report Housing Credit tenant data 

to HUD annually, including tenant race, ethnicity, family composition, age, income, use 

of rental assistance or other similar assistance, disability status, and monthly rental 

payments. 

• Streamlines FHA multifamily insurance processing for Housing Credit transactions. 

• Allows qualified and willing HFAs to underwrite Section 202 program transactions. 


Section 8 Assistance 

• Increases project-based voucher program flexibility 

o Increases the maximum Section 8 voucher contract period to 15 years from 10 year. 

o Allows project-based voucher rents in Housing Credit developments to reach 

normally allowed voucher maximum rent, even if greater than Housing Credit rent. 

o Eliminates HUD’s subsidy layering review for project-based vouchers if a state or 

locality has completed such review for Housing Credit purposes. 

o Repeals the requirement that PHAs undertake environmental review for housing 

assistance payments contracts unless otherwise required. 

o Clarifies standards for voucher rent reasonableness for Housing Credit 

developments. 

McKinney-Vento Homeless Assistance 

• Extends the time period for completion of Shelter Plus Care projects utilizing Housing 

Credits. 

• Authorizes 15 year terms for renewal of Shelter Plus Care permanent housing assistance 

contracts. 

Section 202 

• Requires delegated processing of all new Section 202 elderly housing grants that also use 

funding sources not associated with HUD. 

Revised, 8/6/08

Summary 

of 

H.R. 3221

SUMMARY OF H.R. 3221 – THE HOUSING AND ECONOMIC RECOVERY ACT OF 

2008 

The House and Senate have both passed omnibus legislation relating to the mortgage markets, 

Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. The President is expected to sign 

the bill into law later this week. 

The legislation will consolidate the governance of Fannie Mae, Freddie Mac and the Federal 

Home Loan Banks under a single regulator, with powers similar to those of the banking 

regulators. It will provide the Treasury Department with the authority to make direct 

investments in Fannie Mae, Freddie Mac and the Federal Home Loan Banks, if necessary; it will 

reform the Federal Housing Administration and create a new, voluntary FHA backed refinance 

plan for troubled borrowers; and it will provide for licensing of mortgage brokers and the 

registration (through their primary regulator) of mortgage lenders working for a bank. Due to the 

size of the bill, we have provided separate summaries of the key sections of the bill. The links 

below will take you to each of these individual summaries. Should you need further information 

about the legislation, please contact ABA Vice President and Sr. Counsel Joseph Pigg at 

JPigg@aba.com or (202) 663-5480 or Executive Vice President Bob Davis at BDavis@aba.com 

or (202) 663-5588. 

HR 3221 DIVISION A -TITLE I – FANNIE MAE AND FREDDIE MAC 

GENERAL 

Title I of the Housing and Economic Recovery Act of 2008, HR 3221, creates a new and more 

powerful regulator for Fannie Mae and Freddie Mac, the ―GSEs.‖ The title also grants the 

Treasury Department broad temporary authority to purchase obligations of these GSEs. The new 

regulator will have all of the powers of the current GSE regulator, OFHEO, plus additional 

powers over capital, product approval, prudential management and operation standards, 

executive compensation, prompt corrective actions and enforcement actions. The title also 

revises the mission and housing goals of the GSEs, creates a national Housing Trust Fund and 

Capital Magnet Fund and includes a higher conforming loan limit for mortgages in high cost 

areas. 

NEW REGULATOR - The new regulator will be known as the Federal Housing Finance 

Agency( the ―Agency‖). This agency will assume the duties of the Office of Federal Housing 

Enterprise Oversight of the Department of Housing and Urban Development and the Federal 

Housing Finance Board. The authorizing statutes for the Agency will be the Federal National 

Mortgage Association Charter Act, the Federal Home Loan Mortgage Corporation Act and the 

Federal Home Loan Bank Act. 

The Agency will be an independent agency of the federal government, meaning that the Agency 

will be funded by assessments from the entities it supervises and will not be funded by annual 

appropriations from Congress as is currently the case for OFHEO. The Director of the Agency 

will be appointed by the President and confirmed by the Senate for a term of five years. The 

Title establishes separate deputy directors for the GSEs, the Home Loan Banks and the Housing 

AMERICAN BANKERS ASSOCIATION 1

Mission and Goals of the GSEs. The Director‘s principal duties are to oversee the prudential 

operations of each regulated entity, and to ensure that each entity operates in a safe and sound 

manner, including maintenance of adequate capital and internal controls, the operations and 

activities of each entity foster liquid, efficient, competitive, and resilient national housing finance 

markets and the entities comply with this Act, their mission and in a manner consistent with the 

public interest. 

The Director will be advised by a Federal Housing Finance Oversight Board composed of the 

Secretary of the Treasury, the Secretary of Housing and Urban Development, the Chairman of 

the Securities and Exchange Commission and the Director, who shall serve as the Chairperson of 

the Board. The Director has the ability to require regular and special reports from the GSEs and 

to impose penalties for any failure to file reports. The Agency will have an examination staff 

and the ability to make assessments to cover the cost of running the Agency and supervising the 

GSEs. The Director also has general rule making and regulatory authority. 

The Director is required to establish prudential management and operations standards governing 

the following topics: internal controls and information systems, internal audit systems, 

management of interest rate risk exposure, management of market risk, adequacy and 

maintenance of liquidity and reserves, management of asset and investment portfolios growth, 

investments and acquisitions of assets, overall risk management processes, including oversight 

by senior management and the boards of the GSEs, reputational risk, business resumption plans, 

management of credit and counterparty risk, maintenance of adequate records and such other 

operational and management standards as the Director determines to be appropriate. The 

Director is required to consult with and consider the views of the Chairman of the Federal 

Reserve Board when establishing these standards, the capital requirements of the GSEs and any 

decision to place a GSE in conservatorship or receivership. 

PORTFOLIO MANAGEMENT - The Director shall regulate the portfolio holding of the GSEs 

to ensure that the holdings are backed by sufficient capital, and consistent with the mission and 

the safe and sound operations of the GSEs. In establishing such criteria, the Director shall 

consider the ability of the GSEs to provide a liquid secondary market through securitization and 

the portfolio holdings in relation to the overall mortgage market. The Director has authority to 

make temporary adjustments to the portfolio holdings of a GSE by order. 

RISK BASED CAPITAL LEVELS - The Director also has authority to set risk-based capital 

levels for the GSEs. The Director may establish risk-based capital requirements for any product 

or activity of a GSE to ensure that the GSE operates in a safe and sound manner, with sufficient 

capital and reserves to support the risks that arise in its operation. The Title also requires the 

GSEs to register their securities with the SEC under the securities laws. The Director also has 

the authority to limit golden parachutes to executives of the GSEs, and to review and limit the 

compensation of the senior executives of the GSEs. 

TEMPORARY AUTHORITY FOR TREASURY TO INVEST IN THE GSEs - Title I 

grants the Secretary of the Treasury temporary authority to purchase obligations and securities of 

the GSEs and Home Loan Banks. This authority authorizes the Secretary of the Treasury to 

purchase any obligations and other securities issued by the GSEs and Home Loan Banks on such 


terms, conditions as the Secretary may determine ,in such amounts as the Secretary may 

determine, although nothing permits the Secretary to engage in open market purchase of the 

common securities of the GSEs. This authority may only be used if the Secretary determines 

that such actions are necessary to provide stability to the financial markets, prevent disruptions in 

the availability of mortgage finance and to protect taxpayers. This authority also allows the 

Secretary to require restrictions on the use of GSE resources, including the payment of dividends 

and executive compensation. This authority expires on December 31, 2009. 

PRODUCT APPROVAL - The Director is given the authority to review products offered by the 

GSEs, including the authority to require prior approval for any product before initially offering 

the product. This section includes a process for public comment on product approvals and 

conditional approvals prior to final approval. Nothing in this section limits the ability of the 

Director to review new and existing products or activities for compliance with the safe and sound 

operation of the GSEs and for consistency with the mission of the GSEs. 

CONFORMING LOAN LIMITS - This title establishes new conforming loan limits for the 

GSEs and authorizes higher limits in ―high-cost areas.‖ These limits are adjusted each year 

based on the housing price index maintained by the Director of the Federal Housing Finance 

Agency. The new conforming loan limit is $417,000 and up to $625,500 in ―high-cost areas.‖ 

The GSEs and the Agency are also required to prepare a number of annual reports on the housing 

markets. 

HOUSING GOALS - The title makes numerous revisions to the housing goals of the GSEs. 

The GSEs will have separate goals for single family housing and multifamily special affordable 

housing, The single family housing goal will include goals for purchasing money mortgages, 

the inclusion of low-income families, low income areas, very low income families, refinancings 

and single-family owner occupied rental housing. The Director will have the authority to 

provide adjustments to the goals based on market and economic conditions. The GSEs will also 

have a duty to serve underserved markets. 

HOUSING TRUST FUND - Section 1131 of the bill imposes a new requirement on the GSEs 

to support affordable housing and creates a permanent Housing Trust Fund and Capital Magnet 

Fund. Under this section, each year the GSEs must set aside an amount equal to 4.2 basis points 

of each dollar of the unpaid principal balance of their total new business purchases and allocate, 

or otherwise transfer, 65% of such amounts to the Housing Trust fund to be run by the 

Department of Housing and Urban Development, and 35% into the Capital Magnet Fund to be 

run by the Secretary of the Treasury. 

During calendar year 2009, 100% of these funds will be used to cover losses under the Hope For 

Homeowners Title of the bill(the title establishing the FHA guarantee program for the 

refinancing of mortgages on certain owner occupied homes). In calendar year 2010, 50% of 

these funds will be used to cover such losses; and in Calendar year 2011, 25% of these funds will 

be used to cover such losses. Any funds not needed for such purposes will be used for their 

original purpose – the Housing Trust Fund and the Capital Magnet Fund. 


The Housing Trust Fund will provide grants to the states to increase and preserve the supply of 

rental housing for extremely low- and very low-income families, (including homeless families), 

and to increase homeownership for extremely low- and very low-income families. The Capital 

Magnet Fund is a special account within the Community Development Financial Institutions 

Fund. The Capital Magnet Fund will be available to the Secretary of the Treasury to carry out a 

competitive grant program to attract private capital for and increase investment in the 

development, preservation, rehabilitation or purchase of affordable housing, primarily for 

extremely low- , very low-, and low-income families; economic development activities or 

community service facilities, such as day care centers, workforce development centers and health 

care clinics, which, in conjunction with affordable housing activities, implement a concerted 

strategy to stabilize or revitalize a low-income or underserved rural areas. 

The director may temporarily suspend allocations from the GSEs to these funds if such 

contributions would contribute to the financial instability of the GSEs, cause the GSEs to 

become classified as undercapitalized or prevent the GSEs from successfully completing a 

capital restoration plan. The section also prohibits the GSEs from redirecting the costs of the 

allocations through increased charges or fees, decreased premiums or any other manner to 

mortgage originators, mortgages purchased or securitized by the GSEs. 

The Housing Trust Fund and Capital Magnet Fund sections contain detailed descriptions of how 

they should operate and how funds should be allocated, used andunused. The section also limits 

the ability of the GSEs to be involved in the allocation and use of the funds, and prohibits their 

use for any type of political activity. 

PROMPT CORRECTIVE ACTION - The Title grants the regulator broad, bank-like prompt, 

corrective action powers, including the ability to require the GSEs to conserve capital and create 

capital plans when they become undercapitalized. These sections also give the Director the 

authority to place the GSEs into conservatorship and receivership in certain circumstances. 

These powers are patterned after the powers the FDIC has to resolve failed and failing banks. 

ENFORCMENT AUTHORITIES - Finally, the title gives the Director broad enforcement 

powers similar to those enjoyed by the banking agencies. These powers include cease and desist 

authority; the ability to remove officers, directors or other employees from office and to prohibit 

them from participating in the affairs of the GSEs;and the ability to impose civil money 

penalties, limited criminal penalties and subpoena authority. The Director will also be free to 

testify before Congress as an independent federal agency. 


H.R 3221 DIVISION A – TITLE II - FEDERAL HOME LOAN BANKS 

NEW REGULATOR - This title changes the regulation of the Federal Home Loan Banks by 

placing the Banks under the same regulator as Fannie Mae and Freddie Mac. The new regulator, 

the Federal Housing Finance Agency (FHFB), replaces the Federal Housing Finance Board as 

the regulator of the Federal Home Loan Banks. 

UNIQUE NATURE OF THE SYSTEM TO BE CONSIDERED- The Director of the FHFA 

is required to take into consideration the FHLBanks‘ cooperative structure; mission to provide 

liquidity, affordable housing and community development; capital structure, and joint and 

several liability before issuing any regulation, examination or advisory document. 

FHLB BOARDS OF DIRECTORS - Sets the Board of Directors of each FHLBank at 13 

members or any other number determined by the Director of the FHFA. Each board must be 

made up of at least a majority of members of the FHLBank, with independent directors 

(including public interest directors) comprising not fewer than 2/5 of each board. 

At least two of the independent directors must be public interest directors with more than four 

years experience in banking, credit, housing or consumer financial protection. Independent 

directors cannot serve as an officer of any FHLBank or as an officer, director or employee of a 

member bank or entity that receives advances from a FHLBank. 

Board members are to be elected by a plurality vote and must be U.S. citizens. 

Independent directors shall be elected from eligible persons nominated by the Board of Directors 

of each FHLBank. Election shall be by a plurality vote of the membership. 

Director terms set at 4 years (current term is 3 years). 

The Director of the FHFA is required to submit an annual report to Congress on the 

compensation and expenses paid by each FHLBank to board members. 

Current directors shall serve until the end of their existing term. 

ISSUANCE OF CONSOLIDATED OBLIGATIONS– Replaces the Federal Housing Finance 

Board with the Office of Finance as the issuer of consolidated obligations of the Federal Home 

Loan Banks. 

HOUSING GOALS – Subjects the Federal Home Loan Banks to housing goals consistent with 

those required for Fannie Mae and Freddie Mac for any mortgages purchased by any Federal 

Home Loan Bank. In establishing goals for the FHLBanks, the Director of the FHFA must 

consider the unique mission and ownership structure of the Federal Home Loan Banks. 

COMMUNITY DEVELOPMENT FINANCIAL INSTITUIONS – Allows CDFIs to join the 

FHLBank System. 


SHARING OF INFORMATION AMONG FHLBS – Mandates that the Director of the FHFA 

establish regulations to allow the FHLBanks to share information among themselves in order for 

each Bank to be able to evaluate the financial condition of any one or more of the FHLBs. 

EXEMPTIONS FROM SECURITIES EXCHANGE ACT OF 1934 – Provides the 

FHLBanks and members with exemptions from certain reporting requirements under the 

Securities Exchange Act of 1934. 

VOLUNTARY MERGERS – Allows voluntary mergers of Federal Home Loan Banks and 

requires the Director of the FHFA to promulgate regulations establishing conditions and 

procedures for such mergers. 

REDUCTION OF FHLB DISTRICTS – Allows for a reduction of FHLBank districts to fewer 

than 8 through either voluntary mergers, or a liquidation mandated by the Director of the FHFA. 

COMMUNITY FINANCIAL INSTITUTIONS – The asset size limitation of Community 

Financial Institutions is increased to $1 billion. 

COLLATERAL REPORT – Requires an annual report from the Director of the FHFA to 

Congress on the collateral pledged to each Federal Home Loan Bank. 

PUBLIC DATABASE – Requires each FHLBank to provide the Director of the FHFA with 

census tract level data regarding Home Mortgage Data Act information on any mortgage loans 

purchased by the FHLBanks. 

REFCORP REPORT – Requires the Director of the FHFA to report to Congress semi-annually 

on the projected fulfillment date of the RefCorp obligation. 

NOTICE PRIOR TO LIQUIDATION – Requires the Director of the FHFA to provide at least 

30 days notice to a FHLB if the Director intends to liquidate that Bank. The Bank may contest 

such liquidation and be entitled to a hearing before the Director. 

SECURITIZATION OF ACQUIRED MEMBER ASSETS – Requires a study by the Director 

of the FHFA, due 1 year after enactment, on the securitization of Acquired Member Assets. 

STUDY ON COMPLIANCE WITH NON-TRADITIONAL MORTGAGE GUIDANCE – 

Requires a study by the Director of the FHFA, due one year after enactment, on the degree to 

which FHLBank advances are consistent with interagency guidelines on non-traditional 

mortgage products. 

USE OF AHP FUNDS TO ASSIST TROUBLED BORROWERS – Gives the Director of the 

FHFA authority to set a percentage of Affordable Housing Program funds which the Banks may 

use to refinance the first mortgage loans on primary residences for families at or below 80 

percent of median income. 


H.R. 3221 DIVISION A - TITLE IV – HOPE FOR HOMEOWNERS 

GENERAL - The legislation creates a voluntary program that would permit FHA to refinance 

up to $300 billion in loans, providing guarantees on refinanced loans to assist at-risk borrowers 

into viable mortgages. 

PARTICIPATION - In order to participate, a borrower or existing loan servicer of an eligible 

loan would contact an FHA-approved lender, who would determine the size of a loan that would 

be consistent with the requirements of the program and that the borrower could reasonably 

repay. If the current lender or mortgage holder agrees to a write-down to 87 percent of the 

current appraised value of the property (90 percent minus a 3 percent origination fee), the FHAlender 

will pay off the discounted existing mortgage from the proceeds of the new, FHA 

guaranteed loan. 

ELIGIBILITY REQUIREMENTS FOR EXISTING LOANS: 

Mortgage must be for owner-occupied principal residences (no investors, speculators or 

second homes), and borrowers must certify that they do not own any other homes. 

Mortgage must have been originated on or before January 1, 2008. Borrower must 

have a mortgage debt to income (DTI) ratio of not less than 31 percent as of March 1, 

2008, but this DTI can be set higher by the Oversight Board. Borrowers must certify that 

they have not intentionally defaulted on existing mortgage(s). Borrowers must 

acknowledge that any willful false statement relating to this provision is punishable by 

fine or imprisonment of not more than five years, or both. 

ELIGIBILITY REQUIREMENTS FOR PARTICIPATING HOLDERS/INVESTORS OF 

EXISTING LOANS: 

Participating mortgage holders/investors must waive any penalties or fees on the existing 

mortgage and must accept proceeds of the new loan as payment in full; and 

Agree to fund a single premium payment in an amount equal to 3 percent of the amount 

of the principal obligation of the new loan, funded by reducing the indebtedness on the 

original loan. This calculation brings the payout to the existing loan holder to 87 percent 

of the property‘s current appraised value. 

ELIGIBILITY REQUIREMENTS FOR NEW FHA-INSURED LOANS: 

New FHA loans must be properly underwritten and must be based on current appraised 

value of the house and borrower‘s documented income. The new loan cannot exceed 90 

percent of the appraised value of the property. Oversight Board can set DTI higher than 

the 31 percent in the legislation. 

Borrowers must agree to pay an ongoing annual premium in an amount equal to 1.5 

percent of the amount of the remaining principal balance of the mortgage. 

New loans must be at a fixed rate and for a term of not less than 30 years. 


New FHA loans under this program may not exceed 132 percent of the 2007 Freddie Mac 

limit (for a maximum program limit of $550,000). 

The FHA will retain a share of the borrower‘s future profits. When the borrower sells the 

home or refinances the loan, the borrower will pay from any profits the higher of a 

declining percentage of any net proceeds attributable to home appreciation (i.e., from 100 

percent in year one to 50 percent in year five and thereafter minus the fees the borrower 

has paid into FHA). 

Borrowers will be prohibited from taking out a second mortgage on the property for five 

years, except as determined necessary by the Board for maintenance of the property. Any 

such second liens cannot reduce the value of the Government‘s equity in the property. 

Total loan to value on the property (combining existing mortgage indebtedness and the 

second lien) cannot exceed 95 percent. 

OTHER PROGRAM DETAILS: 

Oversight Board. The program will be overseen by a ―Refinance Program Oversight Board‖ 

consisting of the Secretary of Treasury, the Secretary of HUD, and Chairman of the FDIC. 

Existing Lien-Holders and Shared Appreciation for Second Lien Holders. The Oversight 

Board will be authorized to allow existing second lien-holders to share in future appreciation in 

value and shall be empowered to establish a formula for compensating second lien holders. The 

Board is also given authority to take actions to facilitate and coordinate agreements among 

existing lien holders. 

Separate FHA Fund. To protect the FHA Mutual Mortgage Insurance Fund, these new loans 

will exist in a separate fund in FHA – and will be permitted to be resold through GNMA, with a 

maximum of $300,000,000,000 to be insured. 

Improving FHA Capacity. The Oversight Board will take actions as necessary to increase 

FHA‘s capacity including contracting for the establishment of underwriting criteria, pricing 

standards, and other factors relating to eligibility; and increasing HUD personnel. 

Auction or Bulk Refinance. The Oversight Board is required to conduct a study regarding the 

creation of an auction or bulk refinancing mechanism for mortgages on a bulk basis. The Board 

must issue a report within 60 days of enactment of this section. 

Appraisals. The bill requires enhanced appraisal standards and appraiser independence for 

loans originated under the program. 

Sunset. The program sunsets after September 30, 2011. 

Fiduciary Duty of Servicers of Pooled Mortgages. The bill contains a provision intended to 

provide servicers with a safe harbor from investor lawsuits if a servicer engages in loan 

modifications or refinancings pursuant to the HOPE for Homeowners Program. 


H.R. 3221 DIVISION A - TITLE V: S.A.F.E. MORTGAGE LICENSING ACT 

GENERAL 

Title V of the Bill, entitled ―The Secure and Fair Enforcement Mortgage Licensing Act of 2008,‖ 

establishes uniform professional standards for all mortgage originators, whether mortgage 

brokers or lenders, and whether they operate through federal or state licensing arrangements. 

The legislation creates a national registry, requiring licensing and/or registration for all mortgage 

originators, including loan officers of national banks and their subsidiaries. Under the Bill, 

licensing requirements apply at the ―individual,‖ not company level, ensuring that all mortgage 

professionals are trained in federal lending laws, ethics, consumer protection, and subprime 

market lending. The legislation would also create a national database that consumers can use to 

verify the credentials of their brokers and lenders. Importantly, the legislation makes a 

distinction between mortgage brokers, who will be licensed under state law, and mortgage 

lenders who are employees of banks and their subsidiaries, who will only register with their 

primary regulator. 

NATIONAL REGISTRATION SYSTEM 

Title V begins with an official Congressional recognition of the national mortgage licensing and 

registration system currently being developed and administered by the Conference of State Bank 

Supervisors (CSBS) and the American Association of Residential Mortgage Regulators 

(AARMR). This new system is recognized under as the ―Nationwide Mortgage Licensing 

System and Registry‖ (NMLSR). 

Section 1504 of the Bill then sets forth the basic, and very broad, requirement that individuals 

may not engage in originations of residential mortgage loans unless they obtain, and maintain, a 

license or registration, and obtain a unique identifier. States are then encouraged to establish 

licensing or registration systems that meet the standards set forth by the Bill. 

o In terms of coverage, a ―loan originator‖ is defined under the Bill as an individual who— 

� Takes loan applications and offers or negotiates terms of loans for 

compensation or gain. (Advising on loan terms, preparing loan packages, or 

collecting information on behalf of the consumer would qualify as 

―origination.‖) 

� Supervised loan processors and underwriters are specifically exempted from 

any requirement to register. ―Independent contractors‖ performing processors 

and underwriter tasks must, however, follow the registration requirements 

under the NMLSR (below). 

� Also excluded are properly licensed real estate brokers that perform such 

brokerage activities. 

Under the broad system established by this legislation, a mortgage originator must do two things 

to be compliant with the law‘s registration requirements — 

o Obtain a ―unique identifier‖ through the NMLSR. ―Unique identifier‖ is defined as a 

―number or other identifier‖ that identifies the specific originating individual, and is 

assigned to facilitate accurate tracking of individual originators; AND 


o Register and maintain such registration, as either— 

� A ―Registered loan originator‖ (defined as an individual who (1) is an 

employee of a depository institution (or wholly owned subsidiary), and (2) is 

registered and uniquely identified through the NMLSR), OR 

� A ―State-licensed loan originator‖ (defined as an individual who (1) is a loan 

originator not employed by a depository institution (or wholly owned 

subsidiary), (2) is licensed by a State or the HUD Secretary, and (3) is 

uniquely identified through the NMLSR). 

STANDARDS FOR LICENSURE 

State Licensing: 

In order to be recognized as adequately meeting the requisites of this Bill, State licensing and 

registration systems must participate with, and furnish information to, the NMLSR system. The 

Bill sets forth the following minimum items of information that applicants must furnish, 

including: applicant‘s identity, fingerprints for submission to FBI, and personal history 

(including experience, credit report, and past criminal history). 

Section 1505 of the Bill then defines the minimum standards allowable for licensing and 

registration as a ―State-licensed loan originator.‖ Under such minimum standards, an applicant 

must: 

o Have no felony convictions in domestic, foreign, or military courts; 

o Have no license revocation in any governmental jurisdiction; 

o Demonstrate a record of financial responsibility and general fitness; 

o Fulfill education requirements (20 hours of approved courses, to include at least 3 

hours related to federal laws, 4 hours on ethics and consumer protection in mortgage 

lending, and 2 hours on the sub-prime mortgage marketplace); 

o Pass a written exam (the Bill sets forth detailed standards for the composition of such 

exam, including minimum score of 75% required to pass, and retest criteria); and 

o Meet net worth or surety bond requirements. 

The Bill also sets forth the following minimum educational standards for State licensure 

renewal— 

o Satisfaction of annual continuing education requirements, including 8 hours of 

approved education, and other items specified under the Bill; 

o Continuous satisfaction of the minimum standards set forth above. 

SYSTEM OF FEDERAL REGISTRATION: 

Section 1507 of the Bill requires that the Federal Banking Agencies, jointly through the FFIEC 

(and the Farm Credit Administration), develop and maintain a system for registering employees 

of depository institutions, subsidiaries, or institutions regulated by the Farm Credit 

Administration. This system is required to be fully implemented within one year of the Bill‘s 

enactment. In that time frame, federal banking agencies would be ordered to register all 


esidential mortgage loan originators employed by federally regulated banks. Such registration 

must, at minimum, include a submission of the following information to the NMLSR— 

o Fingerprints, for submission to FBI and other appropriate agencies; 

o Personal history and experience information, including authorization to NMLSR 

to obtain additional administrative, civil, or criminal information relating to 

applicant. 

The Federal Banking agencies are required to coordinate with NMLSR to establish protocols for 

assigning unique identifiers to each registered loan originator. 

HUD BACK-UP AUTHORITY 

Section 1508 of the Bill authorizes the Secretary of HUD to determine, within one year of 

enactment, whether States have developed satisfactory licensing and registration systems 

pursuant to this bill. If the Secretary determines that such systems are not in place, the Secretary 

shall provide for the establishment and maintenance of a system for registry and license of loan 

originators operating in those states. 

Section 1508 of the Bill sets forth standards that HUD shall consider in determining whether the 

State systems satisfy minimum requirements. Such requirements should involve, among others, 

effective supervision and enforcement systems, including terminations and non-renewals for 

violators, and effective reporting of relevant information to NMLSR. The Bill commands that 

any system established by the Secretary shall meet the standards set forth to cover State-licensed 

loan originators, and HUD shall coordinate with NMLSR to establish protocols for assigning 

unique identifiers to such originators. 

The legislation creates extensive enforcement authority for HUD, pursuant to this backup 

licensing system Under the Bill, HUD may examine books and records of loan originators, 

assess fees to cover costs of examinations, issue cease and desist orders, including prohibitions, 

conditionally or unconditionally, against persons that violate this part, or demonstrate ―unfitness‖ 

to serve as loan originators. 

REPORTS AND RECOMMENDATIONS TO CONGRESS 

The Bill calls for the crafting of numerous reports and recommendations to Congress— 

o HUD must submit annual reports on the effectiveness of the provisions of this Act. 

Such reports shall include legislative recommendations to enhance the consumer 

protections and examination standards of the Act. 

o HUD is also ordered to submit, within 6 months of enactment, recommendations for 

legislative reforms to RESPA to promote more transparent disclosures, and to allow 

consumers to better compare prices and shop for mortgage loan terms; 

o HUD shall conduct ―extensive‖ study on the root causes of default and foreclosure of 

home loans, and issue preliminary and final reports. Congress also requests 

recommendations for ―Best Practices‖ and for processes to provide targeted 

assistance to populations with the highest default or foreclosure risks. 


H.R. 3221 – DIVISION B - TITLE I - FHA REFORM 

GENERAL - The legislation reforms the Federal Housing Administration programs to help 

them keep pace with innovations in the mortgage markets and to increase loan levels in higher 

cost areas. 

LOAN LIMITS - Increases FHA mortgage limits to a maximum of $625,500, however the 

added provisions do not impact the temporary limits set by the Economic Stimulus Act of 2008 

(setting a temporary limit of $729,750 through Dec. 31, 2008). 

FHA DOWNPAYMENT: Permits FHA to finance up to 100 percent of the appraised value of 

the property. Requires a borrower to make a cash investment of not less than 3.5 percent of the 

appraised value of the property, or such larger amount as the Secretary may determine. 

Continues current statutory language allowing family members to contribute funds to the 

mortgagor‘s cash investment, if repayment is secured by lien, lien is subordinate to mortgage and 

total of principal and loan may not exceed 100 percent of appraised value of property. 

DOWNPAYMENT ASSISTANCE RESTRICTION - Explicitly prohibits the following 

sources from contributing funds to the mortgagor‘s cash investment: the seller or any other 

person/entity that financially benefits from the transaction; and any third party/entity that is 

reimbursed by the seller or anyone who benefits financially from the sale. The provision will 

take effect on October 1, 2008. 

FHA PREMIUM PRICING POLICIES - Allowable upfront premium ceiling would be 

increased from 2.25 percent to 3 percent of the mortgage amount. Premium could not exceed 

2.75 for first time homebuyers who complete counseling program. Allowable annual premium 

ceiling remains the same at .50 percent. The bill includes a 12-month moratorium on 

implementing FHA risk based premiums as published in the Federal Register on May 13, 2008 

(73FH 27703). Implementation of the 12-month moratorium will be delayed until October 1, 

2008. 

HOME EQUITY CONVERSION MORTGAGE (HECMS) - Removes the limit on the 

aggregate number of HECMs that may be originated and establishes a national HECM loan limit 

equal to Freddie Mac conforming loan limit. Requires borrowers to receive counseling through 

and independent third party that is not associated with or compensated by the party that is 

involved in funding, originating or servicing the mortgage; or the sale of annuities, investments 

or other financial or insurance products. Permits HECMs to be used for home purchase and 

limits the mortgage to the Freddie Mac conforming limit. Permits HECMs on cooperatives. 

Limits the origination fees to 1.5 percent of the maximum claim; Requires HUD to conduct two 

studies: the first on mortgage insurance premiums on HECMs to determine the effect of limiting 

costs and fees under the program; the second to determine the consumer protection and 

underwriting standards to ensure that the purchaser of such products would be appropriate for the 

borrowers. Finally, the bill prohibits lenders from requiring borrowers to purchase an insurance 

annuity, or other product as a condition of eligibility for HECM. 


H.R. 3221 –DIVISION B - TITLE II – MORTGAGE FORECLOSURE PROTECTIONS 

FOR SERVICEMEMBERS 

MAXIMUM GUARANTEE – The legislation would increase the maximum loan guaranty 

amount for certain housing loans that are guaranteed by the Department of Veterans Affairs, and 

which are originated beginning on October 1, 2008 until December 31, 2008. The maximum 

guaranty amount on these loans means an amount equal to 25 percent of the higher of: (1) the 

limitation determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation 

Act (12 USC 1454(a)(2)) for the calendar year in which the loan is originated for a singlefamily 

residence; or (2) 125 percent of the area median price for a single-family residence, 

subject to a cap of 175 percent of the limitation determined under section 305(a)(2) for the 

calendar year in which the loan is originated for a single-family residence. This loan amount 

would equal a maximum of $729,750. 

PREVENTING FORECLOSURES FOR SERVICMEMBERS – The legislation requires the 

Secretary of Defense to develop and implement a program to advise members of the Armed 

Forces (including the National Guard and Reserves) who return from active duty service abroad, 

on actions the servicemembers should take to prevent or forestall mortgage foreclosures. The 

program must include: (1) credit counseling, (2) home mortgage counseling, and (3) such other 

counseling and information as the Secretary of Defense considers appropriate. This counseling 

and information shall be provided to the servicemembers as soon as practicable after their return 

from active duty service abroad. 

EXTENSION OF PROTECTIONS AGAINST FORECLOSURE – The legislation extends 

from 90 days to 9 months following a servicemember‘s military service the protection against a 

sale, foreclosure, or seizure of property secured by a mortgage, trust deed, or other security in the 

nature of a mortgage, when there is a breach of the obligation. This does not change the 

requirement that the obligation on the property must have been originated before the period of 

the servicemember‘s military service. Similarly, the period of time relating to filing an action for 

a stay of proceedings and adjustment of a servicemember‘s mortgage obligation would be 

extended from 90 days to 9 months following military service. These provisions would become 

effective upon enactment and sunset on December 31, 2010. 

EXTENSION OF INTEREST RATE LOCK – The legislation also extends the period of time 

a servicemember can have the interest rate on a mortgage obligation or liability reduced to no 

more than 6 percent per year, to the period of military service, and one year thereafter. This does 

not change the requirement that the mortgage obligation or liability must have been incurred 

before the servicemember enters military service. The reduced interest rate for all other 

obligations would continue to be only during the period of military service. 

Interest, obligation and liability are defined. 


H.R. 3221 DIVISION C - HOUSING ASSISTANCE TAX ACT OF 2008 

ASSISTANCE FOR HOME BUYERS AND HOME OWNERS 

Refundable first-time home buyer credit. The bill would provide a refundable tax credit that is 

equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) 

by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 

and before July 1, 2009. Taxpayers receiving this tax credit would be required to repay any 

amount received under this provision back to the government over 15 years in equal installments. 

The credit begins to phase out for taxpayers with adjusted gross income in excess of $75,000 

($150,000 in the case of a joint return). 

Additional standard deduction for real property taxes. The bill would provide home owners 

who claim the standard deduction with an additional standard deduction for State and local real 

property taxes. The maximum amount that may be claimed under this provision is $500 ($1,000 

for joint filers). This proposal applies only for 2008. The bill would eliminate language included 

in the Senate version of the bill that would have prevented taxpayers from claiming this 

additional standard deduction if they reside in a locality that increased property tax rates in 2008. 

ASSISTANCE FOR LOW-INCOME RENTAL HOUSING 

Temporary increase in low-income housing tax credit. Under current law, there is a state-bystate 

limit on the annual amount of Federal low-income housing tax credits that may be allocated 

by each state. This limitation is currently set at $2.00 for each person residing in the state. States 

with small populations are provided with a special set aside. The bill would increase this 

limitation in 2008 and 2009 by an additional 20 cents for each person residing in the state and 

increase the small state set-aside by 10 percent. 

Low-income housing tax credit simplification. The bill contains numerous proposals to 

simplify the technical rules relating to the LIHTC. In particular, the bill would: temporarily 

establish a minimum credit rate for non-Federally subsidized buildings placed in service after 

date of enactment and before December 31, 2013; clarify the circumstances under which a 

building is considered to be federally subsidized and the circumstances in which Federal 

assistance will be taken into account in calculating the LIHTC; provide State housing agencies 

with greater flexibility to select sites for low-income housing projects and allocate adequate 

amounts of credit for projects; clarify the rules relating to determinations of current income; 

provide developers with more time to begin construction of low-income housing projects after 

the credits have been awarded (one year instead of current law 6 months); reform rules 

pertaining to sales of low-income housing buildings; allow projects to establish housing units for 

individuals who share common characteristics; relax income rules for rural areas; and eliminate 

technical barriers to rehabilitating low-income housing projects. 

Tax Exempt Housing Bond Simplification- The bill contains two proposals to simplify the 

technical rules relating to tax-exempt housing bonds. In the construction and development of 

low-income housing projects, states may find that it is most efficient to finance projects using a 

series of short-term bonds. Under current law, there is a limitation on the annual amount of tax 


exempt housing bonds that each state may issue. In the construction and development of low 

income housing projects, states may find that it is most efficient to finance projects using a series 

of short-term bonds. The bill would clarify that where a state issues a series of short-term bonds 

for low-income housing projects that these bonds will only be counted once against this 

limitation; as well as update the tax-exempt housing bond rules to conform certain aspects of 

these rules to the low-income housing tax credit rules. 

OTHER HOUSING PROVISIONS 

Temporary increase in mortgage revenue bonds. Under current law, there is a national limit 

on the annual amount of tax-exempt housing bonds that each state may issue. Many states have 

reached their limit. The bill would increase this national limit in 2008 to allow for the issuance of 

an additional $11 billion of tax-exempt bonds to provide loans to first-time home buyers and to 

finance the construction of low-income rental housing. The bill would also temporarily allow 

qualified mortgage revenue bonds (a form of tax-exempt bond issued by states to help provide 

financing to first-time home buyers) to be used to refinance certain subprime loans. 

Eliminate costs imposed on housing programs by the alternative minimum tax. The 

alternative minimum tax (AMT) can increase the cost of implementing housing programs. Under 

current law, interest on tax-exempt housing bonds is subject to the AMT. This limits the 

marketability of these bonds and limits the incentive effect of these bonds. Additionally, under 

current law both low-income housing tax credits and rehabilitation tax credits cannot be taken 

against the AMT. This limits the incentive effect of these credits. The bill would allow the low 

income housing tax credit and the rehabilitation tax credit to be used to offset the AMT and 

would ensure that interest on tax-exempt housing bonds is not subject to the AMT. 

Municipal bonds guaranteed by Federal home loan banks eligible for treatment as tax 

exempt bonds. Under current law, municipal bonds that are guaranteed by Federal home loan 

banks cannot qualify as tax-exempt bonds unless the bonds are used to finance housing 

programs. State and local governments currently face significant costs when issuing tax-exempt 

municipal bonds to finance state and local projects. The bill would help these municipalities by 

temporarily allowing bonds that are guaranteed by Federal home loan banks to be eligible for 

treatment as tax-exempt bonds regardless of whether the bonds are used to finance housing 

programs. Allowing these bonds to be guaranteed by Federal home loan banks will help State 

and local governments obtain financing for necessary projects (e.g., constructing roads, repairing 

bridges, building and renovating schools and hospitals, funding college loans, etc) at a lower 

cost. 

Protection of taxpayer Social Security numbers in real estate transactions. Under current 

law, an individual selling a home is required to provide the purchaser of the home with an 

affidavit stating, under penalties of perjury that the seller is not a nonresident alien individual or 

a foreign corporation (special tax rules apply to sales of real estate by nonresident alien 

individuals and foreign corporations). This affidavit must contain the seller‘s Social Security 

number. In order to protect individuals from identity theft that could occur in connection with the 

sale of real estate, the bill will allow the seller to provide this affidavit to the business 

professional responsible for closing the real estate transaction (e.g., an attorney or title company) 

instead of sending this affidavit to the purchaser. 


Encouraging the rehabilitation of government-leased buildings. Under current law, taxpayers 

are not eligible for the full amount of the rehabilitation credit if more than 35% of a rehabilitated 

building is leased to a State or local government. In such a situation, expenditures that are 

allocable to the portion of the building that is leased by the government will not be counted in 

calculating the rehabilitation credit. In general, the bill would allow taxpayers to qualify for the 

full amount of the rehabilitation credit so long as less than 50% of the rehabilitated building is 

leased to State and local governments or other tax-exempt entities. 

Disaster mortgage revenue bonds. The bill would also temporarily allow qualified mortgage 

revenue bonds (a form of tax-exempt bond issued by states to help provide financing to first-time 

home buyers) to be used to help individuals purchase new homes in Presidentially-declared 

disaster areas. This provision would apply to bonds issued after May 1, 2008 and prior to January 

1, 2010. 

REFORMS RELATED TO REITS 

Real estate investment trust reforms. The bill would include most of the provisions of H.R. 

1147, the REIT Investment Diversification and Empowerment Act of 2007 (RIDEA). Real estate 

investment trusts (REITs) are subject to complex rules that can limit the ability of these 

businesses to adjust to changing market conditions and to manage risk. The bill would liberalize 

these rules by clarifying that REITs can earn foreign currency income associated with real estate 

activities, increasing the permissible size of REIT investments in taxable REIT subsidiaries, 

modifying the REIT safe harbor for dealer sales, and extending the special rules for lodging 

facilities to health care facilities. 

EXTENSION AND EXPANSION OF CERTAIN GO ZONE 

INCENTIVES 

Extension and expansion of certain Gulf Opportunity (GO) Zone incentives. The bill would 

allow taxpayers in affected GO Zone areas to amend prior returns to take into account receipt of 

hurricane-related recovery grants, waive the start-construction deadline for certain property 

eligible for bonus deprecation in the GO Zone, and allow projects in two additional counties in 

Alabama to qualify for tax-exempt bond financing. 

TAX PROVISIONS RELATED TO THE ECONOMIC STIMULUS 

ACT OF 2008 

Election to accelerate recognition of historic AMT/R&D credits. The bill would allow 

taxpayers to elect to accelerate the recognition of a portion of their historic AMT or research and 

development (R&D) credits in lieu of the bonus depreciation tax benefit that was included in the 

Economic Stimulus Act of 2008. The amount that taxpayers receive is calculated based on the 

amount that each taxpayer invests in property that would otherwise qualify for bonus 

depreciation under the Economic Stimulus Act of 2008. This amount is capped at the lesser of 6 

percent of historic AMT and R&D credits or $30 million. 


Transfer of funds appropriated to carry out 2008 recovery rebates for individuals. The 

Economic Stimulus Act of 2008 appropriated money into several Department of the Treasury 

accounts in order to carry out the recovery rebate program. The bill would provide the Secretary 

of the Treasury with flexibility to transfer funds among these accounts to carry out the purposes 

of the Economic Stimulus Act of 2008. 

REVENUE PROVISIONS 

Information returns for merchant payment card reimbursements. 

The bill would enact a proposal contained in the President‘s FY 2009 Budget to require 

institutions that make payments to merchants in settlement of payment card transactions to file 

an information return with the Internal Revenue Service. The bill would also require information 

returns for payments in settlement of certain third party network transactions that operate in a 

manner similar to payment card transactions. Additionally, the proposal will require payment 

system providers to request and match Taxpayer Identification Numbers (TINs) from their 

merchant customers. If the institution is unable to properly match a TIN to a merchant, backup 

withholding will result. The proposal applies to returns for calendar years beginning after 

December 31, 2010. Backup withholding applies for amounts after December 31, 2011. 

Delay implementation of worldwide allocation of interest. In 2004, Congress provided 

taxpayers with an election to take advantage of a liberalized rule for allocating interest expense 

between United States sources and foreign sources for purposes of determining a taxpayer‘s 

foreign tax credit limitation. Although enacted in 2004, this election is not available to taxpayers 

until taxable years beginning after 2008. The bill would delay the phase-in of this new liberalized 

rule for two years (for taxable years beginning after 2010). Special transition rules 

would apply in the first year that the liberalized rule phases in. A portion of the revenue raised 

from this provision will also cover some of the cost of supplemental funding for the Community 

Development Block Grant program. 

Modification of exclusion of gain on sale of a principal residence. The bill amends the current 

law exclusion of up to $250,000 ($500,000 if married filing a joint return) of gain realized on the 

sale or exchange of a principal residence. Under current law, the sale of a home will qualify for 

this exclusion if the home is a taxpayer‘s principal residence for at least two of the five years 

ending on the sale or exchange. This exclusion applies even if the home was initially purchased 

as a second home. Under the bill, if a taxpayer moves their principal residence to a second home, 

the taxpayer will only be able to utilize this exclusion to the extent that it relates to the period of 

time when the home was first used as a principal residence and to the extent that it relates to the 

period of time that the home was owned prior to January 1, 2009. 


H.R. 3221 –DIVISION B – TITLE V – MORTGAGE DISCLOSURE IMPROVEMENT 

ACT 

GENERAL – This Title amends the Truth in Lending Act (TILA) to expand mortgage loans 

subject to early disclosures, requires other TILA disclosures be made not later than seven days 

before closing, requires receipt of early disclosures before fees are collected, requires disclosure 

of certain additional information, and doubles potential civil monetary penalties. Several of 

these provisions codify portions of the TILA/HOEPA rulemaking finalized by the Federal 

Reserve on July 14, 2009. 

TIMING – TILA is amended to expand the mortgage loans subject to early disclosures within 

three days of application. Other TILA disclosures are required seven days before closing and any 

correction of an APR must be made three days before closing. 

ADDITIONAL REQUIRED DISCOSURES 

The following disclosure must be made, that ―You are not required to complete this 

agreement merely because you have received these disclosures or signed a loan 

application.‖ 

For variable rate mortgages, disclosures must indicate that that payments will vary based 

on rate changes, provide examples of payment changes that may occur based on changes 

in the rates specified in the contract, and indicate the maximum interest rate and payment 

allowed under the contract. 

FEE COLLETION – No fee may be collected, with the exception of a reasonable fee for a 

credit report, prior to receipt by the consumer of required early TILA disclosures. 

DISCLOSURE TIMING WAIVERS – The consumer may waive or modify the timing 

requirements for disclosures provided there is a ‗bona fide personal emergency‘ as defined by the 

Federal Reserve and the consumer attests to the emergency in a written statement. 

CIVIL MONETARY PENALITIES – Civil monetary penalties under TILA are doubled to not 

less than $400 or greater than $4,000. 

EFFECTIVE DATES – The effective date for provisions in Title V is 12 months after 

enactment, except that the effective date for new disclosures concerning variable rates mortgages 

is the earlier of the compliance date established by regulation or 30 months after enactment. 


The 

Emergency 

Economic 

Stabilization Act 

of 2008

October 2008 

[The Emergency Economic Stabilization Act of 20008] 

The following is a summary of the portions of the “_________” that are of most interest to bankers. 

Division A of the Act deals with “Emergency Economic Stabilization” of the financial markets and is 

summarized in detail below. Division B is dedicated to energy provisions and is not summarized here. 

Division C includes provisions dealing with the Alternative Minimum Tax and a variety of other tax 

provisions which are listed below. 

Emergency Economic Stabilization 

Section 1 – Title 

The title of Division A is the “Emergency Economic Stabilization Act of 2008” (hereafter “EESA”). 

Section 2 – Purposes 

The purpose of EESA is to restore liquidity and stability to the financial system of the United States and 

to protect home values, college funds, retirement accounts, and life savings and to preserve 

homeownership, promote jobs and economic growth. 

Section 3 – Definitions 

Defines several terms used in the legislation, including the type of financial institutions which will be able 

to participate in the program and the types of troubled assets that will be purchased under the program. 

The definition of “financial institutions” includes, but is not limited to, banks, savings associations, credit 

unions, securities brokers and dealers, insurance companies organized by the United States or one of its 

states or territories and having significant operation in the United States, excluding central banks, or 

institutions owned by a foreign government. 

The definition of “troubled assets” includes residential or commercial mortgages and any securities, 

obligations, or other instruments that are based on or related to such mortgages, that in each case was 

originated or issued on or before March 14, 2008, the purchase of which the Secretary determines 

promotes financial market stability; and any other financial instrument that the Secretary of the Treasury 

(the “Treasury”), after consultation with the Chairman of the Federal Reserve Board, determines the 

purchase of which is necessary to promote financial market stability. 

Section 101 – Purchases of Troubled Assets 

Authorizes Treasury to establish the troubled asset relief program (“TARP”) to purchase troubled assets 

from any financial institution. The program will be operated through an Office of Financial Stability 

within Treasury and will be run by an Assistant Secretary appointed by the President and confirmed by 

the Senate. In exercising this authority Treasury must consult with the Board of Governors of the Federal 

Reserve System, the Federal Reserve Bank of New York, the FDIC, the OCC, the OTS, and the Secretary 

of Housing and Urban Development. 

AMERICAN BANKERS ASSOCIATION

October 2008 

Treasury must issue program guidelines describing the mechanism for the purchase of troubled assets, 

pricing and valuing troubled assets, the procedures for the selection of asset managers and the criteria for 

deciding which troubled assets to purchase. Treasury must take steps to prevent unjust enrichment of 

financial institutions, including preventing resale of troubled assets to Treasury at a higher price than what 

the seller paid to purchase the assets. 

Section 102 – Insurance of Troubled Assets 

Requires Treasury to establish a program to guarantee troubled assets of financial institutions, and it is 

required to establish risk-based premiums for such guarantees sufficient to cover anticipated claims. 

Premiums collected will be deposited into a Troubled Asset Insurance Fund. 

Section 103 – Considerations for Use of the Program 

Requires Treasury to consider the following in exercising the authorities granted by the EESA: (1) 

protecting the interests of taxpayers, (2) providing stability and preventing disruption to financial markets, 

(3) the need to help families keep their homes and to stabilize communities, (4) in determining whether to 

purchase assets, the long-term viability of the financial institution, (5) ensuring that all financial 

institutions are eligible to participate without discrimination based on size, geography, form of 

organization or the size, type and number of assets eligible for purchase, (6) providing financial assistance 

to financial institutions that have assets less than $1 billion that were well capitalized before the 

conservatorship of the GSEs, (7) the need to ensure stability for public instrumentalities, such as counties 

and cities, (8) protecting the retirement security of Americans by purchasing troubled assets held by or on 

behalf of certain retirement plans, and (9) the utility of purchasing other real estate owned and instruments 

backed by mortgages on multifamily properties. 

Section 104 – Oversight Board 

Creates a Financial Stability Oversight Board (the “Board”) consisting of the Federal Reserve Chair, 

Secretary of Treasury, SEC Chair, HUD Secretary, and Director of the Federal Housing Finance Agency. 

The Board’s purpose is to review Treasury’s exercise of authority, including appointing financial agents, 

designating asset classes to be purchased, and plans for the structure of vehicles that will be used to 

purchase troubled assets. The Board is also to review EESA’s effect on preserving homeownership, 

protecting taxpayers, and the stability of financial markets. The Board is also responsible for reporting 

fraud, and malfeasance to the Special Inspector General under the Act. The Board may also appoint a 

Credit Review Committee to evaluate the exercise of purchase authority. Finally, the Board is required to 

report to the appropriate Committees of Congress and the Congressional Oversight Panel at least 

quarterly. 

Section 105 – Reports 

Within 60 days of exercising its authority under the EESA, Treasury is required to report to the 

appropriate committees of Congress on actions taken, funds expended, detailed financial statement of 

exercise of authority (all agreements, insurance contracts, transaction and parties, assets purchased, 

operating expenses, valuation and pricing methods, projected costs and liabilities, and vehicles used in 

exercise of authority). 


October 2008 

Within 7 days after there is an aggregate commitment to purchase the first $50 billion of troubled assets, 

and within 7 days of each subsequent commitment to purchase $50 billion in troubled assets, Treasury is 

required to submit to the appropriate Congressional committees a written “Tranche” report that includes a 

description of-- all transactions during the period, pricing mechanisms, impact on the financial system, 

challenges remaining in the financial system, benchmarks to be achieved, estimate of additional actions 

necessary, and a justification of the price paid for transactions. 

By April 30, 2009, Treasury is required to provide the appropriate Congressional committees a 

“Regulatory Modernization Report” analyzing the current state of the regulatory system and its 

effectiveness in overseeing participants in the financial markets, including the over the counter swaps 

markets and GSEs, and making recommendations for improving the system including whether there are 

participants in the market that are currently outside the regulatory system that should be subject to 

regulation. 

Section 106 – Management, Sale and Revenues 

Authorizes Treasury to manage and sell assets under the program, enter into transactions and to transfer 

revenues to the general fund of the Treasury to reduce the public debt. 

Section 107 – Contracting 

Authorizes Treasury to waive the provision of the Federal Acquisition Regulation (FAR), which governs 

Federal agency responsibilities in acquisition of supplies and services with government appropriated 

funds. If FAR is waived, Treasury is required to submit a justification, within 7 days, to the Committees 

on Oversight and Government reform, House Financial Services and Senate Banking, and the Committees 

on Homeland Security and Governmental Affairs. If Treasury has waived any provisions of FAR relating 

to minority and women contracting, it must develop standards and procedures to ensure that minorities 

and women are used and included to the maximum extent practicable. 

The FDIC is eligible for consideration as asset managers for residential mortgage loans and asset backed 

securities, with reimbursement for services by Treasury. 

Section 108 – Conflicts of Interest 

Requires Treasury to establish guidelines and regulation governing conflicts of interest that may arise in 

execution of authority under the Act, including conflicts in hiring, purchase of troubled assets, 

management of troubled assets, post employment restrictions and other potential conflicts. 

Section 109 – Foreclosure Mitigation Efforts 

Requires Treasury to provide foreclosure avoidance assistance to borrowers living in properties securing 

assets which are acquired under the TARP program. Treasury is also required to assist renters in staying 

in rental properties acquired under the program. 

Specifically, Treasury must implement a plan to minimize foreclosures on properties (including 

multifamily properties) securing the mortgages, mortgage backed securities and other assets it acquires. 

Treasury must encourage servicers of underlying mortgages to use the HOPE for Homeowners Program 


October 2008 

and other available programs to assist borrowers in avoiding foreclosure, and it is authorized to use loan 

guarantees and credit enhancements to facilitate loan modifications. Treasury is required to coordinate 

with other Federal Government entities holding troubled assets to identify opportunities for acquisition of 

classes of trouble assets for the purpose of facilitating loan modifications and restructurings. In addition, 

Treasury must protect Federal, State and Local rental subsidies on residential rental properties it acquires, 

and must consent to reasonable requests for loss mitigation. 

Section 110 – Assistance to Homeowners and Localities 

Requires other Federal entities owning or controlling assets secured by residential real estate (including 

both single and multifamily and rental properties) to implement a plan to provide assistance to avoid 

foreclosure and to assist renters in staying in their homes. 

Specifically, the Federal Housing Finance Agency (in its capacity as conservator for Fannie Mae and 

Freddie Mac), the FDIC (in its capacity as a bridge bank for any failed institution) or the Board of 

Governors of the Federal Reserve (in its capacity on behalf of any Federal reserve bank), must provide 

foreclosure avoidance assistance to homeowners living in properties securing assets held, owned or 

controlled by those entities. They are also required to encourage servicers of such mortgages to use the 

Hope for Homeowners program or other programs to minimize foreclosures. They must continue existing 

Federal, State and local rental subsidies and ensure that modifications provide funds for safe conditions in 

rental properties. They must implement these actions within 60 days of enactment and report to Congress 

every 30 days thereafter on the number and type of loan modifications made, and the actual foreclosures 

occurring during each reporting period. The agencies are also required to consult with one another in 

developing their assistance plans to utilize consistent approaches, and to encourage similar assistance 

efforts by loan servicers on loans which the entities do not control but do have an interest. 

Section 111 – Executive Compensation and Corporate Governance 

Requires any financial institution that sells troubled assets to Treasury to put in place certain limits on 

executive compensation and restricts certain tax benefits. Where Treasury buys assets directly from an 

individual financial institution, and it receives a meaningful equity or debt position, it must require the 

institution to: limit incentives for taking unnecessary and excessive risks that threaten the value of the 

institution; provide for the recovery of any bonus or incentive paid to a senior executive officer based on 

materially inaccurate statements of earnings; and, prohibit golden parachute payments to senior 

executives. A “senior executive” is defined as one of the top five executives in a public company subject 

to SEC compensation disclosure. These provisions are effective for the period that Treasury holds the 

equity or debt position in the financial institution. 

When Treasury buys assets at auction, and where the purchase exceeds $300 million in the aggregate from 

a financial institution, it must prohibit any new employment contract for that institution that provides a 

golden parachute in the event of an involuntary termination, bankruptcy filing, insolvency or 

receivership. These provisions apply only to the period during which Treasury’s authority to purchase 

troubled loans is in effect (December 31, 2009 unless extended per Section 120). There are special tax 

rules that also apply (see Section 302 below). 


Section 112 – Coordination with Foreign Authorities and Central Banks 

October 2008 

Requires Treasury to coordinate with foreign financial authorities and central banks to work toward the 

establishment of similar programs. To the extent such foreign financial authorities or banks hold troubled 

assets as a result of extending financing to financial institutions that have failed or defaulted on such 

financing, those troubled assets qualify for purchase under the TARP. 

Section 113 – Minimization of Long-Term costs and Maximization of Benefits for Taxpayers 

Requires Treasury to minimize any potential long-term negative impact on the taxpayer by holding the 

assets to maturity or for resale for and until such time as Treasury determines that the market is optimal 

and selling such assets at a price that Treasury determines will maximize the return on the investment for 

the federal government. Treasury must encourage the private sector to purchase troubled assets and to 

invest in financial institutions. Treasury is charged with purchasing troubled assets at the lowest price and 

with the maximum amount of efficiency. Treasury is also authorized to purchase troubled assets through 

market mechanisms, such as auctions, and direct purchases. 

To protect the government against loss in the sale of assets and to allow it to participate in any equity 

appreciation of the financial institutions selling troubled assets to the TARP, Treasury must take warrants 

from any financial institution selling $100 million or more of troubled assets into the TARP. The 

warrants may be for voting or nonvoting stock, or preferred stock for listed companies or in the case of 

non-listed companies, or senior debt instruments with a reasonable interest rate premium. Treasury must 

agree not to exercise voting power, although such voting power could be exercised by someone who 

purchases the warrant from the Treasury. The warrant must contain anti-dilution provisions, and Treasury 

may set the exercise price of the warrant in the interest of the taxpayers. 

Section 114 – Market Transparency 

Treasury is required, within 2 days of the purchase, trade or other disposition of troubled assets, to make 

information regarding the transaction available to the public in electronic form, including the amounts, 

and pricing of assets. For each financial institution that sells assets, Treasury is to determine whether the 

public disclosure required by the financial institution is sufficient to disclose the institution’s true financial 

position to the public. If not, Treasury must make recommendations to the appropriate regulators for 

additional disclosure. 

Section 115 – Graduated Authorization to Purchase 

Treasury is to receive authority to purchase troubled assets in tranches. Upon enactment, the authority is 

limited to $250 billion outstanding at any time, which can be raised to $350 billion outstanding if the 

President certifies to Congress that Treasury needs to exercise purchase authority. The outstanding 

amount can be raised to a maximum of $700 billion upon the request of the President, but Congress has 15 

days to disapprove the request by passing a Joint Resolution. The President has the authority to veto the 

Congressional Joint Resolution. 

Section 116 – Oversight and Audits 

Authorizes the Comptroller General (GAO) to commence ongoing oversight of the activities and 

performance of the TARP as soon as the program is established. This includes TARP performance in 


October 2008 

foreclosure mitigation, financial market stability, and tax payer protection. GAO also has oversight 

authority for the internal workings of the TARP, including transactions, prices paid, terms and conditions, 

and future commitments. Additionally, GAO is to evaluate contracting procedures, including inclusion of 

minorities and women, and it is authorized to audit audited TARP financial statements, program activities, 

receipts, expenditures, and financial transactions. GAO is required to submit reports on its findings under 

this section to the appropriate Congressional committees and the TARP Special Inspector General at least 

every 60 days. 

The TARP is required to establish and maintain internal controls that ensure effective and efficient 

operation, and reliable financial reporting. 

Section 117 – Study and Report on Margin Authority 

GAO is required to determine to what extent leverage and deleveraging of financial institutions caused the 

present crisis, and to submit a report with recommendations to the House Financial Services and Senate 

Banking Committees by June 1, 2009. The analysis is to include a review of the SEC, Federal Reserve, 

and other Federal banking agencies and their role in monitoring leveraging activity, including any use of 

margin authority by the Federal Reserve. 

Section 118 – Funding 

The costs of the EESA are to be funded through the U.S. Government’s borrowing authority. 

Section 119 – Judicial Review and Related Matters 

Any action by Treasury authorized by the EESA is subject to judicial review under the Administrative 

Procedures Act (APA) and can be set aside if it is found to be arbitrary, capricious or an abuse of 

discretion. However, injunctions or other forms of equitable relief are not allowed with respect to 

Treasury’s purchase or insurance of troubled assets, actions to manage or sell troubled assets or to 

mitigate foreclosures (Sections 101, 102, 106 and 109) except to remedy a violation of the Constitution. 

Any injunction is to be considered on an expedited basis. Actions by persons that sell assets to Treasury 

are limited to judicial review under the APA except where expressly provided for in a written contract 

with Treasury. Homeowners’ rights are preserved for residential mortgages sold to Treasury. Servicers 

that make a determination whether modification of loans would provide a greater net recovery than 

foreclosure are deemed to be acting in the best interests of all investors if they agree to a modification or 

work out plan except as established otherwise by contract. 

Section 120 – Termination of Authority 

Treasury’s authority to purchase and provide insurance for troubled assets terminates on December 31, 

2009. Treasury may extend this authority for a period not later than two years from the date of enactment 

(on or about October 2010). 

Section 121 – Special Inspector General for the Troubled Asset Relief Program 

Requires the President to appoint a Special Inspector General (SIG) as soon as practicable after enactment 

with the advice and consent of the Senate. The SIG will be responsible for conducting and supervising 

audits and investigations regarding the purchase and sale of assets and authority used under the TARP. 


October 2008 

The TARP SIG is required to report to the appropriate Congressional committees, 60 days after 

appointment, and every calendar quarter thereafter, the SIG’s activities that took place 120 days before 

reporting. The report will disclose a detailed statement of all purchases, obligations, expenditures and 

revenues associated with the programs established under the Secretary’s authority. 

Section 122 – Increase in Statutory Debt Limit 

Increases the Statutory debt limit to $11.315 trillion. 

Section 123 – Credit Reform 

Provides that the treatment of costs, cash flows associated with the purchase or insurance of troubled 

assets or other activities authorized by the EESA are to be determined as provided by the Federal Credit 

Reform Act. 

Section 124 – HOPE for Homeowners Amendments 

Amends the recently enacted HOPE for Homeowners program to allow for broader eligibility by troubled 

borrowers, including a substantial amendment allowing for the use of funds generated through the 

financing of HOPE Bonds already authorized to be used to pay second lien holders. 

Specifically, this section extends the March 1, 2008 date on which an eligible borrower’s mortgage debt to 

income ratio must have been at least 31 percent. The amendment allows borrowers to qualify if their 

mortgage debt to income goes to 31 percent or higher after March 1, 2008 due to a reset in the terms of 

their mortgage loan. This section also allows the Board overseeing the Hope for Homeowners program to 

allow for the outstanding principal obligation on a loan refinanced under the program to exceed 90 

percent. This section also allows for payments to be made to subordinate lien holders in lieu of any future 

appreciation payments already authorized under Hope for Homeowners. Significantly, this section allows 

funds raised through the issuance of HOPE Bonds (already authorized as part of the Hope for 

Homeowners program) to be used to pay second lien holders. 

Section 125 – Congressional Oversight Panel 

Establishes a 5-Member “Congressional Oversight Panel” appointed by the Majority and Minority 

Leadership of the House and Senate. The panel is to review the current state of the financial markets and 

report regularly to Congress beginning 30 days after Treasury first uses its loan purchasing authority. The 

reports are to include an assessment of the impact of Treasury’s loan purchases and effectiveness of the 

foreclosure mitigation efforts, among other things. A special report is required not later than January 20, 

2009 analyzing the current regulatory system that is to include recommendations on whether there are any 

gaps in existing consumer protections and whether participants outside of the current regulatory system 

should be covered. The Panel can hold hearings and has the right to obtain data from other agencies. The 

panel terminates on or about June 30, 2010. 

Section 126 – FDIC Authority 

Prohibits misuse of the FDIC’s name and logo to falsely represent that deposits are insured. This can be 

enforced by the appropriate Federal banking agency or by the FDIC if that agency fails to act. For sales 

of bank assets in either an assisted transaction or a failed bank situation, a financial institution can submit 


October 2008 

a bid regardless of any previously signed confidentiality agreement with the bank whose assets are being 

sold. 

Section 127 – Cooperation with the FBI 

Provides that any Federal financial regulatory agency shall cooperate with the FBI and other law 

enforcement agencies investigating fraud and misrepresentation with respect to the development, 

advertising and sale of financial products. 

Section 128 – Acceleration of Effective Date 

Moves the effective date of the authority included in regulatory reform legislation enacted in 2006 

allowing the Fed to pay interest on sterile reserves from October 1, 2011 to October 1, 2008. 

Section 129 – Disclosures on Exercise of Loan Authority 

Requires the Fed to provide a detailed report to Congress, in an expedited manner, when it uses its 

emergency lending authority under Section 13(3) of the Federal Reserve Act. 

Section 130 –Technical Corrections 

Makes technical corrections to the Truth in Lending Act. 

Section 131 – Exchange Stabilization Fund Reimbursement 

Treasury must reimburse the Fund for any losses caused by the temporary money market mutual fund 

guarantee. Treasury cannot use the Fund for any future guarantee program for the money market mutual 

fund industry. 

Section 132 – Authority to Suspend Mark-to-Market Accounting 

Authorizes the SEC to suspend by rule, regulation or order, the application of FAS 157 with respect to any 

issuer or with respect to any class or category of transaction if the Commission determines it is in the 

public’s interest and consistent with the protection of investors. 

Section 133 – Study on Mark-to-Market Accounting 

Requires the SEC, in consultation with Treasury and the Fed, to conduct a study of mark-to-market 

accounting as provided in FAS 157 as such standards are applicable to financial institutions. The study is 

to consider the effect on a financial institution’s balance sheet, impact on bank failures, the quality of 

financial information available to investors, the advisability of modifications to the standard and any 

alternatives. The SEC is to report to Congress within 90 days of enactment. 

Section 134 –Recoupment 

Five years after the date of enactment, OMB, in consultation with CBO, must submit a report to Congress 

on TARP’s net gain or loss. If there is a loss, the President must propose legislation that recoups “from 


October 2008 

the financial industry” an amount equal to the shortfall to ensure the TARP does not add to the budget 

deficit or the national debt. 

Section 135 – Preservation of Authority 

Nothing in the Act limits the authority of Treasury or the Fed, except Section 131 (Exchange Stabilization 

Fund Reimbursement). 

Section 136 - Temporary Increase in Deposit and Share Insurance Coverage 

Temporarily raises the coverage limit on non-retirement accounts for banks and credit unions from 

$100,000 to $250,000 per account holder per institution. Coverage for retirement accounts, currently 

covered up to $250,000, is not changed. The increase is effective from the date of enactment until 

December 31, 2009. 

The FDIC and NCUA are not to consider the temporary increase when setting premiums. The FDIC’s 

ability to borrow from the Treasury (currently limited to $30 billion at any one time) is temporarily lifted 

from the date of enactment until December 31, 2009. The inflation adjustment to the current coverage 

limits (scheduled to begin in 2010) remains in effect and applies to the current $100,000 level and not the 

temporary $250,000 level. 

Section 201 – Information for Congressional Support Agencies 

Requires that information used by Treasury in connection with activities authorized by the EESA must be 

made available to certain agencies and congressional committees. 

Section 202 – Reports by the Office of Management and Budget and the Congressional Budget 

Office 

Requires OMB and CBO to report cost estimates and related information to Congress and the President 

regarding the authorities that the Secretary has exercised under the legislation. 

Section 203 – Analysis in President’s Budget 

Requires the President to include in his annual budget certain analyses and estimates relating to costs 

incurred as result of this legislation. 

Section 204 – Emergency Treatment 

Provides that the EESA is “emergency” legislation for budget purposes. 

Section 301 – Gain or Loss from Sale or Exchange of Certain Preferred Stock 

Allows financial institutions that held preferred stock in Fannie Mae and Freddie Mac to treat losses 

arising from these securities as ordinary losses for tax purposes. This treatment shall apply to any 


preferred stock held by the financial institution on September 6, 2008 or sold or exchanged by that 

institution on or after January 1, 2008 and before September 7, 2008. 

October 2008 

Section 302 - Special Rules for Tax Treatment of Executive Compensation of Employers 

Participating in the Troubled Assets Relief Program. 

Applies limits on deductions and other tax treatment of executive compensation and golden parachutes for 

certain executives of employers who participate in the auction program. 

Section 303 - Extension of Exclusion of Income from Discharge of Qualified Principal Residence 

Indebtedness. 

Extends current law tax forgiveness on the cancellation of mortgage debt. 

Alternative Minimum Tax (AMT) Relief and Tax Extenders 

TITLE I--ALTERNATIVE MINIMUM TAX RELIEF 

Sec. 101. Extension of alternative minimum tax relief for nonrefundable personal credits. 

Sec. 102. Extension of increased alternative minimum tax exemption amount. 

Sec. 103. Increase of AMT refundable credit amount for individuals with long-term unused credits 

for prior year minimum tax liability, etc. 

TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS 

Sec. 201. Deduction for State and local sales taxes. 

Sec. 202. Deduction of qualified tuition and related expenses. 

Sec. 203. Deduction for certain expenses of elementary and secondary school teachers. 

Sec. 204. Additional standard deduction for real property taxes for nonitemizers. 

Sec. 205. Tax-free distributions from individual retirement plans for charitable purposes. 

Sec. 206. Treatment of certain dividends of regulated investment companies. 

Sec. 207. Stock in RIC for purposes of determining estates of nonresidents not citizens. 

Sec. 208. Qualified investment entities. 

TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS 

Sec. 301. Extension and modification of research credit. 

Sec. 302. New markets tax credit. 

Sec. 303. Subpart F exception for active financing income. 

Sec. 304. Extension of look-thru rule for related controlled foreign corporations. 


October 2008 

Sec. 305. Extension of 15-year straight-line cost recovery for qualified leasehold improvements 

and qualified restaurant improvements; 15-year straight-line cost recovery for certain 

improvements to retail space. 

Sec. 306. Modification of tax treatment of certain payments to controlling exempt organizations. 

Sec. 307. Basis adjustment to stock of S corporations making charitable contributions of property. 

Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands. 

Sec. 309. Extension of economic development credit for American Samoa. 

Sec. 310. Extension of mine rescue team training credit. 

Sec. 311. Extension of election to expense advanced mine safety equipment. 

Sec. 312. Deduction allowable with respect to income attributable to domestic production 

activities in Puerto Rico. 

Sec. 313. Qualified zone academy bonds. 

Sec. 314. Indian employment credit. 

Sec. 315. Accelerated depreciation for business property on Indian reservations. 

Sec. 316. Railroad track maintenance. 

Sec. 317. Seven-year cost recovery period for motorsports racing track facility. 

Sec. 318. Expensing of environmental remediation costs. 

Sec. 319. Extension of work opportunity tax credit for Hurricane Katrina employees. 

Sec. 320. Extension of increased rehabilitation credit for structures in the Gulf Opportunity Zone. 

Sec. 321. Enhanced deduction for qualified computer contributions. 

Sec. 322. Tax incentives for investment in the District of Columbia. 

Sec. 323. Enhanced charitable deductions for contributions of food inventory. 

Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory. 

Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; 

wool duty refunds. 

TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS 

Sec. 401. Permanent authority for undercover operations. 

Sec. 402. Permanent authority for disclosure of information relating to terrorist activities. 

TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS 

Subtitle A--General Provisions 

Sec. 501. $8,500 income threshold used to calculate refundable portion of child tax credit. 

Sec. 502. Provisions related to film and television productions. 

Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children. 


October 2008 

Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation. 

Sec. 505. Certain farming business machinery and equipment treated as 5-year property. 

Sec. 506. Modification of penalty on understatement of taxpayer's liability by tax return preparer. 

Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 

2008 

Sec. 511. Short title. 

Sec. 512. Mental health parity. 

TITLE VI--OTHER PROVISIONS 

Sec. 601. Secure rural schools and community self-determination program. 

Sec. 602. Transfer to abandoned mine reclamation fund. 

TITLE VII--DISASTER RELIEF 

Subtitle A--Heartland and Hurricane Ike Disaster Relief 

Sec. 701. Short title. 

Sec. 702. Temporary tax relief for areas damaged by 2008 Midwestern severe storms, tornados, 

and flooding. 

Sec. 703. Reporting requirements relating to disaster relief contributions. 

Sec. 704. Temporary tax-exempt bond financing and low-income housing tax relief for areas 

damaged by Hurricane Ike. 

Subtitle B--National Disaster Relief 

Sec. 706. Losses attributable to federally declared disasters. 

Sec. 707. Expensing of Qualified Disaster Expenses. 

Sec. 708. Net operating losses attributable to federally declared disasters. 

Sec. 709. Waiver of certain mortgage revenue bond requirements following federally declared 

disasters. 

Sec. 710. Special depreciation allowance for qualified disaster property. 

Sec. 711. Increased expensing for qualified disaster assistance property. 

Sec. 712. Coordination with Heartland disaster relief. 

TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW 

TAX RELIEF POLICY 

Sec. 801. Nonqualified deferred compensation from certain tax indifferent parties. 


State Licensed Mortgage Loan Originator 

Requirements and Standards under the S.A.F.E. Act 

Starting July 31, 2009, any individual who, for compensation or gain, takes a residential 

mortgage loan application or offers or negotiates terms of a residential mortgage loan application 

must be licensed or registered as a Mortgage Loan Originator. 

The S.A.F.E. Mortgage Licensing Act of 2008 does not provide any exceptions to licensing for 

individuals conducting above activities. Real estate brokerage, loan processing and loan 

underwriting activities are not covered. 

Note: the S.A.F.E. Act requires a system of licensure to be in place by July 31, 2009 in all states. 

Transitioning existing loan originators onto this system will be implemented on a different 

timeframe sometime after July 31, 2009. 

Licensing Requirements: 

Mortgage Loan Originators must: 

� Provide fingerprints for an FBI criminal history background check 

� Provide authorization for NMLS&R to obtain a credit report 

� Input and maintain their personal Mortgage Loan Originator record in NMLS&R as their 

license in each state in which they wish to conduct loan origination activity 

� Pass a national mortgage test 

� Take 20 hours of pre-licensure education courses approved by NMLS&R. The education 

must include: 

o 3 hours of federal law and regulations 

o 3 hours of ethics, which must include fraud, consumer protection, and fair lending 

o 2 hours of standards on non-traditional mortgage lending

Licensing Standards: 

All state-licensed Mortgage Loan Originators must meet the following standards: 

� Never had a loan originator license revoked; and 

� Has had no felonies in the past seven years; and 

� Never had a felony involving fraud, dishonesty, breach or trust or money laundering; and 

� Demonstrates financial responsibility and general fitness; and 

� Scores 75% or better on a national test created by NMLS&R. The test will include: 

o Ethics 

o Federal law and regulation 

o State law and regulation 

o Federal and state law and regulation pertaining to fraud, consumer protection, 

nontraditional mortgages, and fair lending; and 

� Takes eight hours of continuing education annually. The education must include: 

o 3 hours of federal law and regulations 

o 3 hours of ethics, which must include fraud, consumer protection, and fair lending 

o 2 hours of standards on non-traditional mortgage lending; and 

� Maintain licensure through NMLS&R. 

State Regulatory Registry LLC - September 2009 2

Industry 

Public Law 110-289 

TITLE V—S.A.F.E. MORTGAGE LICENSING ACT 

‘‘Secure and Fair Enforcement for Mortgage Licensing Act of 2008’’ 

Mandates of P.L. 110-289 

o All residential mortgage loan originators must be either state-licensed or federally registered. 

� A mortgage loan originator employed by a federally insured depository institution or any 

credit union or an owned and controlled subsidiary that is federally supervised must be 

registered. 

� All other mortgage loan originators, without exception, must be state licensed. 

o All state licensed and federally registered mortgage loan originators must be registered with 

the Nationwide Mortgage Licensing System & Registry maintained by the Conference of 

State Bank Supervisors and the American Association of Residential Mortgage Regulators. 

States 

o All states must have a system of licensing in place for residential mortgage loan originators 

by July 31, 2009 that meets national definitions and minimum standards, that include, among 

other things: 

� criminal history and credit background checks 

� pre-licensure education 

� pre-licensure testing 

� continuing education 

� net worth, surety bond or recovery fund 

o All states must license mortgage loan originators through NMLS&R. 

U.S. Department of Housing and Urban Development (HUD) 

o HUD must determine: 

� That the state’s mortgage loan originator licensing standards meet the federally mandated 

minimums, and 

� That the state is participating in NMLS&R. 

o If HUD determines that a state not in compliance with both items above, HUD must 

implement a system for all state licensed mortgage loan originators in that state.

Federal Banking Agencies/Federal Financial Institutions Examination Council/Farm 

Credit Administration 

o Must develop and maintain a system for registering employees of federally insured 

depositories and subsidiaries they own and control, and employees of Farm Credit 

Administration regulated entities, with NMLS&R. Registering with NMLS&R requires 

registered loan officers to submit fingerprints for a state and federal background check and 

personal history and experience. 

o Shall coordinate with NMLS&R in assigning unique identifier. 

Conference of State Bank Supervisors/American Association of Residential Mortgage 

Regulators 

o CSBS and AARMR must develop and maintain the Nationwide Mortgage Licensing System 

and Registry for the purposes identified in the Section 1502 of P.L. 110-289. 

Nationwide Mortgage Licensing System and Registry 

o NMLS&R must establish protocols for the issuance of unique identifiers. 

o NMLS&R must receive and process fingerprints for national and state criminal history 

background checks for all loan originators. 

o NMLS&R must review and approve, using reasonable standards, pre-licensure and 

continuing education courses. 

o NMLS&R must develop a qualified written test and approve test providers. 

o NMLS&R must develop a mortgage call report. 

o NMLS&R must provide public access to licensing information. 

State Regulatory Registry LLC - September 2009 2

CSBS/AARMR 

Nationwide Mortgage Licensing System 

Improving Supervision of the Mortgage Industry through Collaboration and Technology 

In order to protect their citizens and bring greater accountability and transparency to the mortgage industry, state 

mortgage regulators developed the Nationwide Mortgage Licensing System (“NMLS”). NMLS increases and 

centralizes information available to state regulators and the mortgage industry about the professionals and 

companies that originate home mortgages. 

State regulators recognized that the rapid expansion and evolution of the mortgage industry demanded a regulatory 

framework that was efficient and effective. In 2004, a nationwide taskforce of regulators began developing a 

uniform licensing registry, which was launched on January 2, 2008 as the Nationwide Mortgage Licensing System. 

NMLS 

Fourteen states currently use the system to manage their mortgage licenses. In fall 2008, another six agencies will 

begin participating in NMLS and in January 2009, four more states will join. Thus, in the first year of operations, 

nearly half of the states will be part of a system that: 

� Improves the efficiency and effectiveness of supervision of the mortgage industry; 

� Enhances consumer protection; 

� Fights mortgage fraud and predatory lending that costs consumers and the industry hundreds of millions of 

dollars each year; 

� Increases accountability among mortgage industry professionals; and 

� Unifies and streamlines state license processes for mortgage lenders and brokers. 

In the first 8 months of operations, NMLS is already managing: 

� Over 7,500 mortgage companies 

� Over 6,800 mortgage company branch locations 

� Over 33,000 loan officers 

Through NMLS, licensed mortgage lenders, bankers, broker companies and loan officers in participating states are 

able to complete a single uniform form electronically (regardless of the number of states they are licensed in). This 

information is housed in a secure centralized repository available to mortgage regulators. Licensees are able to 

access their own record 7 days a week through the NMLS website to update, amend and renew their licenses, or 

apply for new licenses.

Increasing Transparency and Accountability in the Mortgage Industry 

As mortgage companies and/or individuals create a record for themselves and submit to their regulators, NMLS 

will permanently assign a unique identifying number to each record. The unique identifying number allows 

regulators to definitively track companies and professionals across states and over time. 

Additionally, consumers and the industry will eventually be able to check on the license status and history of the 

companies and professionals with which they wish to do business in order to make a more informed decision. 

Raising Standards through the S.A.F.E. Act 

On July 30, 2008, the President signed into law the Housing and Economic Recovery Act of 2008. Title V of this 

Act, entitled the Safe and Fair Enforcement Mortgage Licensing Act 0f 2008 (“The S.A.F.E. Act) recognizes and 

builds on states efforts by requiring all mortgage loan originators, regardless of the type of entity they are employed 

by, to be either state-licensed or federally-registered. All mortgage loan originators must be licensed or registered 

through the expanded Nationwide Mortgage Licensing System and Registry. 

Under the S.A.F.E. Act, all states must implement a mortgage loan originator licensing system that meets certain 

minimum standards and license through the NMLS&R. 

More information about NMLS is available at http://www.stateregulatoryregistry.org/NMLS. 

_____________________ 

# # # 

Conference of State Bank Supervisors is the national organization for state banking, representing the bank 

regulators of the 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands, and 

approximately 6,200 state-chartered financial institutions. The Conference is responsible for defending state 

authority to determine banking structure and the products and services state-chartered institutions can offer 

and for improving the quality of state bank supervision by providing the departments with performance 

evaluation and accreditation programs and supervisory education/training programs for state banking 

department personnel. 

American Association of Residential Mortgage Regulators is the national organization representing state 

residential mortgage regulators. AARMR's mission is to promote the exchange of information between and 

among the executives and employees of the various states who are charged with the responsibility for the 

administration and regulation of residential mortgage lending, servicing and brokering. 

7/17/2008

The Impact of Housing Legislation on 

Minority Homeownership Opportunities 

Mortgage Lending Industry Strategic 

Markets and Diversity Conference 


Tom Goyda

Housing Legislation in a Broader 

Context 

Nontraditional 

Mortgage Guidance 

2006 

State Implementation 

2007 

Mortgage and Housing Market Challenges 

Subprime Statement 

HOEPA (Reg. Z) 

Updates 

2008 

State Implementation

Impact of Regulatory Changes 

• Repayment ability calculated at fully-indexed 

rate assuming a fully-amortizing schedule 

(new and existing homeowners) 

• “Risk layering” reduced 

• Documentation of income expanded 

• Disclosure requirements increased 

• Protections/limitations imposed on “higherpriced” 

mortgages

Impact of Market Challenges 

• Liquidity evaporated 

• Products disappeared 

• Underwriting tightened 

• Rates and costs increased 

• Problems will lead to additional legislation 

and regulation

Developments Since HERA 

• $1 trillion in government funds committed 

– Fannie Mae and Freddie Mac conservatorship 

– AIG bailout 

– TARP 

• Investment banks transformed 

– Morgan Stanley and Goldman Sachs converted to bank 

holding companies 

– Merrill-Lynch purchased by Bank of America 

– Lehman Brothers bankrupt 

• Washington Mutual seized

Components of HERA 

• FHA Modernization 

• Hope for Homeowners 

• Tax Incentives 

• Redevelopment of Abandoned and Foreclosed 

Homes 

• GSE Regulatory Reform 

• Mortgage Originator Licensing and Registration 

• Counseling 

• TILA Disclosures

14.0% 

12.0% 

10.0% 

8.0% 

6.0% 

4.0% 

2.0% 

0.0% 

Resurgent FHA Vital for Minority and 

LMI Homebuyers 

1990 

1991 

1992 

1993 

Source: Inside Mortgage Finance 

1994 

1995 

FHA Endorsements as % of Total Originations 

1996 

1997 

1998 

1999 

One in three FHA purchase loans go to minority homebuyers and 

nearly half of all FHA borrowers earn less than $50,000 per year. 

Source: 2007 HMDA data 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

6MO08

Wells Fargo’s Long-term Commitment 

to Government Lending 

$60,000 

$50,000 

$40,000 

$30,000 

$20,000 

$10,000 

$0 

2001 2002 2003 2004 2005 2006 2007 6MO08 

Wells Fargo FHA/VA Originations Wells Fargo FHA/VA Market Share 

Since 2001, FHA/VA lending has made up more than 9 percent of 

Wells Fargo’s total loan volume; nearly twice the FHA/VA share of 

the total market. 

35.0% 

30.0% 

25.0% 

20.0% 

15.0% 

10.0% 

5.0% 

0.0%

FHA Modernization and Minority 

Homeownership 

Condominium 

processes 

Loan limit 

Risk-based pricing 

Seller-funded downpayment 

assistance 

Cash requirement 

Simplified and streamlined 

Floor raised to $271K plus highcost 

area limits 

No RBP implementation for 12 

months 

Prohibited 

Requires 3.5% cash down and 

LTV = 100%

Other HERA Provisions 

Hope for 

Homeowners 

First-time homebuyer 

tax credit 

Abandoned and 

foreclosed 

properties 

Fannie Mae and 

Freddie Mac 

FHA refinance program for 

distressed borrowers 

$7,500 credit repayable over five 

years 

$4 billion in CDBG grants to fund 

state redevelopment efforts 

Stronger regulation—Made 

obsolete by conservatorship

What Does the Future Hold? 

• Mortgage lender origination and servicing 

practices further regulated 

• Mortgage broker activities more tightly 

controlled 

• Fannie and Freddie exit strategy/future state 

determined 

• Wall Street role reevaluated 

• Rating agency operations scrutinized 

• RESPA?

Questions? 

Tom Goyda 

Wells Fargo 

Home and Consumer Finance Group 

636-594-2259 

tom.goyda@wellsfargo.com

TAB DIVERSITY 

LUNCHEON

Sponsored by: 

Diversity Luncheon 

11:45 a.m. – 1:15 p.m. 


Afternoon: Market Psychology and Preserving Minority Homeownership

TAB MARKET 

PSYCHOLOGY AROUND 

HOMEOWNERSHIP

Market Psychology around Homeownership: Perceptions versus 

Realities 

1:15 p.m. – 2:30 p.m. 

Azalea 2 

Many argue that the market psychology around housing is worst than the fundamentals. It is true 

that bad news has put a damper on many segments of housing demand. It is also likely that 

market perceptions, rather than reality, will drive suppliers of credit to overreact and tighten 

more than reality warrants. Some questions to answer are: Where are we now in the housing 

economic cycle and what will be the earliest signs of recovery? What are the signs of a fear 

driven market? How much of the current crisis is explained by fear versus market fundamentals? 

Are declining markets policies appropriate risk management measures or do they contribute to 

the psychology of fear? Are media portrayals accurate enough to truly explain what’s going on? 

This session will describe the economic realities of the current crisis and contrast them with 

common public misperceptions with a view toward identifying the correct signposts for market 

assessment. The session will provide those involved in the credit granting process with a 

framework for making rational credit policy. 

Moderator: Ken Temkin 

President 

Temkin & Associates 

Speakers: Jay Brinkmann 

Chief Economist 


Guy Cecala 

President and Publisher 


Maurice Jourdain-Earl 


ComplianceTech

Guy D. Cecala 

Guy D. Cecala is the CEO and publisher of Inside Mortgage Finance Publications, Inc., a 

Bethesda, MD-based company that he founded in 1984. The company produces 9 

newsletters, numerous special reports and a large amount of original research and 

statistics related to mortgage finance in the United States. 

Mr. Cecala is frequently quoted in the Wall Street Journal, the New York Times, the 

Washington Post, the Los Angeles Times, USA Today and other major newspapers as well 

as Bloomberg and Reuters. He also has appeared on the NBC Today Show, NBC Nightly 

News, CNBC, ABC News, CBS News, Fox Business News, PBS Nightly Business 

News, CNN, the BBC, CBS Radio and NPR as an expert on the U.S. mortgage market. 

Mr. Cecala earned a B.A. degree in English and political science from Boston College, 

where he graduated magna cum laude. He also holds a M.A. degree in journalism from 

the University of Maryland. 

Mr. Cecala also serves on the Specialized Information Publishers Assocation’s board of 

directors as an executive officer and as a US representative to SIPA-UK.

Mortgage Strategic Markets & Diversity Conference 


Jay Brinkmann 

Mortgage Bankers Association

Foreclosures Started by Quarter 

2

Share Foreclosures by Loan Type 

Product Percent of US Percent of US 

Loans Outstanding Foreclosures Started 

Prime Fixed 65% 21% 

Prime ARM 14% 23% 

Subprime Fixed 6% 13% 

Subprime ARM 6% 36% 

FHA 8% 7% 

Total 100% 100% 

Source: Mortgage Bankers Association 

3

Q2-2008 All Loans Foreclosure Start Rate 

US Average = 1.08% (NSA) 

Legend 

Less than 0.69% 

0.69% to 1.08% 

1.09% to 2.20% 

Greater than 2.20% 

4

Q2-2008 Prime ARM Foreclosure Start Rate 


Legend 


1.26% to 1.82% 

1.83% to 2.46% 


5

Q2-2008 Subprime ARM Foreclosure Start Rate 


Legend 


5.38% to 6.63% 

6.64% to 8.14% 


6

Foreclosures in “Sand” States 

All Loans 

State Percent of US Percent of US 

Loans Outstanding Foreclosure Starts 

California 13% 22% 

Florida 8% 16% 

Nevada 1% 3% 

Arizona 3% 4% 

Total 25% 46% 

CA, FL, AZ & NV share of increase: 87% 


7


Prime Fixed 





Nevada 2% 2% 

Arizona 3% 3% 

Total 34% 33% 

Prime ARM 





Nevada 2% 4% 

Arizona 4% 5% 

Total 45% 66% 

CA, FL, AZ & NV Share of Prime ARM increase: 93% 


8


Subprime Fixed 





Nevada 1% 1% 

Arizona 2% 3% 

Total 23% 30% 

Subprime ARM 





Nevada 3% 3% 

Arizona 5% 5% 

Total 38% 52% 

CA, FL, AZ & NV Share of Subprime ARM increase: 83% 


9

Homeowner Vacancy Rate, by Year Structure Built 

Percent vacant 

12 

10 

8 

6 

4 

2 

0 

2002-Q1 

Source: Census 

2002-Q3 

Built 2000 or later 

Built before 2000 

2003-Q1 

2003-Q3 

2004-Q1 

2004-Q3 

Vacancy rate for “Built before 2000” is the simple average of the vacancy 

rates of properties built during each decade prior to the 2000s. 

2005-Q1 

2005-Q3 

2006-Q1 

2006-Q3 

2007-Q1 

2007-Q3 

2008-Q1 

10

Change in Number of Owner- and Renteroccupied 

Households, Year-over-year (additive) 

Thousands of households 

2500 

2000 

1500 

1000 

500 

0 

-500 

-1000 

-1500 

1990 - Q1 

Change in owner-occupied households 

Change in renter-occupied households 

1991 - Q1 

1992 - Q1 

1993 - Q1 

Source: Census Bureau and MBA 

1994 - Q1 

1995 - Q1 

1996 - Q1 

1997 - Q1 

1998 - Q1 

1999 - Q1 

2000 - Q1 

2001 - Q1 

2002 - Q1 

2003 - Q1 

2004 - Q1 

2005 - Q1 

2006 - Q1 

2007 - Q1 

2008 - Q1 

13

52 

50 

48 

46 

44 

42 

98 

99 

Homeownership Rate: Black Total 

NSA, % 

Homeownership Rate: Hispanic Total 

NSA, % 

00 

Source: Census Bureau 

01 

02 

03 

04 

05 

06 

07 

52 

50 

48 

46 

44 

42 

08 

14

77 

76 

75 

74 

73 

72 

71 

98 

Homeownership Rate: White Non-Hispanic Total 

99 

00 

Source: Census Bureau 

01 

NSA, % 

02 

03 

04 

05 

06 

07 

77 

76 

75 

74 

73 

72 

71 

08 

15

Issues Going Forward 

• What to do with the excess housing inventory, now about 

2.2 million more units than in a normal market, new and 

used? 

• Have we lowered our expectations on homeownership 

rates? 

• Given the already high percentage of 30-day delinquencies 

going to foreclosure, what happens when job losses 

increase with the recession? 

16

Changing the Market Psychology 

around Homeownership 

Mortgage Lending Industry 


October 6-8, 2008 – Washington, DC 

Guy Cecala 

CEO & Publisher

Credit Crisis or Credit Panic? 

� Numbers and available data generally 

don’t support perception that the U.S. 

mortgage market has collapsed. 

� Crisis in investor confidence is what is 

driving down stock markets around the 

world – not actual mortgage losses. 

� Perception has become more important 

than reality when it comes to investors. 

2

The Truth about Foreclosures 

• Perception: record high foreclosures are 

overwhelming and threatening any 

company exposed to mortgages. 

• Reality: More than 90% of outstanding 

mortgages in the U.S. as of June 30 were 

current – no late payments or 

foreclosures. Few companies are in 

immediate danger of failing because of 

mortgage losses. 

3

The Truth about Subprime Exposure 

• Perception: Most subprime mortgages 

are now defaulting – threatening investors 

with trillion dollar plus losses. 

• Reality: About 18% of subprime 

mortgages were seriously delinquent or in 

foreclosure as of June 30. If 30% of all 

subprime loans ultimately default, 

expected losses could reach $100 billion. 

4

The Truth about Mortgage 

Securitization 

• Perception: Anybody holding mortgage 

securities, particularly those backed by 

subprime loans, is likely to face huge 

losses due to rising defaults. 

• Reality: The vast majority of MBS 

investments, even those backed by 

subprime loans, are still investment-grade 

and are providing their promised cash 

flows and yields. 

5

The Truth about Fannie 

and Freddie 

• Perception: Fannie Mae and Freddie Mac had 

to be taken over by the government because of 

their exposure to bad mortgages and huge 

losses. 

• Reality: Less than 2% of the mortgages held or 

guaranteed by Fannie and Freddie are seriously 

delinquent. While credit losses and expenses 

have jumped dramatically at the GSEs, they 

have set aside more than $12 billion to cover 

future losses and are not in imminent danger. 

6

What has the Credit Panic Done to 

the Mortgage Mix in the US? 

Alt A 

11% 

Subprime 

8% 

HEL 

14% 

Jumbo 

14% 

FHA/VA 

5% 

In 2007 

Conv/Conf 

48% 

7

It’s Left Only Government Related 

Mortgages Standing 

Subprime 

1% 

Jumbo 

6% 

Alt A 

2% 

HEL 

8% 

FHA/VA 

16% 

Conv/Conf 

67% 

In 2Q08 

8

80% 

75% 

70% 

65% 

60% 

55% 

50% 

45% 

40% 

35% 

30% 

It Started with a Market Shift 

to the GSEs 

Fannie/Freddie Share of Originations 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

1Q08 

2Q08 

9

And Then a Shift to FHA as Panic 

% of Originations 

20% 

18% 

16% 

14% 

12% 

10% 

8% 

6% 

4% 

2% 

0% 

Threatened GSEs 

FHA Market Share 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008E 

10

Rank 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

It’s Decimated the Ranks of Top Mortgage 

Lenders Since Beginning of 2007 

Lender 

Countrywide Financial, CA 

Wells Fargo Home Mortgage, IA 

Washington Mutual, WA 

CitiMortgage Inc., MO 

Chase Home Finance, NJ 

Bank of America Mtg., NC 

Wachovia Corporation, NC 

Residential Capital Group, MN 

IndyMac, CA 

GMAC Residential. PA 

EMC Mortgage, TX 

New Century Financial Corp., CA 

American Home Mortgage Corp., NY 

SunTrust Mortgage Inc., VA 

HSBC Finance, IL 

Volume 

$462.50 

$397.64 

$195.70 

$183.48 

$172.90 

$167.90 

$104.74 

$102.50 

$89.95 

$74.60 

$72.43 

$59.80 

$58.90 

$56.45 

$52.77 

Share 

15.5% 

13.3% 

6.6% 

6.2% 

5.8% 

5.6% 

3.5% 

3.4% 

3.0% 

2.5% 

2.4% 

2.0% 

2.0% 

1.9% 

1.8% 

Rank 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

Lender 

National City Mortgage Co., OH 

PHH Mortgage, NJ 

ABN AMRO Mortgage Group, MI 

Aurora Loan Services, CO 

GreenPoint Mortgage, CA 

WMC Mortgage Corp., CA 

Fremont General Corp., CA 

First Horizon Home Loans, TX 

First Magnus Financial, AZ 

Option One Mortgage, CA 

MortgageIT, Inc., NY 

Ameriquest Mortgage Co., CA 

First Franklin Financial, CA 

Taylor, Bean, & Whitaker, FL 

US Bank Home Mortgage, MN 

Volume 

$43.12 

$41.26 

$38.31 

$36.80 

$36.40 

$33.20 

$32.30 

$31.21 

$30.07 

$29.92 

$29.00 

$27.80 

$27.67 

$25.49 

$22.29 

Share 

1.4% 

1.4% 

1.3% 

1.2% 

1.2% 

1.1% 

1.1% 

1.0% 

1.0% 

1.0% 

1.0% 

0.9% 

0.9% 

0.8% 

0.7% 

11

Less than Half of 2007 Top Lenders 

Rank 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

Lender 

Countrywide Financial, CA 

Wells Fargo Home Mortgage, IA 

Washington Mutual, WA 

CitiMortgage Inc., MO 

Chase Home Finance, NJ 

Bank of America Mtg., NC 

Wachovia Corporation, NC 

Residential Capital Group, MN 

IndyMac, CA 

GMAC Residential. PA 

EMC Mortgage, TX 

New Century Financial Corp., CA 

American Home Mortgage Corp., NY 

SunTrust Mortgage Inc., VA 

HSBC Finance, IL 

Still Left in 2008 

Volume 

$462.50 

$397.64 

$195.70 

$183.48 

$172.90 

$167.90 

$104.74 

$102.50 

$89.95 

$74.60 

$72.43 

$59.80 

$58.90 

$56.45 

$52.77 

Share 

15.5% 

13.3% 

6.6% 

6.2% 

5.8% 

5.6% 

3.5% 

3.4% 

3.0% 

2.5% 

2.4% 

2.0% 

2.0% 

1.9% 

1.8% 

Rank 

16 

17 

18 

19 

20 

21 

22 

23 

24 

26 

26 

27 

28 

29 

30 

Lender 

National City Mortgage Co., OH 

PHH Mortgage, NJ 

ABN AMRO Mortgage Group, MI 

Aurora Loan Services, CO 

GreenPoint Mortgage, CA 

WMC Mortgage Corp., CA 

Fremont General Corp., CA 

First Horizon Home Loans, TX 

First Magnus Financial, AZ 



First Franklin Financial, CA 

Option One Mortgage, CA 

Taylor, Bean, & Whitaker, FL 

US Bank Home Mortgage, MN 

Volume 

$43.12 

$41.26 

$38.31 

$36.80 

$36.40 

$33.20 

$32.30 

$31.21 

$30.07 

$29.00 

$29.00 

$27.67 

$27.35 

$24.80 

$22.29 

Share 

1.4% 

1.4% 

1.3% 

1.2% 

1.2% 

1.1% 

1.1% 

1.0% 

1.0% 

1.0% 

1.0% 

0.9% 

0.9% 

0.8% 

0.7% 

12

Left Us with ‘Super 4’ Mortgage 

Market Players 

(As of June 30 – Dollars in Billions) 

Servicing Market Originations Market 

Rank Servicer 2Q08 Share 6M 2008 Share 

1 Bank of America $2,097.1 18.6% $206.8 22.6% 

Countrywide Financial $1,485.3 $132.0 

Bank of America Mtg. & Affiliates $540.8 $74.8 

Home Loan Services (Merrill Lynch) $43.0 

Wilshire Credit (Merrill Lynch) $28.0 

2 JPMorgan Chase $1,515.5 13.5% $146.9 16.1% 

Chase Home Finance $829.1 $116.4 

Washington Mutual $604.0 $30.5 

EMC Mortgage (Bear Stearns) $82.4 

3 Wells Fargo & Company $1,496.1 13.3% $133.7 14.6% 

4 Citigroup $1,017.9 9.0% $110.7 12.1% 

CitiMortgage Inc. $816.8 $72.7 

Wachovia Corporation $201.1 $37.9 

Top Four Lenders $6,126.7 54.4% $598.1 65.4% 

Total Market $11,254 100.0% $915.0 

Source: Inside Mortgage Finance, Copyright 2008 

13

Where Are We in the 

Housing Cycle? 

• Home prices are still falling in most parts of the 

country and may continue for another year. 

• Housing inventories are showing signs of 

leveling off – but that may change as rising 

foreclosures add more properties into mix. 

• Housing demand is way below housing supply 

and it is hard to predict any recovery until they 

become more balanced. 

14

Are Declining Markets Underwriting 

Policies Appropriate? 

• If you expect housing values in most markets to 

decline at least 10% in coming year, higher 

downpayment requirements are necessary. 

• But requiring 20% downpayments and 750 FICO 

scores is probably overkill and unnecessary. 

• Better balance between true credit risks and 

mortgage underwriting is needed. 

15

Are Media Portrayals of Mortgage 

Crisis Accurate? 

• Most media reports of housing and mortgage 

market troubles are based on some facts, but 

generally don’t put problems in perspective. 

• Media emphasis on bad news and who is likely 

to be next mortgage crisis victim. 

• Daily barrage of bad housing and mortgage 

news helps drive market and public fears. 

16

Changing the Consumer Psychology 

Around Homeownership 

• Consumers need to start looking at a 

home as a places to live and raise families 

– not as an investment like stocks. 

• Homeowners need to accept that home 

values can go down as well as up. There 

are no guarantees. 

• It’s a great time for consumers to buy 

homes that make economic sense. 

17

Market Psychology Around 

Homeownership: 


October 17, 2008

Perceptions p 

• During g an otherwise mundane hearing g on the federal 

takeover of Freddie Mac and Fannie Mae, Republicans, 

specifically Rep. Michele Bachmann (R-MN 6th District), 

focused on the Clinton administration and “it’s push to 

provide loans to low-income minorities as a key reason 

for the downfall of the housing g market”. 

• The Clinton administration turned Freddie Mac and 

Fannie Mae into “a semi-nationalized monopoly” 

Bachmann argued. Specifically, that administration 

decided to make loans through the Community 

Reinvestment Act “ on the basis of race and often on 

little else”. 

Roll Call, Call September 26, 26 2008 by Emily Heil and Elizabeth Brotherton, Brotherton Roll Call Staff 

3

Reality 2004-2007 2004 2007 

• IIn each h year dduring i th the period i d of f 2004 2004-2007, 2007 

non-Hispanic Whites had more subprime rate 

l loans* * th than all ll minorities i iti combined. bi d 

• Vast majority of subprime rate loans were 

originated in largely white census tracts, i.e., 

census tracts less than 30% minority. 

• The volume of subprime rate loans made to 

non-Hispanic p Whites dwarfs the volume of 

subprime rate loans made to minorities. 

* Conventional, 1st , lien, , owner-occupied, p , home p purchase/refinance, , 1-4 family y 

4

11,400,000 400 000 

1,200,000 

1,000,000 

800,000 , 

600,000 

400,000 

200,000 

0 

2004-2007 Number of Subprime Rate Loans by Race 

Source: HMDA data from ComplianceTech LendingPatterns 

White Black Hispanic Asian 

Native 

American 

Hawaiian 

2004 727,790 218,665 190,335 25,033 7,916 5,816 

2005 1,227,554 385,952 451,231 64,115 9,423 13,661 

2006 1,108,679 , , 378,244 , 445,739 , 56,136 , 7,902 , 11,494 , 

2007 609,352 176,973 182,837 24,752 4,133 4,683 

5

2004-2007 Share of Subprime Rate Loans by Race 

Source: HMDA data from ComplianceTech p LendingPatterns g 

2004 


13.81% 

15.86% 

1.82% 

52.80% 

2006 


19.29% 

16.37% 

2.43% 

47.99% 

2005 


18.01% 

15.40% 

2.56% 

48.99% 

2007 


15.92% 

15.41% 

2.16% 

53.06% 

6

$250,000,000 

$200,000,000 

$150,000,000 

$100,000,000 

$50 $50,000,000 000 000 

$0 

2004 - 2007 Subprime Rate Loans by Race ($000) 



Native 

American 

Hawaiian 

2004 $99,703,308 $28,911,912 $31,037,451 $5,886,295 $1,204,080 $1,214,914 

2005 $210,108,97 $65,067,816 $99,423,144 $19,359,711 $1,717,950 $3,669,466 

2006 $211,754,27 $70,963,632 $108,435,18 $19,318,804 $1,578,007 $3,635,413 

2007 $117,011,30 $32,261,377 $42,344,445 $9,200,995 $756,755 $1,499,182 

7

• In each year, the White proportion of subprime 

rate loans was lower than all minorities, except 

Asians Asians. 

•Compared p to all other racial ggroups, p , blacks and 

Hispanics had the largest percentage buildup of 

subprime rate loans and the highest average 

spreads. 

• Year after year, subprime rate loans were 

increasingly originated in higher proportion in 

census tracts that are inhabited by minorities. 

8

Perceent 

60.00 

50.00 

40.00 

30.00 

20.00 

10 10.00 00 

0.00 

2004-2007 Proportion of Subprime Rate Loans by Race 


Whit White Bl Blackk Hi Hispanic i AAsian i 

Native 

American 

HHawaiian ii OOverall ll 

2004 8.38 30.84 17.55 5.42 21.12 13.65 11.06 

2005 19.19 50.96 37.78 15.57 32.06 29.56 24.36 

2006 21.78 52.76 40.91 17.43 33.82 31.46 27.42 

2007 14.21 37.32 26.46 9.22 23.08 18.98 17.41 

9

Average A Spread 

6.00 

5.00 

4.00 

3.00 

2.00 

1.00 

0.00 

2004-2007 Subprime Rate Loans by 

Race and Average Spread 



Native 

AAmerican i 

Hawaiian 

2004 4.23 4.28 4.03 3.88 4.17 4.00 

2005 4.75 4.97 4.70 4.61 4.81 4.68 

2006 5.09 5.50 5.18 4.95 5.21 5.18 

2007 4.60 5.00 4.58 4.27 4.71 4.57 

10

700,000 

600,000 

500,000 

400,000 

300 300,000 000 

200,000 

100,000 

0 

2004-2007 Count of Subprime Loans by Tract % Minority 


$120,000,000 

$100,000,000 

$80,000,000 

$60,000,000 

$40,000,000 

$20,000,000 

$0 

2004-2007 Dollar Volume of Subprime Rate Loans by Census Tract 

Percent Minority ($000) 


Percent 

50.00 

45.00 

40.00 

35.00 

30.00 

25.00 

20 20.00 00 

15.00 

10.00 

5.00 

0.00 

2004-2007 Percent of Subprime Rate Loans within Tract % Minority 


•Upper U iincome borrowers b had h d the th 

highest share of subprime rate 

loans during each year except 

2004, 00 , where e e middle dd e income co e 

borrowers had the highest share. 

•Contrary to popular belief, low 

income borrowers had the lowest 

share of 2006 subprime rate loans. 

14

45.00% 

40.00% 

35.00% 

30.00% 

25.00% 

20.00% 

15.00% 

10.00% 

5.00% 

0.00% 

2004-2007 Percent of Subprime Rate Loans by Borrower Income 

Source: ComplianceTech-LendingPatterns 

2004 2005 2006 2007 

Low 11.30% 8.52% 7.51% 9.04% 

Moderate 27.75% 24.06% 20.91% 22.13% 

Middle 30.34% 29.64% 27.56% 27.04% 

Upper 28.60% 35.12% 39.59% 37.01% 

15

250,000 

200,000 

150,000 

100,000 

50,000 

0 

2007 Subprime Rate Loans by Race and Income 


White Black Hispanic Asian Nat. Am Hawaiian 

Low 55,102 22,629 11,148 691 373 150 

Moderate 133,066 48,583 34,920 2,420 876 624 

Middle 165,091 49,086 48,645 4,582 1,048 1,075 

Upper 221,559 48,819 81,031 14,397 1,493 2,349 

16

Reality 2004 2004-2007 2004 2007 

2007 

• Male and Female with no co- 

applicants li t made d up more 

than 2/3rds than 2/3 of subprime loan 

recipients p 

• Refinance was the dominate 

loan purpose 

17

1,000,000 

900,000 

800,000 

700,000 

600,000 

500,000 

400 400,000 000 

300,000 

200,000 

100,000 

0 

2004-2007 Gender Distribution of Subprime Rate Loans 


Male 

Primary 

Female 

Primary 

Female (no 

co-app.) 

Male (no 

co-app.) 

Same 

Gender 

UUnk k 

2004 373,684 112,689 377,600 442,521 20,216 51,138 

2005 590,208 199,441 699,481 878,358 38,519 99,292 

2006 513,352 174,539 654,186 822,990 35,008 109,999 

2007 284,212 93,293 308,894 391,623 19,382 50,711 

18

40.00% 

35.00% 

30.00% 

25.00% 

20.00% 

15.00% 

10.00% 

55.00% 00% 

0.00% 

2004-2007 Gender Percent Distribution of Subprime Rate Loans 


Male Primary 

Female 

Pi Primary 

Female (no 

co-app.) ) 

Male (no coapp.) 

) 

Same 

GGender d 

2004 27.11% 8.18% 27.39% 32.10% 1.47% 

2005 23.56% 7.96% 27.92% 35.06% 1.54% 

2006 22.22% 7.55% 28.31% 35.62% 1.52% 

2007 24.75% 8.12% 26.90% 34.10% 1.69% 

19

Peercent 

2004-2007 Subprime Rate Loans by Loan Purpose 


80.00% 

70 70.00% 00% 

60.00% 

50 50.00% 00% 

40.00% 

30.00% 

20.00% 

10.00% 

0.00% 

2004 2005 2006 2007 

Purchase 32.74% 43.23% 42.67% 35.84% 

Refinance 67 67.26% 26% 56 56.77% 77% 57 57.33% 33% 64 64.16% 

16% 

20

Reality 2004 2004-2007, 2004 2007, cont 

• According to HMDA data Fannie Mae 

and Freddie Mac were NOT major 

purchasers of subprime rate loans 

from approved seller/servicers. 

• Non-Agency investors purchased the 

vast majority of subprime rate loans 

21

2,000,000 

1,800,000 

1,600,000 

1,400,000 

11,200,000 200 000 

1,000,000 

800,000 

600,000 

400,000 

200,000 

0 

2004-2007 Number of Subprime Rate Loans by Investor 


Fannie 

Mae 

Ginnie 

Mae 

Freddie 

Mac 

Farmer 

Mac 

Non- 

Agency 

Not Sold 

2004 28,874 0 2,917 5 906,401 440,248 

2005 64,739 0 3,345 99 1,864,17 573,237 

2006 71 71,979 979 0 99,498 498 9 11,696,95 696 95 531 531,951 951 

2007 118,860 0 22,121 4 610,659 396,696 

22

• While many conservatives believe the current 

crisis is a “minority” problem, the data show that 

the subprime lending crisis has had a bi-racial 

impact impact. Non-Hispanic Whites in fact have far 

more subprime rate loans than all the minority 

groups combined. 

• Income-wise, middle and upper income families 

were hit much harder in the aggregate than 

low/mod low/mod. 

• The proportion of subprime rate loans that 

minorities i iti receive i as a percentage t of f ttotal t l llending di 

in is way out of line and suggest a serious credit 

supply, consumer choice and/or a steering 

problem problem. 

23

MMaurice i JJourdain-Earl d i E l 

202-842-3800 

jourdainearl@compliancetech.com 

www.compliancetech.com 

24

TAB TRENDS IN LOSS 

MITIGATION

Trends in Loss Mitigation - Maximizing Home Retention Strategies 

1:15 p.m. – 2:30 p.m. 

Azalea 3 

Homeownership cultivates and upholds the viability of urban communities and provides a legacy 

of wealth creation that can be passed on from one generation to the next. In today’s housing 

market helping homeowners stay in their homes is a priority as is preserving generational wealth. 

Mortgage servicers are facing major default challenges and some have developed creative 

strategies for contacting distressed borrowers to help them avoid foreclosure. This panel will 

discuss the importance of working with borrowers, the role of non-profits, and available 

government assistance programs. 

Moderator: Buz Mertes 

Segment Marketing Manager for Corporate Accounts 


Speakers: Patrick Carey 

Chief Executive Officer 

Titanium Solutions 

Phil Comeau 

President and Chief Executive Officer 

Phillip Comeau Company, Inc. 

Alan Goldberg 

Vice President Default Services 


Joseph (Joe) Ohayon 

Vice President, Community & Client Relations 

Default & Retention Operations 

Wells Fargo Home Mortgage

Patrick Carey 

Chief Executive Officer (CEO) 

Titanium Holdings 

Patrick Carey is the chief executive officer of Titanium Holdings, the holding company 

that owns Titanium Solutions. Titanium Solutions is the premier provider of loss 

mitigation outreach services in the mortgage industry. Prior to joining Titanium 

Holdings, Carey was the executive vice president, Default/ Retention Operations for 

Wells Fargo Home Mortgage, Inc. in the Carolinas campus in Fort Mill, S.C.. Carey was 

responsible for all Default functions including collections, loss mitigation, foreclosure, 

bankruptcy, service support, claims, property preservation, loss analysis, default 

information management & analytics (DIMA), and Premier Asset Services (PAS), for 

prime, non-prime and sub-serviced products. Carey’s operations included locations in 

Fort Mill, S.C., San Bernardino, Calif., Des Moines, Iowa., Milwaukee, Wis., Frederick, 

M.D., and Minneapolis, Minn. 

Carey joined Wells Fargo on April 14, 2003 after nearly 20 years experience in mortgage 

and consumer lending. Prior to joining the company, Carey spent three years at Century 

21 Gold Medal Realty where he headed the company’s commercial real estate division. 

He also has served as senior manager of the regional claims centers for UnumProvident 

Life Insurance Company of America. In addition, he was first vice president and chief 

quality officer for First Card Corporation. He also held several leadership positions with 

Chase Manhattan Bank N.A., including vice president for the northeast collections region 

with the Chase bank Company, and vice president of customer support & Default 

Operations for Chase Home Mortgage Corporation. 

Carey has a bachelor’s degree in business administration from Georgia State University 

and holds the designation of Accredited Mortgage Professional (AMP) with the Mortgage 

Bankers Association (MBA).

Alan Goldberg 

Alan Goldberg has over 30 years of experience in default management and loss 

mitigation. He currently serves as Vice President, Homeowner Assistance for Genworth 

Mortgage Insurance. Alan is responsible for Genworth’s Homeowner Assistance 

program, which assists borrowers with financial and other hardships. 

Alan began his career with General Electric Company in 1977. He has held various 

senior positions in consumer loan finance and servicing, wholesale finance, commercial 

loan servicing, mortgage servicing and mortgage insurance. Alan’s positions have been 

concentrated in default management, loss mitigation, asset disposition and homeowner 

assistance. 

Alan became part of Genworth Financial in 2004 when Genworth became an independent 

company and moved away from General Electric through an IPO. He is a graduate of 

City University of New York, Queens College, and currently resides in Raleigh, N.C.

TAB 

NON PROFIT’S 

ROLE IN EARLY 

INTERVENTION

Non Profit’s Role in Early Intervention Foreclosure Prevention 

2:45 p.m. – 3:45 p.m. 

Azalea 2 

There are several critical stages in the mortgage default life cycle, from a borrower’s first 

delinquency to foreclosure. Creating hope and assistance awareness among potential borrowers 

are logical keys to success. If homeownership is to be preserved, appropriate intervention 

strategies need to be implemented at key points in the life cycle. Panelists will discuss 

intervention strategies and inter-personal implementation styles that are effective in preserving 

homeownership. 

Moderator: Norman Edwards 

Senior Director 

Corporate Relations 


Speakers: David Berenbaum 

Executive Vice President 

National Community Reinvestment Coalition 

Charmaine Brown 

Program Managaer 

Fannie Mae 

Larry Gilmore 

Deputy Director 

HOPE NOW Alliance 

Jim Griffin 

Director of Operations 

HomeFree USA

Larry L. Gilmore 

5502 Willow Grove Court ■ Bowie, MD 20720 ■ (240) 353-1233 ■ nupemd3@hotmail.com 

Larry has been actively involved in developing solutions to providing affordable housing to 

underserved communities throughout his career. 

Larry currently serves as the Director of the HOPE NOW Alliance where he assists in managing 

a comprehensive strategy to preserve homeownership. This includes executing strategies 

specific to consumer outreach, education, and ensuring borrower’s access to long-term 

solutions. 

Larry served as Vice President of Emerging Markets and VP of Government, Housing, and 

Industry Relations for Option One Mortgage Corporation (a subsidiary of H & R Block 

Corporation), where he had direct responsibilities for directing sales strategies to increase 

lending opportunities among growing segments, expanding the company brand by managing 

ongoing relationships with community organizations, consumer advocacy groups, industry trade 

associations, regulators, legislators and GSEs. Larry also worked on specific strategies to 

increase cultural diversity and served as the Chair for the Mortgage Bankers Association of 

America’s Diversity Task Force. 

Prior to Option One, Larry served as the Associate Director of Industry Relations at the 

Mortgage Bankers Association of America (MBA) with core responsibilities of managing 

outreach and policy issues. Larry served as MBA’s liaison for the Association’s Expanding 

Markets Committee and the Non Conforming Credit Lending Committee, which served as the 

voice of MBA member firms and assisted in developing MBA’s position on affordable housing 

and nonprime lending issues. In addition, Larry was responsible for coordinating MBA 

conferences, launching an industry cultural diversity initiative, and facilitating MBA’s 

development of numerous affordable housing efforts. 

Larry joined Norwest Mortgage in 1996 (which merged with Wells Fargo in 1999) where he 

developed much of his experience in single-family affordable housing while serving as the 

Manager of Market Opportunities. At Wells Fargo, Larry managed a research division that 

identified market opportunities and developed strategic plans to increase affordable home 

lending across the country. In addition, Larry assisted in the development of national programs 

and identified partnership opportunities. 

Prior to Norwest, Larry managed multi-family affordable housing, assisted in research studies to 

better understand minority and low-to-moderate income markets, and worked as a planner to 

provide economic, community, and housing develop strategies to rural communities. Larry has 

and continues to serve on numerous boards that provide services specific to affordable housing 

and other underserved communities. 

Larry graduated from Iowa State University with a Bachelor’s of Science Degree in Community 

and Regional Planning with an emphasis in affordable housing and later received his Masters of 

Public Administration Degree with an emphasis in organizational development and public policy 

from Drake University. He has received a number of certifications specific to affordable housing 

management, planning, and real estate finance, including receiving his designation as an 

Accredited Mortgage Professional and Certified Mortgage Banker.

The HOPE NOW Alliance 

Larry L. Gilmore 

Director

2007….What Happened? 

� Lack of Liquidity & Mortgage Availability -The subprime mortgage industry 

collapses, and a surge of foreclosure activity (twice as bad as 2006) and rising 

interest rates depressed prices further as problems in the subprime markets spread 

to the near-prime and prime mortgage markets. The U.S. Treasury secretary calls the 

bursting housing bubble "the most significant risk to our economy. 

� Fall in HomeSales - Home sales continued to fall. The plunge in existing-home sales 

is the steepest since 1989. 

� Price Depreciation - In Q1/2007, S&P/Case-Shiller house price index records first 

year-over-year decline in nationwide house prices since 1991. 

� February–March: Subprime industry collapse; more than 25 subprime lenders 

declaring bankruptcy, announcing significant losses, or putting themselves up for 

sale. 

� August: worldwide "credit crunch" as subprime mortgage backed securities are 

discovered in portfolios of banks and hedge funds around the world, from BNP 

Paribas to Bank of China. Many lenders stop offering home equity loans and 

"stated income" loans. Federal Reserve injects about $100B into the money 

supply for banks to borrow at a low rate. 

� October 10: Hope Now Alliance was created by the US Government and private 

industry to help some sub-prime borrowers.

2008….What’s Happening? 

� March 16 : Bear Stearns gets acquired for $2 a share by JPMorgan Chase in a 

fire sale avoiding bankruptcy. The deal is backed by Federal Reserve providing 

up to $30B to cover possible Bear Stearn losses. 

� July 11: FDIC took over Indymac; has taken over a total of 13 banks total since 

� September 7 : Federal takeover of Fannie Mae and Freddie Mac 

� September 14 : Merrill Lynch sold to Bank of America amidst fears of a liquidity 

crisis and Lehman Brothers collapse 

� September 15 : Lehman Brothers files for bankruptcy protection 

� September 16 : Moody's and Standard and Poor's downgrade ratings on AIG's 

credit on concerns over continuing losses to mortgage-backed securities, 

sending the company into fears of insolvency. 

� September 17 : The US Federal Reserve loans $85 billion to American 

International Group (AIG) to avoid bankruptcy. 

� September 19 : Paulson financial rescue plan unveiled after a volatile week in 

stock and debt markets. 

� September 25 : Washington Mutual was seized by the Federal Deposit 

Insurance Corporation, and it's banking assets were sold to JP MorganChase 

for $1.9bn. 

� September 26 th : Wachovia possibly at risk 

� September 28 th : Treasury Rescue Plan Reached

2,500,000 

2,000,000 

1,500,000 

1,000,000 

500,000 

0 

Jan-07 

Growth in Foreclosures 

Mar-07 

May-07 

Jul-07 

Sep-07 

Nov-07 

Jan-08 

Mar-08 

May-08 

Jul-08 

Monthly Foreclosure 

Starts 

Monthly Completed 

Foreclosure Sales 

Foreclosure Starts Total 

Foreclosures Completed 

Total

Mission 

� Maximize the preservation of homeownership while minimizing 

the rate of foreclosure. Assist borrowers who have the 

willingness and wherewithal to remain in their homes, but need 

some help to do it. Our goal is to keep people in their homes and 

when that is not possible, prevent foreclosure. 

� HOPE NOW’s strategy focuses on: 

� Reach Homeowners in need - through assertive outreach campaigns 

� Counsel Homeowners in need – accessible counseling services and 

efficient communication between counselors and servicers 

� Assist Homeowners in need – working with servicers and investors 

ensure borrowers have access to appropriate workout solutions

HOPE NOW Alliance Membership 

Counselors 

� Consumer Credit Counseling Service of Atlanta 

� Homeownership Preservation Foundation 

� Housing Partnership Network 

� NeighborWorks America 

� HUD Intermediaries 

Mortgage Market Participants 

� Assurant, Inc. 

� Aurora Loan Services 

� Avelo Mortgage, LLC. 

� Bank of America 

� Carrington Mortgage Services 

� Citigroup, Inc. 

� Countrywide Financial Corporation 

� EMC Mortgage, Inc. 

� Fannie Mae 

� First Horizon Home Loans and First Tennessee 

Home Loans 

� Freddie Mac 

� GMAC ResCap 

� Home Loan Services, Inc. (d/b/a First Franklin Loan 

Services & NationPoint Loan Services) 

� HomEq Servicing 

� HSBC Finance 

� IndyMac Bank 

� JPMorgan Chase & Co. 

� Land American / Loan Care 

� MERS 

� National City Mortgage Corporation 

� Nationstar Mortgage, LLC. 

� Ocwen Loan Servicing, LLC. 

� Option One Mortgage Corporation 

� PMI Mortgage Insurance Co. 

� Saxon Mortgage Services 

� Select Portfolio Servicing, Inc. 

� State Farm Insurance Companies 

� SunTrust Mortgage, Inc. 

� Washington Mutual, Inc. 

� Wells Fargo & Company 

� Wilshire Credit Corporation 

Trade Associations 

� American Bankers Association 

� American Financial Services Association 

� American Securitization Forum 

� Consumer Bankers Association 

� Consumer Mortgage Coalition 

� The Financial Services Roundtable 

� The Housing Policy Council 

� Mortgage Bankers Association 

� Securities Industry and Financial Markets 

Association

Servicer Principles 

� Early contact to borrowers facing reset – Outreach to borrowers with adjustable rate 

mortgages 120 days (minimum) prior to interest rate reset. 

� Port of Entry for Counselors – Servicers establish 1-800 numbers, fax, and email as 

direct port of entry available to all HUD-certified housing counseling agencies and their 

counselors. 

� Servicers Funding Counseling – Servicers agree to fund counseling sessions through 

the Homeownership Preservation Foundation’s HOPE Hotline through May 31, 2008. 

� Outreach to at-risk borrowers who have not been in contact – Monthly, servicers send 

outreach letters to at-risk borrowers, those that are 60+ days delinquent and have no 

previous contact with their servicer. 

� ASF Framework and Project Lifeline 

� Commitment to Report Results – Servicers reporting data on: 

� Foreclosure sales, Foreclosure starts, Modifications, Repayment plans, Effectiveness of outreach 

letters 

� ASF Fast Track Efforts 

� Other as needed 

� Commitment to Borrower and Counselor Response 

� Notice of Application Receipt within 5 days 

� Periodic correspondence within at least 30 days 

� Providing definitive response to full application within 45 days 

� Agreement to provide borrower’s a uniform timeline 

� Automatic subordination of 2 nd liens

Borrower Outreach Letters 

� Servicer Outreach Letters - 

� Letters sent by servicers on HOPE NOW 

Letterhead 

� All 60+ Delinquent Borrowers 

� Results: 

� Averaging nearly 200,000 letters per month 

� Over 1.85 million letters sent since November 2007 

� Average monthly response rate of 20%

HOPE NOW Homeownership 

Preservation Workshops 

� Borrowers at risk of foreclosure can meet face-to-face 

with their mortgage servicer and/or a local counselor 

� Mortgage Servicers have direct mail campaign to 

delinquent borrowers and massive radio and print 

marketing campaign initiated 

� Over 12,000 counseled in last 6 months 

� Collaborative between servicers and counselors; 

NeighborWorks America has been a key partner 

� Other key partners have included Governors, 

Legislators, Federal Reserve Banks, State AG Offices, 

etc.

Date Cities State Servicers Borrowers Reached 

March 3rd Riverside CA 10 227 

March 5th Anaheim CA 10 267 

March 7th Stockton CA 12 411 

March 30th Columbus OH 12 170 

April 1st Philadelphia PA 14 328 

April 19th Atlanta GA 13 696 

April 21st Milwaukee WI 10 501 

April 22nd Indianapolis IN 14 312 

April 24th Chicago IL 17 642 

May 3rd Memphis TN 9 232 

May 5th Jacksonville FL 12 237 

June 9th Dallas TX 22 469 

June 10th San Antonio TX 11 150 

June 13 & 14 Las Vegas NV 15 1328 

July 25 & 26 Newark & Mount Laurel NJ 12 

August 12 Fox borough, MA MA 20 2176 

August 21 Orlando FL 20 1008 

August 22 Estero FL 20 614 

August 23 Miami FL 20 1695 

September 13 

20 

Prince Georges . Fairfax County MD 

VA 

11 

11 

438 

214 

183 

Total 12,298

Upcoming Workshops 

October 21 Firm Tucson AZ 

23 Firm Phoenix AZ 

November 6 In progress Miami FL 

7 In progress Miami FL 

15 In progress Houston TX 

19 In progress Cleveland OH 

Dates to be 

Scheduled Pending Detroit MI 

Not Started Los Angeles CA 

Not Started Denver CO 

Not Started Sacramento CA

HOPE Hotline...888-995-HOPE 

� National Ad Council TV campaign to encourage borrowers to 

contact their lenders, or contact HOPE – 1.888.995-HOPE 

� National, toll-free hotline provides counseling for foreclosure 

prevention 

� Free to homeowners and available 24/7/365 

� Staffed by over 450 highly trained foreclosure prevention 

specialists at 10 HUD-approved credit counseling agencies 

� Results: 

� Currently receiving over 2,700 calls per day 

� Over 830,000 calls received & 282,000 counseled 

� In the 2 nd quarter of 2008, over 198,000 calls received & nearly 

69,000 counseled

Increasing Efficiency 

through Technology 

� Early Resolution Counseling Portal (ERCP) which will connect 

counselors with servicers and produce dramatically more 

workouts for homeowners 

� In Pilot Phase with Bank Of America, Wells Fargo, CountryWide, 

and CCCS of Atlanta 

� An invoice management system for processing fee for service 

invoices 

� A permanent triage solution which combines the best of high tech 

with the best of high touch to give every caller prompt service 

and satisfaction with the service 

� A call distribution system to identify the next available counselor 

and increase the conversion rate.

HOPE NOW Results 

� Since July 2007 through June 2008, over 2 million homeowners 

avoided foreclosure through the efforts of HOPE NOW members. 

� Increase loan workouts: HOPE NOW lenders are increasing the 

number of modifications, repayment plans, and refinances every 

month. 

� Streamline: Current borrowers with subprime ARM loans may be 

eligible for streamlined modification or refinance as outlined by the 

American Securitization Forum. 

� Project Lifeline: HOPE NOW lenders are working to reach most atrisk 

borrowers (90-day plus delinquent), work with the borrower, and 

if appropriate, put a 30-day “pause” on foreclosure.

HOPE NOW Data Reporting 

BORROWER LOAN WORKOUT PLANS 

2007 Q3 2007 Q4 2008 Q1 2008 Q2 Total 

RepaymentPlans 322,909 333,393 312,225 301,894 1,270,421 

Prime 120,254 136,364 146,586 141,126 544,330 

Subprime 202,656 197,029 165,639 160,768 726,091 

Modifications 75,326 140,401 170,090 220,100 605,917 

Prime 29,999 37,162 48,022 55,907 171,089 

Subprime 45,327 103,239 122,068 164,193 434,828 

Workout Plans 398,236 473,794 482,315 521,994 1,876,338 

Prime 150,253 173,526 194,607 197,033 715,419 

Subprime 247,983 301,244 287,708 324,961 1,160,919 

FORECLOSURE SALES 

2007 Q3 2007 Q4 2008 Q1 Apr-08 Total 

Foreclosure Sales 135,330 151,403 202,970 245,688 735,390 

Prime 53,760 59,750 82,819 107,661 303,989 

Subprime 81,570 91,653 120,151 138,027 431,401 

Worklout Plans = Repayment Plans + Modifications 

Repayment Plans: A plan that allows borrower to become current and catch up on missed payments that 

are appropriate to the borrower’s circumstances, which involves deferring or rescheduling payments but 

the full amount of the loan is expected ultimately to be paid and within the original maturity of the loan. 

Modifications: A modification occurs any time any term of the original loan contract is permanently altered. 

This can involve a reduction in the interest rate, forgiveness of a portion of principal or extension of the 

maturity date of the loan.

Percent 

Increase in Loan Modifications 

60.0% 

50.0% 

40.0% 

30.0% 

20.0% 

10.0% 

0.0% 

Modifications as a % of Total Workouts 

Jul-07 

Aug-07 

Sep-07 

Oct-07 

Nov-07 

Dec-07 

Jan-08 

Feb-08 

Mar-08 

Apr-08 

May-08 

Jun-08 

Month 

Total 

Prime 

Subprime

HOPE NOW Tomorrow 

� Anticipate continued delinquencies and focus on housing loss 

mitigation through 2009, Prime and Subprime 

� Creative partnerships with third parties 

� “Operationalize” “Fee for service” model to pay for foreclosure 

counseling (ASF, FNMA, Freddie Mac, HUD) 

� Creation and adoption of enhanced loss mitigation standards by 

industry 

� Improve communication and transparency among servicers, 

lenders, non-profits and investors. Long term model change for 

industry 

� Improve transparency on loss mit process for consumer 

� Improved work flow to meet unprecedented demand 

� Creation of comprehensive data base around loss mitigation

TAB RESPONSIBLE 

SUSTAINABLE LENDING

Responsible Sustainable Lending across the Credit Spectrum 

2:45 p.m. – 3:45 p.m. 

Azalea 3 

This session will describe what responsible non-prime lending should look like going forward. It 

appears that subprime lending as we knew it is gone, perhaps forever. Nevertheless, many argue 

that some aspects of this type of lending were positive in supporting minority homeownership. 

Credit policy decision makers are grappling with where to stratify credit tiers along with other 

qualification criteria. 

Moderator: Debbie Johnson 


Compliance 


Speakers: Shelly Metz-Galloway 

Vice President Diverse Segments 


Catherine Godschalk 

Washington Branch Director 

Self Help Credit Union 

Ernest Baskette 


Strategic Business Alliances 

Neighborhood Housing Services of America (NHSA)

Ernest E. Baskette, Jr. 

Mr. Baskette currently serves as Senior Vice President of Neighborhood Housing 

Services of America’s Strategic Business Alliances Group. Mr. Baskette is responsible 

for the development of increased business activity and product development. 

Starting with the Architects Renewal Committee in Harlem (ARCH), in New York City 

in 1972, Mr. Baskette has worked in the community development field for 35 years. For 

the last 27 years, he has held progressively responsible positions within NHSA. Before 

joining NHSA in 1980, he served, for a three-year period, as executive director of the 

Neighborhood Housing Services of Newark, New Jersey. His notable accomplishments 

at NHSA have included: creation and direction of a statewide construction loan program 

from 1989 through 1996 in New Jersey, which produced over $200 million in facilitated 

housing development loans. His most recent responsibilities with NHSA have included: 

head of loan operations, and business and loan product development. 

Mr. Baskette’s work experience prior to joining the NeighborWorks ® network included: 

extensive work in the sales of computer technology and services; teaching computer 

operations; management and training of temporary office personnel; and teaching a 

course in Urban Problems as an adjunct professor for Marymount Manhattan College in 

New York City. Mr. Baskette holds a Masters in Urban Planning from Hunter College in 

New York City.

Catherine Van Dusen Godschalk 

Catherine Godschalk is the Branch Director for Self-Help’s Washington, DC office and 

manages Self-Help’s commercial real estate and affordable housing lending in the 

Washington, DC region. Prior to joining Self-Help in 2005, Catherine was a senior 

policy analyst in the Housing and Community Development Division of Fannie Mae, 

where she managed a team of analysts focused on policy and program development 

related to expanding minority and low-income homeownership. Catherine holds a 

Bachelor of Arts in History from Columbia University and a Masters of Public Policy 

from the Kennedy School of Government at Harvard University. She lives in the 

Washington, DC area with her husband and two young children. 

Self-Help is a community development lender and real estate developer that works with 

qualified individuals, organizations and communities traditionally underserved by 

conventional markets in pursuit of its mission to create and preserve ownership and 

economic opportunity. Through direct and secondary market lending, Self-Help has 

provided more than $5 billion in financing to more than 55,000 homebuyers and small 

businesses nationwide.

Shelley Metz-Galloway 

Vice President/CRA/HMDA Manager 


Shelley Metz-Galloway is Vice President/CRA and HMDA Manager Wells Fargo Bank 

N.A. In this capacity, she is responsible for positioning leadership to effectively manage 

the business implications related to the management and reporting of WFHM’s CRA and 

HMDA data. Metz-Galloway leads a cross-enterprise team in all aspects of CRA and 

HMDA data management, analysis and reporting and in the development of strategic 

plans and internal/ external communications. 

As the Wells Fargo CRA Manager, Metz-Galloway is also responsible for developing, 

implementing and supporting strategies/initiatives that drive LMI and Minority market 

share growth for the Diverse Segments division. She also managers the development and 

implementation of GSE partnership plans that support GSE’s HUD Goal and Sub-Goal 

requirements. 

Having joined Wells Fargo & Company in 2002, Metz-Galloway has served as the 

Director of Special Projects and Strategic Planning for Emerging Markets, National 

Operations Manager and Project Manager for the WFHM Diversity Council. Metz- 

Galloway is currently a member of the enterprise wide Corporate Diversity Council. 

Prior to joining Wells Fargo, Shelley Metz-Galloway was President and Chief Operating 

Officer of Equinta Corporation, San Diego, CA, an internet based residential transaction 

platform. From 1998 – 2000 Metz-Galloway served as a Corporate Strategist to the 

Office of the Chairman of Fannie Mae where she conducted corporate, division and 

functional level strategic and emerging business/industry analyses. She was President of 

CAF, Inc., Washington D.C. from 1991-1993 and a Senior Investment Officer for Aetna 

Bond Investors, Hartford, CT from 1983-1991. 

Shelley Metz-Galloway holds an MBA degree with finance concentration from the 

University of Michigan, a certificate in Senior Executive Leadership from Georgetown 

University, and a Bachelor of Arts Degree in Political Science from Edinboro University

Responsible/Sustainable Lending Across 

the Credit Spectrum 



Diverse Segments 

Draft 

October 7, 2008

What is… 

“the art of influencing and directing others in 

such a way that will win their obedience, 

confidence, respect and loyal cooperation 

in achieving common objectives” 

“ welded to performance” 

2

Destination 

� Fair and Responsible Lending - Wells 

Fargo’s Past, Present and Future… 

� Fair and Responsible Lending – It’s the 

Right Thing to Do 

� Fair and Responsible Lending – the 

Principles that Guide Us 

3

Wells Fargo 

Our Commitment is Past, Present and 

Future… 

To always do what is right for our customers. Wells 

Fargo is fully committed to responsible lending and 

servicing in all communities. 

4

Wells Fargo 

Fair and Responsible Lending 

The Right Thing to Do… 

September 4, 2008 – Global Finance magazine released its annual 

ranking of the World Safest Banks in which Wells Fargo was listed 

among the top 10. 

WORLD’S SAFEST BANKS 

Groupe Caisse des Dépôts (CDC) France 

Bank Nederlandse Gemeenten (BNG) Netherlands 

Landwirtschaftliche Rentenbank Germany 

Rabobank Netherlands 

Landeskreditbank Baden-Wuerttemberg-Förderbank Germany 

Lloyds TSB United Kingdom 

BNP Paribas France 

Dexia Belgium 

Wells Fargo United States 

NRW Bank Germany 

5

Wells Fargo 

Sustaining the History of Service and 

Success 

As one of the nation’s largest lenders and servicers of 

residential real estate loans and lines of credit, we believe 

it is important for our company to be an industry leader in 

fairly and responsibly lending to all customers 

So in 2004 Wells Fargo was one of the first lenders in the 

industry to adopt affirmative lending principles in our real 

estate transactions… 

6

Wells Fargo’s Responsible Lending 

Principles – The Principles that Guide Us 

1. Ability to Repay 

2. Benefit to the Borrower 

3. Informed Choices 

4. Wide range of terms and features 

5. Product Selection 

6. Appropriate Loan Pricing 

7. Limits on prepayment fees 

8. Customer service 

7

Why Responsible Lending? 

Responsible Lending = Sustainable Lending 

� Supports our Goals of positive, long-term relationships 

� Enables us to earn more of our customers business 

� Helps our customers to succeed financially 

� Encourages them to recommend us to others 

It is consistent with our commitment to always do what is 

right for our customers. 

8

Fair and Responsible Lending… 

Wells Fargo’s – 

Past, Present and Future 

The Right Thing to Do 

A Sustainable Strategy for Success... 

9

Thank you 


Vice President, Diverse Segments 


301-562-2555 

Shelley.Metz-Galloway@wellsfargo.com 

10

Catherine Godschalk 

Self-Help Foreclosure Lease-Purchase Program 



www.self-help.org

What is Self-Help? 

• Self-Help is a nonprofit Community Development 

Financial Institution (CDFI) that was formed in 1980 

• Mission: to provide economic opportunity and wealthbuilding 

strategies for low income families 

• Direct Services 

– Assets of $1 billion 

– Home lending (in NC and Washington DC MSA) 

– Lending to small businesses and nonprofits 

– Real estate development 

– Nonpartisan policy research on abusive financial 

services (Center for Responsible Lending) 

• Secondary Market (nationwide) 

www.self-help.org 

2

Secondary Market Overview 

Loan Originations: 

• Roughly $4.5 billion in purchased loans 

• 48 states via partnership with major banks 

• Over 49,600 loans 

Borrower Profile: 

• Average Income is 64% of borrower’s Area 

Median Income (AMI) 

• 40% minority 

• 42% female heads of household 


3


4 

4

Program Guidelines 

• 100% LTV until recently; 97% LTV now 

• No mortgage insurance 

• Flexible underwriting guidelines 

• Affordable for the borrower 

• 38/41% qualifying ratios 

• 20% FICO < 620; now 620 floor 

• Retail originations only 


5

Lease-Purchase Mortgage Product 

� Variation on Self-Help/Fannie Program (30-yr fixed) 

� Initial borrower is local nonprofit partner 

� Self-Help recourse in place of individual qualification 

� Target for tenant to purchase home and assume loan 

within 5 years 

� Tenant lease payments cover mortgage and operating 

expense during rental period (and will not exceed FMR) 

� Tenants screened for affordability at origination 

� Affordability and credit capacity evaluated at assumption 

� Credit and homeownership counseling required 


6

Lease-Purchase Program Goals 

� Neighborhood Goals 

� Minimize cost of foreclosures and vacant homes 

� Turn foreclosures into wealth building assets for 

low-income families and communities 

� Household Goals 

� Provide path to homeownership for first-time 

homebuyers and credit-impaired homeowners 

� Program Path 

� Test multiple pilots then pursue scalability 


7

Lease-Purchase Pilot Structure 

Loan 

Servicers 

Foreclosed 

Properties 

Neighborhood 

Redevelopment 

Bulk 

Purchase 

REOs 

Open Market 

Purchases 

Long-term 

Affordable 

rentals 

Local 

Non-profit 

Developer 

Resale 

Lease to buy 

Funding Strategy 

Acquisition 

Rehab 

CRA/PRI 

Lease to buy 

mortgage 

Purchase 

Mortgage 

Local Bank 

Loss 

Reserve 

Capital 

Funding 

SECM 

Purchase 


Financing Structure 

Self-Help 

Sell mortgage 

w/ credit 

enhancement 

Fannie 

Mae 

8

Lease-Purchase Critical Issues 

Vacant REO 

Neighborhood & 

Property Selection 

• Find location where 

economics work (or 

subsidy is there) and 

capacity exists 

• Price/market stability 

• Volume/efficiency 

• Selectivity 

Acquisition/Rehab 

• Acquisition 

strategy 

(bulk vs. 

retail) 

• Capacity 

• Financing 

• Costs 


Program/Asset 

Management 

• Broad skill set 

(counseling, 

asset & prop 

mgmt.) 

• Value proposition 

for nonprofit 

• Counterparty risk 

Wealth- 

Building Asset 

Tenant 

Assumption & 

Beyond 

• Value proposition for 

tenant 

• Qualifying tenants 

• Turnover capacity of 

nonprofit 

• Lacking L-P loan 

performance 

9

Pilot in Peachtree Hills, Charlotte 

� Reverse recent neighborhood deterioration 

� Occupy vacant foreclosed properties 

� Acquisition and rehab of up to 25 vacated properties 

� Begin sales & leasing by early fall 2008 

� Up to five-year lease-purchase period, though 

targeting three-year lease period 

� Monthly one-on-one counseling and budgeting 

� Financial literacy workshops throughout program 


10

Charlotte – Foreclosure Distribution 


11

Peachtree Hills – 

Foreclosure Distribution 


12

Peachtree Hills – Ownership 

Red – Investorowned 

Black – Owneroccupied 

Blue – HOAowned 

common 

space 

Green – vacant 

lots 


13

Homes are still in decent 

shape 

Expected repairs are 

relatively minor with a few 

major upgrades and 

replacements 

Neighborhood completed 

approximately five years ago 

Needed improvements to 

landscaping and common 

areas 

Homeowners Association exists 

but is struggling

Sales & Lease Price Ranges 

� Home prices will average $80,000, previously sold for 

$150,000. 

� Average mortgage payment will be approx. $650/mo 

� Average lease payment will be around $850 a month 

for 3bd/2bth 

� Homeownership fund will be available to participants who 

successfully complete the program 

� If tenants do not assume mortgage, homeownership fund will 

be available to the nonprofit for unit turnover, etc. 


15

Supportive Services 

• Homebuyer counseling services 

• Neighborhood liaison/organizing and work with HOA 

• Community policing 

• Code enforcement 

• Infrastructure improvements 

• Landscaping upgrades 

• Attention to solid waste and general clean up 

• Funds to support rehab of homes and future homebuyer 

down payment assistance 


16

Conclusion 

• 2 to 6 million completed foreclosures will occur from 

2007 through 2012. 

• $400 billion minimum of vacant properties to be 

redeployed or torn down. 

• One option is to match vacant properties with families 

that can lease-purchase, but are not qualified to 

purchase today. 

• $10 billion investment could leverage $100 billion of 

lease-purchase redeployment (500,000 units). 

• Public sector investment will occur because the 

spillover neighborhood costs will be devastating. 


17

4 th Annual Mortgage Lending Industry 

Strategic Markets 


Ernest Baskette 

Neighborhood Housing Services of America 


COMPANY CONFIDENTIAL- PLS DO COPY

• Mortgage Market Dislocation – Regulatory Intervention 

• Many Lenders exiting business via bankruptcy 

• Over supply of homes/downward pressure on home prices 

• Loose/easy credit has brought destruction on the mortgage 

markets 

• Markets are freezing up 

• Non Traditional credit 

MLI Emerging Markets and Diversity Conference 

Where to Focus to Help Borrowers 

The Perfect Storm?? 

We’ve decided to focus and address 

one aspect of the problem: 

The Challenges of Stabilizing Markets & 

Non Traditional Credit Lending 

2


Over 1,000,000 Applicants Per Year Have 

“Thin Thin Files” Files or No or Low FICO ® s 

Potential Opportunity for Thin – No Credit File Mortgage Lending 

Based on Number of Inquiries Q4 ’05 – Q3 ‘06 

(Inquiries in 1,000s) Q4 '05 Q1 '06 Q2 '06 Q3 '06 Total 

Total Credit Bureau Inquiries (Mortgage Applications) 4,663 4,494 5,016 4,755 18,928 

No-Score Files (no score provided by bureaus) 54 52 58 55 220 

No-Hit Files (no file found at bureaus) 10 10 11 11 44 

Thin-Data Files (insufficient data for standard decision) 186 179 200 190 757 

Total Opportunity 

(based on volume of inquiries - individual market opportunities 

vary by lender, loan program and particular marketing efforts) 

251 242 270 256 1,022 

� Industry averages for thin/no-file population based on total credit bureau inquiries 

(mortgage application related): 

– No Score population (1.2%) 

– No Hit population (0.23%) 

– Thin file population (4.0%) 

Source: Thompson Financial Mortgage Market Date overlaid with First American CREDCO Scoring Data 

Market Opportunity 

3


Current Issues 

� Time-consuming, laborious to process for major lenders 

• Historically had no real appeal to Mortgage Loan Officers, REALTORS, and 

Builders, due to long approval process & high rate for declines 

• Manual, time consuming process required the creation of a paper file prior 

to an Underwriting review, where loan stipulations were uneven 

� Limited non profit borrower support activity in this space 

� Historically, Thin File Customers received higher cost loans via: 

• Teaser rates, Option ARMs, Interest Only, prepayment penalties, etc. 

• Can lead to resets, payment shocks, etc. 

� No widely accepted industry standards for evaluating non 

traditional creditworthiness and ability to repay 

� Limited market liquidity for non traditional credit products 

4

A new, innovative, comprehensive and cost-effective 

cost effective 

way to meet the needs of “thin thin file” file applicants 

Issue 

Time-consuming, 

manual 

processing 

Non profit 

origination 

Higher 

Cost Loans 

Credit Evaluation 

and Limited 

Market Liquidity 


Solutions 

“R” Solution Is…. 

Is 

� Automated, Internet-based platform: Decisions returned 

in minutes. Verification process is thorough, valid, and 

timely as well. 

� Support in the community for these new homebuyers: Upfront 

certified HUD approved counseling coupled with ongoing 

support vastly increases their successful homeownership 

� Growing Partnership with local governments which need to 

stabilize local real estate markets 

� Near Prime, 30-Year Fixed-Rate Conventional Mortgages. 

� Industry leading credit evaluation model: New, proven credit 

model for evaluating nontraditional credit 

� Large Global Financial institutional support: Backing of Financial 

Giants (Fortune 50 financial services companies participating) 

5


Introducing… 

Introducing 

6


Introducing R-HOME OME 

� The mortgage industry’s newest, responsible lending technology 

innovation designed to help creditworthy consumers, with 

limited or no credit history, become homeowners 

� Unprecedented non profit/for-profit partnership, bringing new 

buyers to market; recycling bank owned properties 

� Leading edge technology driven loan origination platform to help 

non profits and lenders serve the traditional underserved thin file 

consumers better and more efficiently 

� Upfront and ongoing financial counseling and support to help thin 

file consumers get ready for homeownership with support 

throughout the life of the loan 

7


Key Features of R-HOME HOME Program 

� Immediate Conditional Mortgage Pre-Qualification based on 

Non-Traditional Credit 

� “Rapid-Recheck” Assistance to Validate Credit Accuracy for 

Borrowers with Thin-File Credit 

� Works with local low- to moderate-income subsidy programs to 

enhance affordability 

� Product Flexibility 

� Lifetime Borrower Support 

� $20 million funded in the difficult markets of 2008; more 

committed and coming 

8


Recently Added to R-HOME HOME Program 

� BestFIT and Social Compact loan 

resolution technology to help 

communities deal with the crisis of 

mortgage foreclosures 

� Web-based technology connects 

borrowers, committed to staying in their 

homes, with loan servicers in a 

transparent and efficient manner 

� Validates a borrower’s capacity to pay 

� Determines current market values for 

properties in distressed markets 

� Provides for refinance, modification, short 

sale and REO redeployment 

� As with R-HOME Loan programs, the loss 

mitigation programs provide continued 

Borrower Support 

9


The R-HOME HOME Team 

10


The R-HOME HOME Alliance 

� NHSA 

– Loan aggregation and special servicing platform 

� First American’s ANTHEM 

– Alternative credit evaluation 

� Just Price Solutions 

– Technology platforms 

� State Farm and Fannie Mae 

– Investors 

Network of HUD-certified Counselors 

– Homeownership counseling 

� CitiMortgage 

– National Funder and Exclusive Loan Servicer 

11


Strategic Focus 

� ACCESS – A streamlined and automated process means more 

qualified homebuyers with non traditional credit histories will 

have access to mortgages 

� INNOVATION – State-of-the art technology, Internet-based 

mortgage platform that can deliver approval decisions (multiple 

layered risks) in minutes 

� SAVINGS – Conforming, near prime 30-year fixed-rate 

mortgages 

� PEACE OF MIND – Stable, affordable fixed-rate mortgages 

alleviate worries that often plague first-time homebuyers 

12


Visit the R-HOME Booth 

To Learn More/Sign-Up 

More/Sign Up 

13

TAB TACTICS & 

STRATEGIES TO 

PRESERVE MIN. 

HOMEOWNERSHIP

Tactics and Strategies to Preserve Minority Homeownership 

4:00 p.m. –5:00 p.m. 


There are a variety of creative techniques that can be employed to preserve minority 

homeownership. Many of these techniques involve working with minority origination sources, 

mortgage servicers and perhaps foreclosures counselors to prevent foreclosure through short 

sales, lease purchase and shared equity arrangements. These same sources may also be able to 

help liquidate bank REO in the communities they represent. Alternative strategies to drive new 

home financing may involve working builder’s inventories. The panelists will discuss these and 

other strategies that can be used to stabilize minority homeownership. 

Moderator: Tim Sandos 

President 

National Association of Hispanic Real Estate Professionals 

Speakers: Gary E. Acosta 

President/Chief Executive Officer 

New Vista President 

Marc Cormier 

Realtor 

Remax Allegiance 

Craig Nickerson 

Lead Consultant/Project Director 

National Community Stabilization Trust

Tim Sandos 

Tim Sandos Before joining NAHREP as CEO, Tim Sandos was Vice President of 

Emerging Markets for Principal Residential Mortgage, Inc., where he is responsible for 

the organization’s Emerging Markets programs and initiatives throughout the country. 

Tim most recently served as State Vice President & Chief Operating Officer for QWEST 

Communications (formerly U S WEST) and its 3,200 Nebraska employees in the state of 

Nebraska. His responsibilities included managing the company’s operations, sales and 

marketing initiatives, and directing regulatory, legislative and community affairs for the 

organization. 

Before joining U S WEST as Director of Government Affairs in 1998, Tim served as 

Vice President of the Education Division for Telecommunications, Inc. Prior to this, he 

was Executive Assistant to Denver’s former mayor, Federico Peña, which culminated in 

his election to the Denver City Council in 1991. In 1996, he ran for Congress in 

Colorado’s 1st Congressional District. He attended the University of Colorado and the 

Kennedy School of Government at Harvard University. 

Tim has an extensive background in community service. While in Nebraska he served on 

the boards of the Greater Omaha Chamber of Commerce, United Way of the Midlands, 

the Joslyn Art Museum, The Nebraska State Chamber of Commerce, and the Omaha 

Performing Arts Society. He was also Chairman of the Board for the Boys and Girls 

Clubs of Omaha. In Denver Tim served as a trustee at University Hospital and the Denver 

Convention and Visitors Bureau. He was a member of the Board of Trustees for the 

Denver Health and Hospitals Authority, and the Carnegie Foundation Task Force on 

Adolescent Development. Sandos has received many awards for his work including 

recognition from such organizations as Mile High United Way, I Have A Dream 

Foundation, Downtown Denver Partnership, and the National Hispanic Chamber of 

Commerce. 

Tim’s national service is extensive as well. He served as Chair-elect of the Omaha 

Branch of the Federal Reserve Bank, and was a member of the National Academy of 

Sciences Board on Children and Families, advising the White House and Congress on 

issues related to the healthy development of children. In 2001, Tim was selected by 

Secretary of Defense Donald Rumsfeld to participate in the Joint Civilian Orientation 

Conference (JCOC), reviewing the U. S. military compliment and its five branches. He 

was a founding member of the National Hispanic Caucus of State Legislators.

TAB 

BEST IN INDUSTRY 

DINNER

Joseph J. Murin 

Joseph J. Murin was sworn in as President of the Government National Mortgage Association 

(Ginnie Mae) on July 1, 2008. Nominated by President George W. Bush and confirmed 

unanimously by the Senate, Murin will oversee Ginnie Mae’s mission to make affordable 

housing a reality for millions of low- and moderate-income households across America. 

Mr. Murin brings more than 35 years of diverse experience in the mortgage and banking 

industry to the U.S. Department of Housing and Urban Development. Prior to his 

appointment, Mr. Murin led the strategic direction of Mortgage Settlement Network, LLC. As 

Managing Partner, he was the driving force behind the company’s long-range plans and 

objectives. Mr. Murin sold Mortgage Settlement Network, LLC as of August 31, 2007. 

Prior to establishing Mortgage Settlement Network, LLC, Mr. Murin served as President and 

Chief Operating Officer and later Chief Executive Officer of Basis100, a Toronto-based 

technology company, which is responsible for the development of the Canadian Bond Trading 

system, as well as the current Automated Property Valuation (AVM). 

He also has significant experience on the trading and lending side of the industry. Before 

Basis100, Mr. Murin led the transformation of Lender’s Service, Inc. (LSI) from an appraisal, 

title, and closing management company to a provider of new technologies and business 

solutions for the national marketplace. LSI was later sold to Merrill Lynch, where Mr. Murin 

served as CEO upon the recapitalization of LSI in 1998. 

Mr. Murin began his career with Pittsburgh National Bank, now PNC Bank, in the early 1970s 

as a loan officer. From 1979 to 1982, he served as President of Murin Brothers, Inc., a 

family-owned business, which built single-family residential and multifamily housing 

primarily for low- and moderate-income families. 

Mr. Murin received his degree in business from National Louis University. Currently, he 

serves on the Board of Point Park University in Pittsburgh, PA. 

He and his wife, Angela, will reside in the Washington Metropolitan area. They have two 

married daughters and three grandchildren.

FOR IMMEDIATE RELEASE 

Wednesday, October 8, 2008 

Fourth Annual Minority Lending Awards Announced 

WASHINGTON, D.C. -- The Lending Industry Diversity Conference, Inc. today announced the 

winners for its 2008 Best in Industry Awards. Based on the recently released 2007 Home 

Mortgage Disclosure Act (HMDA) data, the “Best in Industry Awards” distinguish companies that 

have demonstrated superior performance in minority lending and minority market penetration. 

The Lending Industry Diversity Conference (LIDC) uses ComplianceTech to perform the analyses 

for the awards, using its www.LendingPatterns.com platform to analyze HMDA loan application 

registers (LARs). 

“This year we wanted to recognize those lenders that have made responsible lending a hallmark 

in the way they do business. Therefore, we studied the 2007 HMDA data to uncover those 

lenders that engaged in a high proportion of lower cost lending while maintaining a significant 

volume of minority loans,” says Mike Taliefero, managing director of ComplianceTech, the 

organization that founded the non-profit DC-based Lending Industry Diversity Conference, Inc. 

(LIDC). ComplianceTech is also one of the lead organizers of the Fourth Annual Mortgage 

Lending Industry Strategic Markets & Diversity Conference, which is being held October 6-8, 

2008 at the Gaylord National Resort and Convention Center in National Harbor, MD. 

The LIDC analyses identified the following companies as this year’s winners for their respective 

performance categories: 

Best in Minority Market Penetration Award goes to Wells Fargo, NA. This award 

recognizes the lender that has the greatest proportion of minority applications compared 

to the national minority population percentage (according to the 2000 census). To be 

eligible for this award the lender must have reported at least 50,000 HMDA applications, 

have less than a 51% HMDA reportable spread frequency, and report no more than 10% 

of total applications as race unknown. Remarkably, Wells Fargo, NA had 24% of its 

applications come from minorities. 

Minority Lending Awards by Regulatory Peer Group These awards recognize 

mortgage lenders operating primarily in the continental USA that demonstrated 

responsible low-cost lending overall, with a high number of loans to minorities within a 

specified category based on the regulator to which the lender reports its HMDA data. The 

criteria for all of these awards are the number of originations and maintaining a maximum 

HMDA reportable spread rate of less than 10%. 

(continued)


Page 2 

Regulatory 

Peer 

Group 

OCC 

OCC 

Minority Lending Awards for 

High Volume, Low-Cost Lender 

More than 50,000 minority loans with 

rate spread of less than 10% 

Less than 50,000 loans but more than 

10,000 loan with rate spread of less 

than 10% 

Winner 

Rate 

Spread 

# of 

Minority 

Loans 

Bank of America 5% 153,402 

ABN AMRO Mortgage Group 1.4% 13,952 

FRB Rate spread of less than 10% SunTrust Mortgage, Inc. 6.2% 42,139 

FDIC Rate spread of less than 10% Bank of the West 7% 2,098 

OTS Rate spread of less than 10% USAA Federal Savings Bank 1.7% 11,545 

NCUA Rate spread of less than 10% Navy Federal Credit Union 0.7% 8,038 

HUD 

HUD 

More than 25,000 minority loans with 


Less than 25,000 minority loans with 


Taylor, Bean, and Whittaker 0% 29,964 

Provident Funding Assoc. 1.4% 15,382 

The achievements of these lenders will be recognized at the “Best in Industry” Awards Dinner to 

be held in the Washington, DC area in conjunction with the Fourth Annual Mortgage Lending 

Industry Strategic Markets and Diversity Conference. 

“In these troubling economic times it’s important to recognize lenders who behaved well and who 

did not contribute to this current crisis,” says Maurice Jourdain-Earl, co-founder of 

ComplianceTech. ComplianceTech provides lending related consulting services with specialties 

in database analysis to identify marketing opportunities and legal/regulatory compliance 

weaknesses for the lending industry, especially related to fair lending. 

(continued)


Page 2 

About Lending Industry Diversity Conference, Inc. 

The Lending Industry Diversity Conference, Inc. is a not-for-profit District of Columbia-based 

corporation that is organized for the following specific purposes: 

• To conduct conferences that promote the link between racial and ethnic diversity in the 

workforce and racial and ethnic diversity in lending/credit allocation. 

• To increase the racial and ethnic diversity of the lenders’ workforce and suppliers in all 

lending and credit-granting sectors. 

• To researching and publicize ways to capitalize on racial and ethnic diversity as a 

mechanism to increase minority loan originations. 

• To teach lenders, credit providers, credit enhancers and real estate industry participants 

about effective strategies to increase homeownership opportunities for minorities. 

• To strengthen and develop business relationships among lending companies who are 

committed to closing the homeownership gap. 

• To promote the exchange of knowledge and information to members of the credit and 

lending industry. 

• To provide relief for credit distressed or under-served populations. 

• To promote social welfare by increasing minority homeownership rates, which in turn, 

increases economic development and minority household wealth. 

• To lessen the barriers of entry for minority-owned companies and contractors. 

Lending Industry Diversity Conference, Inc 

1325 G Street, NW, Suite 500 Washington, DC 20005 

Tel: 202-842-3800 Fax: 202-842-3808 

http://www.mortgageindustrydiversity.com/ 

For media inquiries contact: 

Laura Siebold, Media Relations Specialist, Martopia 

Colleen Makare, Senior Account Executive, Martopia 

(630) 587-9944 

###

TAB AFFORDABLE 

HOUSING, CRA & 

STRATEGIC MARKETS

Affordable Housing, CRA & Strategic Markets 

9:00 a.m. – 10:15 a.m. 


Notwithstanding the current crisis, the lending standards for CRA, affordable lending, and fair 

lending have not been lowered. It is likely to be more difficult to achieve these mandated 

objectives without special measures and unique relationships. This session will discuss the 

following: state and local housing agency solutions; role of non profits in community lending; 

strategic markets and affordable housing origination strategies; role of the GSE's in supporting 

affordable lending. 

Moderator: Victor Galloway 

Market Segment Manager 


Speaker: Don Cohen 


Community Development and Lending 

Landmark Credit Union 

Terri Fowlkes 

Director, Consumer Segment Management 

REL Strategic Markets 

Citi

Donald A Cohen 

Don has worked with the Low to moderate income community for over 30 years, first as 

a Real Estate broker and then in banking. He is now the Vice President of Community 

Lending for Landmark Credit Union in Milwaukee, Wisconsin, the largest credit Union 

in Wisconsin. 

Over the last nearly 20 years in banking, Don has taken two banks from “low 

satisfactory” on their CRA exams to” high satisfactory” and to “outstanding”. He helped 

one bank open a branch in the largest Hispanic owned grocery store in Wisconsin. 

Don has worked the last 5 years to bring the banking industry to the Hispanic market. He 

has developed programs using ITIN’s and Government issued ID’s (Matricula consular 

card) to help people use the financial systems to open accounts and to obtain personal, 

car, and home loans without Social Security numbers. 

Don was the chair of the Mortgage group for the New Alliance Task Force for the FDIC 

in Chicago, which helped develop mortgage products for immigrants without Social 

Security numbers. Don is involved heavily in the Hispanic, African American and 

Hmong markets in the Milwaukee area.

Affordable Housing, CRA & Strategic Markets 

Mortgage Lending Industry Strategic Markets 


October 8, 2008

Current Environment 

More restrictive products: Higher credit scores, additional overlays 

(declining markets), lower debt to income 

ratios allowed, higher down payment 

Slower market: Supply and demand; declining home 

prices 

Struggling Economy: Ripple effect 

creative loan products more qualify higher demand 

less stock available higher prices 

seller concessions needed etc… 

Maxed out sellers: Many took out all the equity and now prices 

have declined 

Higher cost of living Less to save; impossible environment for 

ARMs 

No seller paid DPA: Where does this leave the new homebuyer? 

IMPACT: 

Fewer 

Homebuyers 

& 

Fewer 

Homeowners

What is ACCESS? 

Standard First Mortgage + Amortizing Second for Down Payment / Closing Costs 

• Variety of First Loan Types & Terms 

– MyCommunityMortgage, HP, FLEX, and Standard Products 

– 97% LTV Max 

– First Loan Priced Daily 

• Second Loan 

– 20-Year Fixed 

– < 2% above First Loan Note 

– Proceeds for Any Cash-to-Close Needs 

– 103% CLTV Max (100% in Declining Markets)

ACCESS: A Solution for homeownership 

No Seller DPA 

as of Oct. 1 

Funds 

Consistently 

Available 

Easy to Use 

& Delegated 

Underwriting 

More Restrictive Products 

Don’t Have to be 

A First-Time 

Homebuyer 

Based on 

Qualifying Income 

(Not Household) 

Higher Income 

Limits 

100%-103% 

Financing 

is Possible 

Slower Market 

More Restrictive Products 

Maxed out Sellers 

Higher Cost of Living 

Struggling Economy

Create a Competitive Edge 

• Second Loan Funds Available Consistently 

– Lock First & Second Loan at Same Time 

– Available in 45 States! 

– Learn one program nationally 

• Easy Program to Use 

– Delegated Underwriting Available 

– No Additional “Compliance Review” Step 

• NHF Website 

– ACCESS Guideline Library 

– Alerts (updates, news) 

– Web-Training Calendar 

This presentation contains program highlights only. 

Please see complete program guidelines at www.nhfloan.org for all program guidelines, or call NHF Toll-Free (866) 643-4968.

Expand Your Reach 

• Higher Income Limits 

– 140% HUD AMI 

– Qualifying Income Only 

• Flexible Borrower/Property Eligibility 

– No First-Time Homebuyer Requirement 

– 1- or 2-Unit 

• Little-to-no money down from borrower’s own funds 

• Financing up to 103% CLTV (FHA up to 105% CLTV—CA & NV only) 

• 20% Tax Credit Mortgage Credit Certificates (MCC) may be used in 

conjunction with the ACCESS program 

• Minimum 580* 

• Non-Traditional Credit and Income Allowed (under MCM) 

Over $7.2 B in 

First & Second Loan 

Financing since 1993 

(53,000 Properties) 

*PMI Restrictions require 720 in CA

Leverage MI to Create a Competitive Edge 

• Lower MI Requirements Available for 

MCM, HP & FLEX 

• Single, Split or Monthly Premiums 

• Second Loan Proceeds May be Used 

to Finance All or Part of MI 

• Specific Provisions / Rates through 

Certain MI Providers

Leverage ACCESS Materials to Maximize Marketing Budget 

• “Homebuyer Materials” to Help You Reach Your “Niche” Customers 

– Samples & Guidelines at www.nhfloan.org 

– English & Spanish Available 

– Pre-Printed – READY TO ORDER 

– Blank Area – FOR YOUR CONTACT INFO 

NOTE: 

“"Homebuyer Materials" 

ARE NOT AVAILABLE in 

the states of Arizona, 

Delaware or Pennsylvania.

ACCESS is Easy for You and Your Customers. 

• ACCESS Rate Sheet Distributed through Servicer 

• Origination is Easy 

– Lock First & Second Loans with Servicer 

– Lender Funds & Services First & Second Loans 

– Lender Completes Program Checklists (2) 

– Lender Submits Loan Package to Servicer, for Sale of 

First & Second Loans 

– Borrower Receives “Single-Statement” Servicing

To Get Started 

Real Estate Professionals 

Find an NHF Approved Lender in Your Area 

– Call NHF at 1-866-643-4968, or 

– Call CitiMortgage Special Programs, 1-800-967-2205, Options 1, 0, 1 

Lenders / Bankers 

Become an NHF Approved Lender 

– Call NHF at 1-866-643-4968, or 

– Call CitiMortgage Special Programs, 1-800-967-2205, Options 1, 0, 1 

– Rate Sheets Distributed Daily

Questions: 

National Homebuyers Fund, Inc. 

801 12th Street, Ste 600 

Sacramento, CA 95814 

(866) NHF-4YOU (866) 643-4968 

E-mail: info@nhfloan.org 

Website: www.nhfloan.org 

CitiMortgage Special Programs 

Phone: (800) 967-2205, Options 1, 0, 1 

E-mail: csp.dallas@citi.com 

Website: http://correspondent.citimortgage.com/SpecialPrograms

TAB TOWN HALL 

MEETING

Town Hall Meeting: Consumer Protection 

10:30 a.m. – 12:00 p.m. 

Annapolis Ballroom 1 - 3 

There are some who argue that the current crisis in lending could have been prevented entirely if 

the mortgage origination process respected and protected the mortgage consumer. In this Town 

Hall Meeting you will hear from a cross section of industry professionals on their views on what 

has been wrong with consumer protection to date, how current and future consumer protection 

measures may affect minority home shoppers and borrowers, and ideas for enforcement of 

consumer protection laws. 

Moderators: Lori Jones Gibbs 


Affordable Housing/ Industry Affairs 


Michael Taliefero 



Speakers: Stella J. Adams 

Founder and CEO 

S J Adams Consulting 

Cathy Cloud 


National Fair Housing Alliance 

Nathan Farrior 

Vice President of Business Development 

Generations Community Credit Union 

Calvin Haggins 

Director 

Compliance Policy 

Office of the Controller of Currency (OCC)

Speakers continued: 

Town Hall Meeting: Consumer Protection 

10:30 a.m. – 12:00 p.m. 

Annapolis Ballroom 1 - 3 

Joy Jamison 

President and Founder 

National Association of Black Mortgage Brokers 

Maurice Jourdain Earl 



Maria Kong 

President 

National Association of Real Estate Brokers 

Tim Sandos 

President and CEO 

National Association of Hispanic Real Estate Professionals 

Larry Gilmore 

Deputy Director 

HOPE Now Alliance

Lori Jones Gibbs 

Lori Jones Gibbs is Vice President of Affordable Housing/Industry Affairs for 

Genworth Financial’s mortgage insurance business, one of the nation’s leading mortgage 

insurers. She is responsible for developing strategies to increase home ownership in 

diverse, under-served markets nationwide, specifically targeting low-to-moderate income, 

ethnic minority and New American constituencies. 

A 20-year housing industry veteran, Lori held various positions at Peoples Bank, 

Mechanics and Farmers Bank, the North Carolina Community Development Initiative 

and SELF-HELP Credit Union prior to joining the General Electric Company in 1998. 

Lori serves on numerous boards, including the Congressional Black Caucus With 

Ownership Wealth (WOW) National Advisory Board, National Bankers Association 

Corporate Advisory Board, North Carolina Low Income Housing Coalition, Mortgage 

Bankers Association Of The Carolinas, the North Carolina Council of Housing 

Counselors, the City/County of Durham Merger Task Committee, the National Housing 

Council and North Carolina Central University Foundation. 

A graduate of the University of Connecticut, Lori holds a Masters degree from the 

University of Bridgeport. 

Genworth is a leading insurance holding company, serving the lifestyle protection, 

retirement income, investment and mortgage insurance needs of more than 15 million 

customers, with operations in 20 countries, including the U.S., Canada, Australia, the 

U.K. and more than a dozen other European countries. For more information, visit 

www.genworth.com

Town Hall Meeting on Consumer Protection 

Questions for Consideration 

1. When it comes to consumer protection, is the industry capable of policing 

itself? Explain your answer. 

2. Should the principle of caveat emptor (“let the buyer beware”) be the 

starting point for consumer protection? Related question: do you believe 

the subprime lending crisis would have been avoided if borrowers had been 

financially literate? 

3. How should the industry or government protect consumers from 

dangerous mortgage products? 

4. How do we protect consumers from unscrupulous lenders? 

5. Do you believe loan product steering contributed to the subprime lending 

problem? If so, how can consumers be protected from steering? 

6. Do we need more consumer protection laws? If so, which ones would you 

suggest? Alternatively, would more aggressive enforcement of existing 

laws be better for the consumer. 

7. Should certain loan originator compensation schemes be outlawed or 

restricted to remove economic incentives to take advantage of certain 

consumers? 

8. Do we need a new regulatory framework for mortgage lending? If so, what 

should that look like? 

9. What are the consumer protection issues associated with helping 

delinquent homebuyers? 

10.Who should be most responsible for providing financial education to the 

next generation - School System/Teachers, Financial Community, 

Government, Non-profits, or Parents? List in order of priority.

Stella Adams 

Stella Adams is the founder and CEO of S J Adams Consulting which performs research 

and policy development in the areas of fair housing, and fair lending. The firm also 

conducts civil rights and mortgage fraud investigations and fair lending audits. 

Ms, Adams is the former Executive Director of the award-winning North Carolina Fair 

Housing Center. Under her leadership, the NC Fair Housing Center recovered over $57 

million from predatory lenders for over 27,000 North Carolinians. In addition, the Center 

recovered $3 million dollars for victims of unlawful discrimination. 

Ms. Adams has testified before Congress on many occasions and is the recipient of the 

2006 Individual Achievement Award of the International Association of Official Human 

Rights Agencies, 2005 Civil Rights Award granted by the National Association of 

Human Rights Workers and has received the 2004 HUD FHEO Pioneer Award for her 

work in fighting predatory lending and the 2004 National Fair Housing Alliance Fair 

Lending Advocacy Award. 

Ms. Adams served on the Federal Reserve Board Consumer Advisory Council (1/05- 

12/07), which advises the Board on the exercise of its responsibilities under the 

Consumer Credit Protection Act (Ms. Adams served as the Chair of the Community 

Affairs and Housing subcommittee and lead the discussions on strengthening HOEPA to 

protect consumers from Predatory Lenders. Ms. Adams also currently serves on the 

following Boards and Commissions: The National Community Reinvestment Coalition; 

The North Carolina Advisory Committee to the US Civil Rights Commission; The NC 

Legislative Commission on Racial, Ethnic and Religious Discrimination; and The NC 

Conference of the NAACP.

Cathy Cloud 

Cathy Cloud is Senior Vice President of the National Fair Housing Alliance. Ms. Cloud 

joined NFHA in January of 1991, shortly after it opened its first office. As Senior Vice 

President, she is responsible for supervising NFHA programs in the areas of compliance, 

membership services, education and outreach, consulting, community development, 

finances, and administration. Ms. Cloud is responsible as well for the development and 

implementation of Fair Housing School8, NFHA=s comprehensive training and 

education program for fair housing personnel. 

During her tenure at NFHA, Ms. Cloud has been responsible for supervision of national 

testing and investigation programs in the areas of homeowners insurance and mortgage 

lending. These efforts led to settlement agreements with many of the nation=s largest 

homeowners insurance companies who changed their underwriting guidelines and 

implemented compliance programs. Ms. Cloud has provided training and consulting 

services to public and private fair housing organizations, the housing industry, federal 

financial regulatory agencies, mortgage lending institutions, homeowners insurance 

providers, and national retail chains. She has served as a member of the Consumer 

Advisory Council of the Board of Governors of the Federal Reserve System and on the 

national advisory board of the Federal Reserve Banks= Mortgage Credit Partnership 

Project. Ms. Cloud was featured on the 1992 PBS special "Frontline" -- Your Loan is 

Denied. She is also the author of articles on mortgage lending discrimination and coauthor 

of chapters in books on mortgage lending and insurance discrimination. 

Prior to joining the National Fair Housing Alliance, Ms. Cloud served as Assistant 

Director of HOPE Fair Housing Center which serves the western suburbs of Chicago. 

She coordinated HOPE=s testing program; worked with the private bar, HUD, and 

Department of Justice in the filing and resolution of complaints; provided training to the 

housing industry; monitored consent orders for compliance; counseled clients on fair 

housing, tenant-landlord, and affordable housing issues; and helped create educational 

programs on the issues of fair and affordable housing. Ms. Cloud also served as the 

Research Chair of the Chicago Area Fair Housing Alliance, a coalition of public and 

private fair housing agencies working cooperatively on fair housing/fair lending issues in 

the Chicago metropolitan area. In this capacity, Ms. Cloud obtained a grant from the 

John D. and Catherine T. MacArthur Foundation to conduct a pilot mortgage lending 

discrimination research and testing program. She also supervised the 1989 HUD-funded 

Housing Discrimination Study in the Chicago metropolitan area. 

Ms. Cloud received an M.A. in Public Policy from the University of Chicago and a B.A. 

in Political Science from the University of Illinois (Urbana).

Maria Kong 

Maria Kong has been a dynamic and innovative force in the real estate industry for over 

26 years and serves as a senior associate with Barrington Consultants, Inc. Her 

accomplishments are many, but at the core, she has guided her clients toward economic 

empowerment and wealth creation. She can count among her successes generating more 

than $500 million in real estate sales and mortgage placements. Although based in the 

active south Florida marketplace, Maria serves an enviable client base located throughout 

the country and internationally including entertainers, sports figures, politicians, 

corporate leaders, investor groups and others seeking a knowledgeable professional. 

Throughout her impressive career, Maria’s reputation as a savvy real estate expert 

positioned her to write first-time homebuyer’s mortgage programs for industry leaders 

such as Fannie Mae and Freddie Mac. 

In 1991, Maria formed Markon Realty & Management, Inc. that now, is a recognized 

company in the real estate industry with Maria being approved as a Resolution Trust as 

well as a Fannie Mae REO Broker. Prior to establishing the company, Maria spent 10 

years with InveRealty, Inc. serving as broker and subsequently, the company’s president. 

Located in Ft. Lauderdale, Florida’s luxury Inverrary community, Maria mastered the 

coveted market where entertainers, including the famed Jackie Gleason, made his home 

hosted his annual Golf Classic. 

Maria’s civic involvement leaves little doubt that she believes in sharing her knowledge, 

her commitment to her community, and to her profession. Ms. Kong has worked with 

Congresswoman Meek as one of the “Women for Carrie Meek,” served as fundraising 

chair for commissioners Hazel Rogers and Barrington Russell, is one of the founders of 

Afri-Pac, a non-partisan political action committee, and has actively participated in a 

number of successful political campaigns. She has served as treasurer of the Florida 

Netball Association, and board member for the Teddy Pendergast Foundation. 

Professionally, she has served as vice president of the Women’s Council of the National 

Association of Real Estate Brokers, and on the City of Lauderhill’s Code Enforcement 

Board and its Housing Advisory Board. She sits on the South Florida Fannie Mae 

Partnership Office Advisory Board; Dade County Anti-Predatory Lending Task Force; 

Caribbean American Elected Leaders and Officials National Board; past president of the 

South Florida Realtist Women’s Council; board member and past president of the South 

Florida Board of Realtists, and past board member, Lauderhill Kiwanis Club. Ms. Kong 

chaired the luncheon of “Women of Color in Possession of Power” honoring five of the 

top women of power in Atlanta including the mayor of Atlanta. Nationally, Maria was 

appointed by President Bush to serve on the Small Business Advisory Board.

Kong continued: 

Currently, Maria Kong holds the position of president of the National Association of Real 

Estate Brokers (NAREB), the nation’s oldest minority trade organization. Maria is the 

second female president in NAREB’s 60 year history, the first Floridian and person of 

Caribbean descent to hold this position. Always an active NAREB member, Maria has 

served on numerous occasions, as NAREB’s convention chair including the one 

convened in Jamaica attended by more than 1,000 members, government ministers and 

real estate leaders. 

A recipient of many local and national awards, Maria has been featured in the News and 

Sun-Sentinel as well as several Caribbean newspapers and in Black Diaspora Magazine. 

Maria has been given proclamations from Broward County and the City of Lauderhill, as 

well as Honorary Citizen of the City of Huntsville, Alabama. Born and raised in Jamaica, 

Ms. Kong earned a Bachelor of Arts and MBA degrees from American Intercontinental 

University.


Emerging Markets and Diversity Conference 

www.MortgageIndustryDiversity.com 

4th Annual Mortgage Lending Industry 
























4th Annual Mortgage Lending Industry

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