C mmunity Liaison

The OTS and the other banking

agencies have issued important

guidance to the industry and

our examiner workforce on nontraditional mortgage products, subprime

lending and assisting financially troubled borrowers. At OTS, the

Compliance Policy, Compliance

Examination Operations, Consumer

Protection and Community Affairs

functions are under one “umbrella,”

coordinated in Washington, DC by

Montrice G. Yakimov. These functional areas are substantially interrelated

and comprise various complementary

activities. As such, we are uniquely

positioned to leverage our resources,

which create an important multiplier

effect for OTS and the institutions we

supervise.

This edition of Community Liaison

highlights issues that cross those functional boundaries, a type of interdisciplinary approach that couples significant compliance policy developments

with outreach activities to thrift institutions and community and consumer

organizations. We have chosen to publish the newsletter to mark National

Consumer Protection Week (NCPW),

held March 2 through March 8, 2008,

which showcases broad-based consumer protection and financial education efforts throughout the country.

Priorities for NCPW this year include

the promotion of homeownership and

counseling programs and the provision of information to help borrowers

recognize and avoid abusive lending

practices, two key areas whose importance to consumers is even more critical in the current mortgage environment. 

What’s in This for You?

In this issue, we provide information

on the following:

Q The joint Department of Housing

and Urban Development and the

Department of Treasury foreclosure avoidance initiative, which

reaches out to community groups

that provide foreclosure counseling

and refinancing opportunities and

products, including HUD’s

enhanced refinancing program,

FHASecure. The article also discusses the nexus between foreclosure intervention and proposed

changes to the Community

Reinvestment Act (CRA), which

would provide favorable consideration for a variety of activities that

benefit financially distressed

homeowners (see page 3).

Q The critical role that

NeighborWorks®America plays in

providing foreclosure prevention

counseling and related assistance

to struggling homeowners. As a

result of their longstanding accomplishments in this area, they are a

pivotal entity in the multi-partner

foreclosure avoidance initiative,

HOPE NOW (see page 6). 

Q The opportunities — and important issues to consider — regarding

FHA-insured reverse mortgage

products available to senior citiVolume No. 2008, Issue 1 Community Affairs Newsletter

From the Director’s Desk

John M. Reich, Director, Office of Thrift Supervision

CommunityLiaison

Editor: Stephanie Caputo

Production: Rick Shacklette

Printing: John Scott
– 2 –

zens, and a discussion of one thrift’s use of reverse mortgages (see pages 8 and 9).

Q Policy guidance issued by the regulatory community

during the past few months that also underscore key

components of President Bush’s mortgage foreclosure

initiative (see page 14). 

Q A resource directory that lists Web sites that provide

more information on the major topics covered (see page

16).

Q We are also introducing a feature called “CRA

Spotlight,” which profiles CRA-eligible activities that

present opportunities for our institutions, particularly

smaller thrifts seeking community development lending,

investment and service activities. The Senior Housing

Crime Prevention Foundation serves as a conduit for

banks and thrifts to make both loans and investments,

and provide related services, which benefit senior housing residents. Since its inception, the program has

enjoyed an effectiveness rate greater than 90 percent in

combating elder abuse, neglect, fraud and theft (see

page 11). 

It is important that as regulators and policymakers focus on

preventing avoidable foreclosures, we avoid blurring the

line between responsible subprime lending and predatory

lending. The objective should be to prevent predatory lending and mortgage fraud without constraining legitimate

subprime lending. Poor underwriting and abusive lending

practices have been problematic; subprime lending, per se,

has not.

When we reintroduced Community Liaison in the summer

of 2007, I noted the leadership posture of the thrift industry throughout the years in promoting and financing homeownership options. Despite the challenges they confront in

today’s lending environment, we expect our institutions to

continue to deploy their resources and expertise to meet the

credit needs of borrowers with appropriate products and

services that help ensure the American dream remains within reach.

We hope you find the newsletter helpful and welcome your

feedback and comments. Q

CommunityLiaison

OTS Community Affairs Staff

Northeast Region

Connecticut, Delaware, Maine, Massachusetts, New Hampshire,

New Jersey, New York, Pennsylvania, Rhode Island,

Vermont, & West Virginia

Francis Baffour, Community Affairs Liaison (201) 413-7343 – Ph.

U.S. Department of the Treasury (201) 413-7520 – Fax

Office of Thrift Supervision

10 Exchange Place, 18th Floor

Jersey City, New Jersey 07302

Southeast Region

Alabama, Florida, Georgia, Kentucky, Maryland, North Carolina,

South Carolina, Tennessee, Virginia, Washington, D.C., Puerto Rico, &

Virgin Islands

Lynn Bedard, Community Affairs Liaison (404) 888-8443 – Ph.

U.S. Department of the Treasury (404) 897-1861 – Fax

Office of Thrift Supervision

1475 Peachtree Street, N.E.

Atlanta, Georgia 30309

Central Region

Illinois, Indiana, Michigan, Ohio, & Wisconsin

VACANT, Community Affairs Liaison (312) 917-0000 – Ph.

Christopher A. Lombardo, Asst. Dir., Compliance (312) 917-5091 – Ph.

U.S. Department of the Treasury (312) 917-5001 – Fax

Office of Thrift Supervision

1 South Wacker Drive

Suite 2000

Chicago, Illinois 60606

Midwest Region

Arkansas, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri,

Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota,

& Texas

Aaron Satterthwaite, Jr., Community Affairs Liaison (972) 277-9569 – Ph.

U.S. Department of the Treasury (972) 277-9563 – Fax

Office of Thrift Supervision

225 E. John Carpenter Freeway, Suite 500

Irving, Texas 75062-2326

West Region

Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana,

Nevada, Oregon, Utah, Washington, Wyoming, Guam, & The Northern

Mariana Islands

James Woods, Community Affairs Liaison (650) 746-7040 – Ph.

U.S. Department of the Treasury (650) 746-7001 – Fax

Office of Thrift Supervision

Pacific Plaza — 2001 Junipero Serra Blvd., Suite 650

Daly City, California 94014-1776

Washington, D.C.

Stephanie Caputo, Community Affairs Specialist (202) 906-6549 – Ph.

U.S. Department of the Treasury (202) 906-6326 – Fax

Office of Thrift Supervision

1700 G Street, N.W.

Washington, D. C. 20552

Nicola Kelly, Community Affairs Specialist (202) 906-7891 – Ph.

U.S. Department of the Treasury (202) 906-7842 – Fax

Office of Thrift Supervision

1700 G Street, N.W.

Washington, D. C. 20552

CommunityLiaison

is produced by the

Office of Thrift Supervision

1700 G Street, N.W.

Washington, D.C. 20552

To receive free additional copies please call your

local Community Affairs Liaison office
– 3 –

Foreclosures create seriously adverse consequences for

families and communities.1 Analysts have questioned the sufficiency of underwriting transparency

regarding the actual creditworthiness of many borrowers,

and many consumer advocates have questioned the appropriateness of disclosures regarding certain mortgage products, particularly loans made to subprime borrowers.

Beyond the challenges to individuals and communities, disruptions facing the mortgage markets are broad, also

impacting investors both domestically and internationally.2

The federal government, the financial services industry, and

consumer advocates are implementing strategies and programs, which include the active participation of the private

and nonprofit sectors, to address this growing problem.3

Some initiatives are:

Q The Department of

Housing and Urban

Development (HUD)

announced changes in

the Federal Housing

Administration

(FHA)-insured loan

program to enable

more people to qualify

for FHA-insured loans.

HUD’s program,

FHASecure, is currently underway, and is

expected to help up to

240,000 homeowners

refinance into FHAinsured mortgages in 2008 (see FHASecure: A Good

Way to Refinance Out of Trouble, page 5).

Q The federal banking agencies have published policy

guidance to communicate supervisory expectations

relating to mortgage underwriting and consumer protections. (See Compliance Roundtable, page 14, for additional information on the guidance).

Q The OTS is participating with the Federal Reserve, the

Federal Trade Commission, state agencies represented

by the Conference of State Bank Supervisors, and the

American Association of Residential Mortgage

Regulators to conduct targeted consumer-protection

compliance reviews of selected nondepository lenders

with significant subprime mortgage operations.4 Project

participants will share information, take appropriate

corrective action, and

explore ways to increase

cooperation to ensure

effective supervision of

these entities. In applying

a coordinated review program, the regulatory

agencies will enhance

their ability to more consistently assess subprime

mortgage lending practices across a wide range

of mortgage lenders and

other industry participants.

CommunityLiaison

Finding Solutions:

Responding to Rising Foreclosures

Stephanie Caputo, Community Affairs Specialist, Washington, DC

1 The Government Accountability Office (GAO), in its report issued October 2007 on home mortgage defaults and foreclosures, cited a

March 2007 study by Dr. Christopher Cagan entitled “Mortgage Payment Reset: The Issue and the Impact.” The study estimated about

13 percent of adjustable-rate mortgages (ARMs), or about 1.1 million loans originated from 2004 through 2006, are projected to foreclose

over a seven-year period as a result of interest rate resets. The Center for Responsible Lending, a consumer advocacy organization, has

estimated that approximately 2.2 million subprime borrowers are facing foreclosure. According to RealtyTrac data, the number of foreclosure filings reported in December 2007 was up 97 percent from the December 2006 figure. The number of fourth-quarter 2007 foreclosure filings was 86 percent higher than the total number in fourth-quarter 2006.

2 In remarks made to the National Association of Mortgage Brokers, February 6, 2008, OTS Director John M. Reich noted that adjustablerate mortgage resets are projected to continue at high levels, with an estimated 1.8 million owner-occupied subprime mortgage resets

expected in 2008 and 2009. Record-high home price appreciation and the flawed assumption that house prices would continue to rise

rapidly have contributed to the current subprime delinquency crisis. Another major contributor was poor underwriting and, in some cases,

fraud.

3 HUD News Release No. 07-123, issued August 31, 2007.

4 Per OTS press release 07-048, issued July 17, 2007. In remarks delivered in October 2007, Federal Reserve Governor Randall Kroszner

noted that independent mortgage companies, specifically nondepository institutions, made approximately 46 percent of the higher-priced

first-lien mortgages in 2006. In its October 2007 report on default and foreclosure trends, GAO noted that, in 2005, brokers accounted

for about 60 percent of originations in the subprime market, compared with about 25 percent in the prime market.
– 4 –

CommunityLiaison

Q In October 2007, Secretary of the Treasury Henry M.

Paulson and HUD Secretary Alphonso Jackson launched

a private sector national alliance called HOPE NOW.

The alliance includes mortgage servicers, housing counselors, investors, lenders, and trade associations that will

maximize outreach efforts to homeowners who are in

distress.5 Among other activities, the newly created collective organization is conducting a direct mail campaign to urge troubled borrowers to contact their lenders

or credit counselors. (See An Alliance for Hope, page 6).

Q NeighborWorks® America is a national partner in the

HOPE NOW collaboration, and the group’s foreclosure

hotline — 1-888-995-HOPE, discussed below — will

serve as an ongoing resource for consumers at risk of

foreclosure. (See also the Resource Directory, page 16,

for additional information).

CRA’s Role in the Foreclosure

Mitigation Initiative 

The OTS and the other federal banking agencies recognize

that the Community Reinvestment Act (CRA) is an important incentive to encourage the participation of regulated

financial institutions to address current housing and lending challenges. The federal banking agencies recently published an updated version of the Interagency Questions and

Answers (Q&As) regarding Community Reinvestment,

which includes a number of proposed and revised Q&As

that address how financial institutions could receive favorable CRA consideration for various community development loans, qualified investments, and community development services that benefit financially distressed homeowners.6 (See also Compliance Roundtable, page 14).

The agencies propose giving positive CRA consideration to

the following activities: 

Q Investment(s) in a nationwide fund, including an example of a community development fund that provides

foreclosure relief to low-and moderate-income (LMI)

homeowners;7

Q Providing credit counseling, homebuyer and homemaintenance counseling, financial planning or other

financial services education to promote community

development and affordable housing, including credit

counseling to assist low- or moderate-income borrowers

in avoiding foreclosure on their homes. The agencies are

revising the examples of community development services to include those activities;8

Q “Responsive lending activities,” which include establishing loan programs that provide relief, through loan refinancings, restructures, or modifications, to homeowners

who are facing foreclosure on their primary residences.

The agencies encourage institutions to develop and participate in such programs, consistent with safe and

sound lending practices.9

Expanding CRA consideration for these activities may

prove particularly useful for smaller thrift institutions that

are evaluated under the Intermediate Small Savings

Association (ISSA) test. The ISSA test evaluates the performance of thrifts with total assets between $250 million and

$1 billion, adjusted annually, in the provision of community development loans, qualified investments, and community development services. Smaller thrifts play a pivotal role

in assisting homeowners in their communities, and the proposed CRA changes will reinforce their commitment to

those efforts in the current lending environment.

NeighborWorks® America — A Leader

in Foreclosure Prevention

NeighborWorks® America — created in 1978 as the

Neighborhood Reinvestment Corporation — works with

local communities to establish effective partnerships with

the public and private sectors. These community-based,

nonprofit entities comprise the NeighborWorks® network.

Nationally, there are 235 NeighborWorks® organizations

serving approximately 3,000 urban, suburban, and rural

communities. All of the federal banking agencies, HUD,

and the National Credit Union Administration serve on

NeighborWorks® America’s Board of Directors.

5 On February 12, 2008, six of the largest servicers, representing 50 percent of the mortgage market, announced the launch of Project

Lifeline. This initiative expands on the original HOPE NOW activities, and is targeted to all homeowners who are 90 days or more delinquent on their mortgages, regardless of whether the loans are prime or subprime. The initiative provides for a 30-day suspension of foreclosure proceedings, during which time the lenders and borrowers will work out more affordable financing options. The six participants

are Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., JPMorgan Chase & Co., Washington Mutual Inc., and Wells

Fargo & Co.

6 The updated Q&As were published for comment July 11, 2007. The comment period closed September 10, 2007. The final Q&As have

not yet been published.

7 See proposed Q&A §___.23(a)-2.

8 See revised Q&A §____.12(i)-3.

9 See revised Q&A §___.22(a)-1.
– 5 –

CommunityLiaison

What is FHASecure?

The FHASecure initiative is designed to benefit homeowners with adjustable-rate mortgages (ARMs) with

interest rates that already have reset1 to a much higher

rate, or will reset by December 2009. The FHA program

changes could assist nearly 240,000 borrowers —

approximately 95 percent of whom have subprime loans

— to refinance into conventional mortgages during fiscal

year 2008.2 (See the Resource Directory, page 16, for

specific Web site information on different aspects of

FHASecure). 

FHASecure gives homeowners with non-FHA adjustable

rate mortgages the ability to refinance into an FHAinsured mortgage. Borrowers who are current on mortgage payments may refinance into any type of conventional loan with FHASecure. 

FHASecure extends eligibility to borrowers who became

delinquent under their current mortgage following the

reset of their interest rate. If a borrower is delinquent,

that delinquency must be the result of the payment shock

of an interest rate reset or, in the case of a paymentoption ARM, the recasting of the mortgage to fully amortizing payments. 

FHA will permit arrearages (loan balances that are past

due) to be added into the new loan amount provided the

arrearages arose after the reset. If the new maximum

FHA loan is not enough to pay off the existing first lien,

closing costs and arrearages, the lender may take a second lien at closing to pay the difference. 

Eligibility Highlights of the FHASecure

Initiative

Q The mortgage being refinanced must be a non-FHA

ARM that has reset (or is scheduled to reset).

Q The mortgagor’s payment history on the non-FHA

ARM must demonstrate that the homeowner made

timely mortgage payments during the six months

prior to the reset.

Q As part of their underwriting process, mortgagees

must determine that the reset of the non-FHA ARM

caused the mortgagor’s inability to make timely

monthly payments, and that the mortgagor has sufficient income and resources to make the monthly payments required under the new FHA-insured refinancing mortgage.3

Advantages to Borrowers

FHA is already refinancing a significant number of nonFHA mortgages for borrowers who are making timely

payments on their existing mortgage. FHA-insured mortgages do not include prepayment penalties, teaser rates,

or balloon payments. They are offered at market rates

with up to 30-year terms and are fully amortized, which

means that borrowers make payments towards principal

and interest on a monthly basis. Loan servicers and

lenders can advise borrowers who are current on their

non-FHA adjustable-rate mortgage to consider refinancing to an FHA-insured mortgage.4

Advantages to Lenders

FHASecure can benefit lenders by helping them avoid

foreclosure expenses. Even if a lender takes a short payoff5 in order to originate an FHASecure loan, it is still

less expensive than foreclosure and property disposition,

with less negative neighborhood impacts. Only FHAapproved lenders can originate FHASecure loans.6

FHA has developed Fact Sheets and promotional

brochures for both lenders and consumers.

FHASecure: A Safe Way to Refinance Out of Trouble 

1 FHA has purposely not defined “reset” because there are various reset periods associated with non-FHA adjustable-rate mortgages.

In the case of payment-option ARMs, the ultimate “reset” or “recasting” of the loan to fully amortizing payments is an acceptable

cause of default to qualify a borrower for FHASecure.

2 The application window for FHASecure mortgage loan refinancings opened September 5, 2007, and closes December 31, 2008.

From program inception through February 12, 2008, HUD has received applications to refinance more than 228,000 conventional

loans into FHA-insured mortgage products.

3 Although FHA cannot help borrowers who are delinquent prior to rate reset, there may be other options available. The Resource

Directory, page 16, provides information on available options. 

4 FHA recognizes there may be tax consequences resulting from debt relief. Since FHA does not provide tax guidance, it recommends

that borrowers — and mortgage lenders — seek tax advice from reputable parties.

5 A short payoff, also referred to as a “short sale,” occurs when the proceeds from the sale would not be sufficient to cover the secured

obligations of the homeowner. Thus, a short payoff represents a debt forgiveness granted by a lender to a homeowner, in which the

bank allows the homeowner to sell the property for a lesser amount than the amount owed to the bank.

6 In remarks made on February 12, 2008, HUD Secretary Jackson noted that 1,400 lenders have used FHASecure to date.
– 6 –

CommunityLiaison

HOPE NOW is an alliance of housing counselors, loan

servicers, investors, and other parties in the mortgage

markets.1 This alliance, which launched October 10,

2007, is designed to maximize outreach efforts to distressed homeowners to help them avoid foreclosure. The

initiative implements a coordinated approach to reduce

obstacles and explore viable options for affected borrowers. 

The alliance builds upon the synergy created by the

financial industry, nonprofit organizations, and government agencies working collaboratively. A major tenet of

the alliance’s strategy focuses on contacting homeowners

as early in the process as possible, before interest rates

reset and loan delinquencies begin. 

Anecdotal and empirical data show that reaching homeowners in trouble is the biggest hurdle that lenders confront. Once homeowners obtain mortgage counseling,

nearly 50 percent are able to stave off foreclosure and

remain in their homes. The alliance will pursue various

ways to persuade borrowers to contact their lenders

and/or take advantage of housing counseling services.

As discussed in the lead article, the HOPE NOW alliance

utilizes the foreclosure prevention platform developed by

NeighborWorks® America to reach out and counsel atrisk homeowners. Efforts underway include increasing

the number of counselors staffing the Homeownership

Preservation Foundation’s foreclosure hotline to handle

the expected rise in call volume as the alliance expands

its outreach activities. Homeowners may also visit Web

sites set up by HUD and the Department of Justice (DOJ)

to obtain information on locating counseling agencies

and similar resources. In addition, the alliance has created its own Web site that provides counseling resource

information (see the Resource Directory, page 16 for further details).

Alliance members include the American Financial

Services Association, the American Securitization Forum,

Bank of America, Citigroup, Inc., the Consumer Bankers

Association, the Consumer Mortgage Coalition,

Countrywide Financial Corporation, Credit and

Homeownership Counselors, the Financial Services

Roundtable, the Homeownership Preservation

Foundation, JPMorgan Chase & Co., NeighborWorks®

America, the Mortgage Bankers Association, Option One

Mortgage, PMI Mortgage Insurance Co., the Securities

Industry and Financial Markets Association, State Farm

Insurance Companies, SunTrust Mortgage, Inc.,

Washington Mutual, Inc. and Wells Fargo & Company.

An Alliance for HOPE

The HOPE NOW alliance is drawing upon the experience of

NeighborWorks® America.10 NeighborWorks® America s

has been a leader in homeownership education and counseling and sustainable homeownership efforts for over a

decade. Since 1993, the NeighborWorks® network has educated and counseled more than 700,000 and assisted more

than 150,000 households to become homeowners.

NeighborWorks® America also advances quality national

standards and best practices for homeownership education

and counseling through the NeighborWorks® Center for

Homeownership Education and Counseling.

Center for Foreclosure Solutions: A

Ready Response

The Center for Foreclosure Solutions (CFS), an initiative of

NeighborWorks® America, was created to preserve homeownership in the wake of rising foreclosure rates. In conjunction with national nonprofit, mortgage and insurance

partners, CFS builds capacity among foreclosure counselors

around the nation, conducts public outreach campaigns to

reach struggling homeowners, and researches local and

national trends to develop strategic solutions. In cities and

states with high rates of foreclosure, CFS works with local

1 The HOPE NOW membership has grown from 60 percent of the subprime mortgage servicer market to 94 percent; as of

February 12, 2008, 25 mortgage servicers are represented. The membership includes counseling providers, servicers and other mortgage market participants, and trade associations.

10 In response to the nationwide subprime foreclosure challenges, Congress approved legislation signed by President Bush on

December 26, 2007, which authorized $180 million for the National Foreclosure Mitigation Counseling (NFMC) Program. The appropriation is designed as a one-time infusion of funds to support a rapid expansion of foreclosure intervention counseling capacity on a shortterm basis by HUD-approved Housing Counseling Intermediaries and State Housing Finance Agencies. NeighborWorks® America was

chosen to administer the NFMC Program, with priority consideration for use of the funds given to rural and urban areas demonstrating

the greatest need.

— continued on page 7
– 7 –

CommunityLiaison

leaders to create sustainable foreclosure intervention programs. Already CFS has reached thousands of homeowners.

CFS builds on NeighborWorks® America’s profile and track

record as a leader in sustainable homeownership efforts.

CFS conducts a wide and complementary array of programs and activities, including the following:

Q Partnership with the Homeownership Preservation

Foundation — NeighborWorks® partnered with the

Homeownership Preservation Foundation, which established the national toll-free foreclosure prevention hotline, 1-888-995-HOPE. The hotline is staffed by HUDapproved housing counseling agencies that provide

assistance 24-hour/7-days per week. Counseling is

available in English and Spanish. Callers receive budgeting assistance and expert guidance and are linked, as

appropriate, with their lender, a local NeighborWorks®

organization or other HUD-approved nonprofit organization with certified post-purchase housing counselors,

for further assistance. More than 50,000 homeowners

received counseling in 2007.

Q Public Awareness Media Campaign — A multimedia

public education campaign, developed in partnership

with the Ad Council, is designed to reach homeowners in

financial distress and spur them to take action by calling

the HOPE hotline. The campaign’s theme is “Nothing is

worse than doing nothing.” Outreach is conducted

through TV, radio, print advertising, a dedicated Web

site (refer to the Resource Directory, page 16), and

brochures and outdoor media, such as billboards. Nearly

200 local groups, task forces, and municipalities have

co-branded these advertisements. 

Q Building Foreclosure Counseling Capacity — The

NeighborWorks® Center for Homeownership Education

and Counseling provides training and certifies housing

counselors that furnish post-purchase assistance to

homeowners in financial distress. Over the next year,

training will be provided to 5,000 housing counselors.

Q Supporting Local/Regional Foreclosure

Coalitions/Task Forces — The Center for Foreclosure

Solutions provides technical assistance and small,

capacity-building grants to local groups responding to

the foreclosure crisis. In fiscal year 2007,

NeighborWorks® America made $2 million in capacitybuilding grants to more than 30 local and regional nonprofit organizations that are delivering foreclosure intervention counseling activities.

Q Outreach to Borrowers Holding Mortgages with

Resetting Interest Rates — The Center for Foreclosure

Solutions is developing targeted outreach to borrowers

facing negative impacts from adjustable-rate mortgage

loans with rates that reset from lower initial rates to

higher rates.

In addition to its partnerships with the nonprofit community, NeighborWorks® America is working with representatives of the financial services industry to examine the foreclosure crisis and implement additional measures. 

As these and other legislative and regulatory initiatives

evolve to mitigate foreclosure, stop abuses, and reassure the

capital markets, the OTS will ensure that access to credit by

worthy borrowers is not cut off, and community banks that

were not responsible for the creation of these problems are

not penalized Q

Another key element of the alliance’s strategy encompasses the American Securitization Forum’s (ASF’s)

statement on reimbursement of counseling expenses. The

statement provides for the reimbursement of counseling

expenses associated with individual, securitized mortgage loans. Mortgage loan servicers have the discretion to

determine if these fee expenses are reimbursable, in situations in which the loan is in default or in which default

is reasonably likely to occur, and in situations in which

counseling services have resulted, or are likely to result,

in loss mitigation and loan recoveries.2

The primary objective of the ASF statement is to provide

a uniform framework for the interpretation and application of loan modification provisions in securitized loan

transactions. The framework is designed to help promote

greater and more consistent use of loan modifications, as

necessary and appropriate, and spur more workout

arrangements to accommodate financially impaired borrowers.3 The alliance is working with members of the

investor community to facilitate the use of loss mitigation

strategies in securitized transactions.

An Alliance for HOPE — continued

2 The ASF’s loan modification framework was adopted by some servicers in January 2008 after the Securities and Exchange

Commission issued accounting guidance. In remarks made on February 12, 2008, Treasury Secretary Paulson noted that servicers

and investors began providing funds for counseling activities even before implementation of the ASF framework. 

3 In the second half of 2007, the industry assisted an estimated 869,000 homeowners and, concurrent with the formation of HOPE

NOW, the loan modification rate in the fourth quarter doubled over the rate in the third quarter.
CommunityLiaison

– 8 –

Some experts note that workers in

America may not have sufficient

savings to live comfortably during their retirement. Many homeowners, however, do have sufficient equity

in their homes that can supplement

their retirement income. This group of

homeowners includes the elderly; in

fact, according to a 2006 survey by

the Pew Research Center, 72 percent

of people aged 65 and older have no

home mortgage; this figure contrasts

with the percentage — 32 percent —

of all homeowners who do not have a

mortgage on their home. The same

study showed that 79 percent of

seniors had experienced home value

appreciation, which was particularly

strong over the past several years. 

There is a financing option that is

becoming increasingly popular:

seniors now have the opportunity to

tap into their home equity through

reverse mortgage loans.

This article explores who qualifies for

reverse mortgages, how payments

may be structured, and the advantages, as well as potential risks, of the

product.

What are Reverse

Mortgages?

The “baby boom” generation has

started entering retirement age, and

many analysts suggest that the socalled boomers hold most of their savings in the form of home equity. As of

July 1, 2005, the U.S. Census Bureau

estimated the baby boom generation

— people born between 1946 and

1964 — to be 78.2 million people.

The Census Bureau also estimated

that 7,918 boomers turn 60 each day,

which translates to 330 persons every

hour. 

According to Social Security

Administration statistics, in 1935, life

expectancy for people who were 65

years old was 12.5 years. Today, it is

approximately 18 years. Thus, as the

aging population lives longer, retirees

will also have to depend much longer

on traditional sources of income, such

as social security and pension funds,

and may well find themselves turning

to other funding sources, such as

reverse mortgages.

Reverse mortgages are loans that

allow homeowners to convert equity in

their homes into cash, and at their

Reverse Mortgages:

Information to Consider on

Benefits and Risks

Francis Baffour, Community Affairs Liaison, Northeast Region

option, provide them with periodic

payments for as long as they live in

their homes. Reverse mortgages may

not be appropriate for some homeowners, such as those retirees who

have pensions and other investments

that provide adequate income for their

lifestyles. Other retirees, however,

such as those with limited income,

may benefit. As this population continues to age and retire from the workforce, many will depend on their accumulated home equity savings as a

source of income.

Potential Benefits

Many financial institutions have started to market reverse mortgages to

seniors. The U.S. Department of

Housing and Urban Development

(HUD)’s Federal Housing

Administration (FHA) reverse mortgage program is the most widely used

product in the country.1 Known as the

Home Equity Conversion Mortgage

(HECM), the mortgages are provided

by FHA-approved private lenders and

receive the benefit of FHA-insurance.

However, only a small number of

OTS-supervised institutions offer the

program2; see page 9 for an example

of one thrift’s use of the product. 

Fannie Mae has a similar reverse

mortgage program called the Home

Keeper® Mortgage. There are also

variations of the Home Keeper®

Mortgage that have slightly different

features. (See the Resource Directory,

page 16, for additional information.) 

1 According to May 2006 testimony by Peter H. Bell, President, National Reverse Mortgage Lenders Association, before the U.S. Senate

Subcommittee on Housing and Transportation, the market share for FHA-insured HECMs is approximately 90 percent.

2 Per listing of FHA-approved HECM lenders. Refer to the Resource Directory for details.
– 9 –

Wilmington Savings Fund Society (WSFS), based in

Wilmington, Delaware, is one of a number of OTS-supervised institutions that originate reverse mortgages

insured by FHA. Ms. Patricia Kauker, Vice President in

charge of WSFS’s program, believes that the market for

reverse mortgages will continue to grow as the baby

boom generation ages.

WSFS’s Participation 

Ms. Kauker offered examples of benefits to seniors who

have used the product. Borrowers have used the additional funds to help pay property taxes, utility and medical expenses, and credit card debts; make home

improvements; and help grandchildren pay for college.

She noted that some seniors have been able to prevent

foreclosures on their homes by using reverse mortgage

proceeds to pay off existing mortgage debt. This can be

vitally important to borrowers who are struggling in

today’s mortgage environment.

FHA mandates that all reverse mortgage borrowers

undergo counseling from HUD-approved homeownership counselors before obtaining their loans. WSFS

maintains a list of approved counselors with whom the

thrift has worked, which has helped to reduce the processing time frame between loan application filing and

closing. According to WSFS, the thrift typically closes a

reverse mortgage loan in approximately 30 days, compared to the industry norm of about 60 days. 

Counselors can provide additional valuable information

about other programs and services that are important

elements in the cost/benefit analysis. In Delaware, for

instance, people over 65 years old can apply for a reduction in property taxes and water and sewer bills.

Although many seniors are unaware of this benefit, the

counselors with whom WSFS works advise qualified borrowers about the opportunity to lower their tax and utility expenses, as well as provide other relevant information that assists them in making an informed decision

about reverse mortgage products.

Reverse Mortgage Products: One Thrift’s Growing Market

Both FHA’s and Fannie Mae’s program

guidelines require that qualified

homeowners be at least 62 years old

and have little or no mortgage balances on their properties.3

Additionally, applicants for HECMs

and Fannie Mae reverse mortgages are

required to undergo an educational

mortgage counseling session prior to

the processing of the loan application.

(Fannie Mae is not a direct lender; it

purchases the reverse mortgage loans

from its approved lenders for sale to

the secondary market.)4

Homeowners with reverse mortgages

can receive their payments in one of

the following forms (items #2 through

#6 represent the payment plan options

for reverse mortgage proceeds; lump

sum proceeds are not characterized as

a payment plan): 

Q Lump sum cash payment at closing of the transaction; Q Monthly or periodic cash advances

for as long as the borrower uses the

property as the primary residence

(“tenure” payments);

Q Monthly or periodic cash advances

for a specific period of time

(“term” payments):

Q A line of credit having a specific

dollar amount, from which the

borrower determines when to withdraw, and the amount of the withdrawal;

Q A combination of a line of credit

and regular monthly payments for

as long as the borrower lives in the

primary residence (“modified

tenure”); and

Q A combination of a line of credit

3 The first and second lien position is required for the HECM; therefore, the program requires existing mortgages to be repaid in full,

using the reverse mortgage proceeds, or subordinated.

4 Wells Fargo is the largest producer of government-insured reverse mortgages, with a 21.6% share of the 99,870 loans originated since

the beginning of October 2006 through August 2007. Financial Freedom Senior Funding Corp., a unit of IndyMac Bancorp Inc. of

Pasadena, CA. is second, with a 10.94% share. Third-place Seattle Mortgage has a 2.75% share. (Statistics provided by American Banker,

October 1, 2007.)

This article explores

who qualifies for reverse

mortgages, how payments

may be structured, and

the advantages, as well as

potential risks, of the

product.

CommunityLiaison
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CommunityLiaison

and a fixed term of monthly payments (“modified term”). 

Homeowners have the option of

adjusting these payment structures at

any time. The amount of the cash proceeds received depends on the age of

the borrower(s), prevailing interest

rates, and the value of the property.

Simply stated, the older the borrower,

and the higher the property value, the

more cash is available. 

Moreover, reverse mortgages are nonrecourse, which means that borrowers

are not personally liable in the event

of default, and cannot be required to

pay off the loan even if the amount of

cash received exceeds the value of the

primary property. When the property

is no longer the primary residence of

an HECM borrower, for reasons such

as the home is sold, the borrower dies,

or the homeowner vacates the property for a period of 12 months or longer,

the mortgage becomes due and

payable in full. The amount due

would include the outstanding mortgage balance, accrued interest, and

other finance charges or fees. 

It is critical that prospective borrowers

receive independent financial counseling on the financial implications of,

and alternatives to, HECMs.5

Calculating the costs of the loan and

determining the most advantageous

way to structure the payout of the

funds to the borrower present significant issues, particularly when comparing product features and payment

options offered by different lenders.

Typically, questions will arise about

the impact of the reverse mortgage

payment stream on certain public

benefits, such as Supplemental Social

Security Income (SSI) and Medicaid. 

The disclosures that lenders provide to

potential borrowers must note that

HECMs may have tax consequences,

affect eligibility for assistance under

federal and state programs, and have

an impact on the estate and heirs of

the homeowners. The lender can provide a listing of housing counseling

agencies, or the borrower may consult

the HUD Web site. Seniors can also

contact the American Association of

Retired Persons (AARP) for the names

of qualified reverse mortgage counselors. (See Resource Directory, page

16, for more information on finding

housing counseling assistance). 

Counseling will also help inform the

borrowers’ decision-making process

and prevent them from falling victim

to abuse and scams. Seniors have lost

their homes as a result of unscrupulous lending practices and have even

had family members take financial

advantage of them. 

HUD emphasizes that the flexibility of

HECMs is a major benefit for seniors.

Holders of reverse mortgages may also

refinance their loans; financial counseling is required for product refinancings, unless certain conditions are

met. 

Although HUD does not have current

statistics for homeowners in distress

who have applied for reverse mortgages, troubled homeowners who

meet eligibility requirements may use

reverse mortgage payments to address

financial hardships (See Reverse

Mortgages: One Thrift’s Growing

Market, page 9). 

Not for Everyone:

Risks Associated With

Reverse Mortgages

Reverse mortgages are not suitable for

all homeowners. While there are significant benefits to using the product,

there also are disadvantages for some

borrowers.

The complexity of reverse mortgage

transactions, particularly for uninformed borrowers, is one drawback to

product use. Prospective borrowers

should carefully review the payment

structure and method for receipt of

the funds with the financial counselor

to ensure it suits their particular situation.

The costs of reverse mortgage products are generally high compared to

those associated with traditional

mortgages. Costs include origination

fees, closing costs, servicing fees and

mortgage insurance premiums.6 A 2

percent mortgage insurance premium

fee is charged upfront at closing, and

a small percentage is added to the

interest rate that is charged on the rising loan balance.

Reverse mortgage loan origination

fees are based on the home’s value,

which typically is greater than the

loan amount. Thus, the origination

fees are greater than those associated

with other mortgage loans. Interest

rates are also generally higher than

the average 30-year mortgage loan.7

Closing costs can range between

$7,000 and $15,000, depending on

the amount of reverse mortgage proceeds.8

5 It is advisable for prospective borrowers to consult with an attorney or financial adviser about tax implications specific to their circumstances.

6 The FHA insurance protects the lender if the loan balance exceeds the value of the property, provides a higher loan principal amount,

and ensures payment to the borrower in the event the lender defaults.

7 Lenders now have the option of using different indices, including LIBOR and the rate on one-year Treasury securities. The margin may

vary depending on the lender and investor(s).

8 Estimates provided by HUD.
– 11 –

A homeowner who may sell or move

out of the property within a few years

of taking out a reverse mortgage loan

may not find the product appropriate

because of the high associated costs.

Borrowers in those situations would

owe substantial amounts of fees and

interest but may not have received a

sufficient amount of cash advances to

offset these costs, which is an important factor in the decision-making

process. As with any loan scenario,

however, lender fees and third-party

costs will vary, so HUD and AARP

advise prospective borrowers to shop

around and negotiate for the most

favorable deal.

In sum, borrowers should be prepared

to work closely with certified financial

counselors and approved lenders to

perform the necessary cost/benefit

analysis of different reverse mortgage

products, and, based on their financial

circumstances, determine the most

advantageous ways to structure their

payment plan options Q

CommunityLiaison

Spend a few minutes

speaking with Peter

Gwaltney, Vice Chairman

and Chief Executive Officer of

the Senior Housing Crime

Prevention Foundation, and

you start sharing his enthusiasm for programs that make a

difference, improving the quality of life for many elderly people.

Spend a few more minutes

reading the examples of how

relatively small amounts of

money provided by financial

institutions have generated

very positive outcomes and

your enthusiasm quickly turns

into admiration and — if you’re

a banker — very likely translates into financial support, too.

The Senior Housing Crime

Prevention Foundation

(SHCPF), located in Memphis,

Tennessee, is a nonprofit

501(c)(3) corporation. Its mission is to reduce crime in senior

housing facilities and provide

ongoing, effective crime prevention programs that provide safe, secure and high-quality living environments for residents.

SHCPF has established and

implemented the Senior

Crimestoppers Program in

senior residential facilities,

which has significantly contributed to accomplishing that

mission. Major program activities include:

Q Providing lock boxes to

residents and their families for

storage of personal items of

value;

Q Operating a 24-hour per

day toll-free call center for

callers, whose anonymity is

safeguarded, to report crimes

in the nursing home or other

senior facility;1

Q Paying up to $1,000 in

rewards for information that

helps resolve crimes; and 

Q Offering crime prevention counseling and related

training materials to help deter

criminal activity against residents, staff members and the

facility.

CRA Spotlight

Combating Elder Abuse

A CRA-Eligible Program Helps Prevent Crime in Senior Residential Communities

1 Two incidents reported in September 2007: In a nursing home in Denver, CO, an anonymous tipster reported seeing an employee physically assaulting

a patient. Following an investigation, the employee was identified and a $1,000 reward was paid. Another tipster reported two people selling drugs in the

parking lot of a HUD-assisted project in Illinois. One community resident was identified and police made the arrest. A $500 reward was paid to the tipster.
– 12 –

CommunityLiaison

Other important elements of program sponsorship are the

annual Time of Your Life “nostalgia” video for the enjoyment of the residents and the annual Wish Comes True

grant program, which provides residents with simple, yet

meaningful, items or services that they would most like to

have for them or others in their family or community. These

components of the program create valuable “touch points”

for participating financial institutions to interact with their

sponsored facilities and residents.

Statistics maintained by SHCPF show that the program’s

success rate in reducing crime incidents in participating

facilities has reached or exceeded 90 percent nationally

since its inception, currently hovering at 92 percent. The

types of crimes covered include fraud, abuse, neglect, theft

and damage to property on the campus of the sponsored

facility. The Foundation maintains crime incident records

on every facility in the program and provides quarterly

reports to sponsoring institutions.

CRA Plays an Important Part in

SHCPF’s Success

SHCPF was established as a conduit for financial institutions to make community development loans and investments that would qualify for favorable Community

Reinvestment Act (CRA) consideration. The federal banking agencies recognize that the Senior Crimestoppers

Program satisfies CRA eligibility criteria. SHCPF ensures

that the resident population in each of the bank-sponsored

facilities meets low- and moderate-income (LMI) requirements for CRA purposes.

OTS-supervised institutions have provided financial support to the Foundation in the past, and other thrifts may

benefit by exploring different ways to structure their participation in SHCPF activities (see Doing Well by Doing

Good, page 13) Q

Statistics maintained by

SHCPF show that the program’s success rate in

reducing crime incidents in

participating facilities has

reached or exceeded 90

percent nationally since its

inception, currently hovering at 92 percent.
– 13 –

There are several ways a financial institution may participate in SHCPF activities and receive positive CRA

consideration. 

A bank or thrift takes a bond out of its portfolio or buys

a new bond, and puts it in the name of the Senior

Housing Crime Prevention Foundation (SHCPF). The

bond is held by the Foundation’s custodian. SHCPF

receives the income paid on the bond coupon. The

Foundation retains 1 7/8 — or 1.875 percent — of the

yield and uses it to fund the operations of the Senior

Crimestoppers program (see Combating Elder Abuse: A

CRA Success Story, page 11). The financial institution

receives the remainder of the yield in the form of interest

income on its loan to the Foundation, or as dividend

income on its investment in the Foundation. 

If an institution seeks CRA community development loan

consideration, it would structure its participation in

SHCPF as a five-year, interest-only loan, which is

secured by the bond that collateralizes the transaction.

The interest rate on the loan is the difference between the

coupon rate on the bond and the administrative portion

of 1.875 percent retained by the Foundation. 

If an institution wants to make a qualified investment

under CRA, it would purchase preferred stock in the

Senior Housing Crime Prevention Investment

Foundation.1 The dividend the bank receives is the

coupon rate on the bond minus the 1.875 percent administrative allocation made to the Foundation. 

The benefits to the financial institution include: 

Q Risk and yield management. The institution chooses a

non-amortizing investment grade bond (typically a

government or government-sponsored enterprise —

GSE — bond) to fund and collateralize its loan or

investment; 

Q Flexible CRA consideration through the use of loan

and/or investment structures; and

Q Relatively short-term commitment (5 years).

The bank or thrift receives dollar-for-dollar CRA consideration for the entire length of its financial participation.

To date, no financial institution has failed to renew its

financial support when the term expired. An institution

may sponsor one facility or multiple senior living facilities, depending on the level of its financial involvement.2

In addition, there are opportunities for institutions to

receive CRA favorable consideration under the community development service test. Many nursing home

employees are low- and moderate-income individuals,

and many of them are unbanked. With an average

employee-to-resident ratio of 1:1, a typical nursing home

will have a significant workforce to which banks and

thrifts can offer direct deposit and low-cost banking services.3 SHCPF advises participating institutions in the

development of various consumer and commercial banking activities. Institutions may also provide other activities, such as financial literacy training and first-time

homebuyer education programs to members of the larger residential community.

1 Two foundations were established to facilitate the financial

institutions’ making loans and investments. The Senior

Housing Crime Prevention Foundation, Inc., a 501(c)(3) nonprofit corporation, was established for CRA-eligible loan transactions, and a separate entity, the Senior Housing Crime

Prevention Foundation Investment Corporation — a for-profit

corporation — was formed for investment transactions. The

investment foundation operates exactly as the 501(c)(3) entity

does; the for-profit status enables it to issue preferred stock for

CRA investment test consideration.

2 One bank has made an investment of $11 million, which

sponsors 50 facilities.

3 The SHCPF’s financial analysis indicates that banks are

achieving a 20 percent penetration rate within the total senior

housing facility environment of new retail customers. The projected total yield from a bank’s investment, net of the administrative portion allocated to SHCPF, and factoring in the revenues derived from cross-marketing opportunities, is approximately 7.40 percent in year one.

Doing Well by Doing Good: How Banks Can Provide CRAEligible Loans, Investments and Services to the Senior

Housing Crime Prevention Foundation

CommunityLiaison
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CommunityLiaison

Proposed Guidance: Mortgage Lending 

Refer to: http://www.ots.treas.gov/ and click on “laws and

regulations” for the following issuance. 

Q Illustrations of Consumer Information to Support

the Interagency Subprime Statement

Issued August 14, 2007

The federal banking agencies and the NCUA issued proposed illustrations of consumer information for certain

adjustable-rate mortgage (ARM) products, described in

the Subprime Statement issued July 10, 2007. The illustrations are intended to assist institutions in providing

clear, balanced, and timely information to consumers

about the relative benefits and risks of certain ARM

products. 

The proposed illustrations consist of an explanation of

some key features and risks that the Subprime

Statement identifies, including payment shock, and a

chart that shows the potential consequences of payment

shock in a readily understandable manner. 

The comment period closed October 15, 2007. The final

guidance has not been published.

Refer to http://www.ots.treas.gov/docs/7/73373.pdf for

the following issuance.

Q Advanced Notice of Proposed Rulemaking — Unfair

or Deceptive Acts or Practices

Issued August 6, 2007

The OTS issued an Advance Notice of Proposed

Rulemaking (ANPR) relating to unfair or deceptive acts

or practices (UDAP), which seeks public comment on

approaches that OTS should consider in determining

whether, and to what extent, additional regulation is

needed to ensure customers of OTS-regulated entities

are treated fairly.

The ANPR solicits comment on the scope of entities,

practices, products and/or customer relationships that a

revised UDAP regulation should cover. It further seeks

comments on whether there is a need for the OTS to

expand its regulation in this area, and whether other

approaches, including guidance, may be appropriate.

The ANPR affirms the importance of consistency in rules

and guidance by the federal banking agencies, including

consistent interagency standards relating to unfair or

deceptive acts or practices. The OTS will pursue consistency with the other regulators in this area.

The comment period closed November 5, 2007.

Proposed Guidance: Community

Reinvestment Act

Refer to http://www.ots.treas.gov/docs/7/777047.html for

the following issuance.

Q Revisions to Interagency Questions and Answers

Regarding Community Reinvestment

Issued July 11, 2007

The agencies are proposing new questions and answers

as well as substantive and technical revisions to the

existing policy guidance. Some of the proposed revisions

are intended to encourage institutions to work with

homeowners who are unable to make mortgage payments by highlighting that they can receive CRA consideration for foreclosure prevention programs for low- and

moderate-income homeowners, consistent with the April

2007 interagency Statement on Working with Mortgage

Borrowers. 

In addition, the revisions would clarify that institutions

of all sizes should receive favorable consideration for

providing credit in a manner that is responsive to the

needs of their communities. Such activities include, for

example, offering affordable small loan programs and

programs that transition low-and moderate-income

homeowners from higher-cost loans to lower-cost loans.

The comment period closed September 10, 2007.

Compliance Roundtable

Below is a summary of major compliance policy guidance — and an advanced notice of proposed rulemaking

by OTS — published since May 31, 2007.
– 15 –

Final Guidance: Mortgage Lending 

Refer to

http://www.ots.treas.gov/resultsort.cfm?catNumber=44&d

l=1&edit=1 for each of the following issuances.

Q Consumer Illustrations for Nontraditional Mortgage

Products

Issued May 31, 2007 

The consumer illustrations are intended to assist financial institutions in implementing the consumer protection portion of the Interagency Guidance on

Nontraditional Mortgage Product Risks (the Interagency

NTM Guidance), adopted on October 4, 2006. The federal banking agencies and the National Credit Union

Administration (NCUA) collectively issued the guidance.

The Interagency NTM Guidance recommends that promotional materials and other product descriptions provide consumers with information about the costs, terms,

features, and risks of nontraditional mortgage products

that can assist consumers in their product selection decisions. This includes information about potential payment shock and negative amortization and, where

applicable, information about prepayment penalties and

the costs of reduced documentation loans. Institutions

may elect to use the illustrations, or provide information

based on the information, including using an alternate

format.

Q Statement on Subprime Mortgage Lending

Issued July 10, 2007

The guidance clarifies how institutions can offer certain

adjustable-rate mortgage (ARM) products in a safe and

sound manner, and in a way that clearly discloses the

risks that borrowers may assume. The federal banking

agencies and the NCUA collectively developed the

Statement on Subprime Mortgage Lending (the

Subprime Statement) to address emerging issues and

questions relative to certain subprime mortgage lending

practices. The agencies are concerned that borrowers

may not fully understand the risks and consequences of

obtaining products that can cause payment shock.

The Subprime Statement incorporates a section on

workout arrangements that references the principles of

the April 2007 Interagency Statement on Working with

Borrowers. Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial

institution and the borrower.

[Note: The Conference of State Bank Supervisors and

the American Association of Residential Mortgage

Regulators have developed a parallel statement for state

supervisors to use with state-supervised entities.]

Refer to http://www.ots.treas.gov/docs/7/777062.html

for the following issuance.

Q Statement on Loss Mitigation Strategies for

Servicers of Residential Mortgages

Issued September 4, 2007

The federal banking agencies, the NCUA, and the

Conference of State Bank Supervisors released a statement encouraging federally regulated institutions and

state-supervised entities that service securitized residential mortgages to determine their authority under pooling and servicing agreements to identify borrowers at

risk of default and pursue appropriate loss mitigation

strategies designed to preserve homeownership. Loss

mitigation strategies include loan modifications, conversion of adjustable-rate mortgages to fixed-rate mortgages, deferral of payments, or extending amortization

periods. Institutions should also consider referrals of

borrowers, as appropriate, to qualified homeownership

counseling services that may assist the parties in avoiding foreclosure Q

CommunityLiaison
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Editors Note: Our thanks to the many contributing writers throughout OTS who continue to make this

a viable and informative publication. Editions of the Community Liaison newsletter are available

online at www.ots.treas.gov

Finding Solutions: Responding to Foreclosure 

http://www.fha.gov/about/fhascusqa.cfm

This Web page contains Frequently Asked Questions

(FAQs) about FHASecure.

Borrowers may search online for an FHA-approved

lender, or call 1-800-225-5342 (1-800-CALLFHA).

http://www.fha.gov/foreclosure/index.cfm

This FHA site provides detailed information to homeowners experiencing financial trouble, which includes

how to contact lenders to discuss workout arrangements,

how to obtain housing counseling services, and ways to

avoid predatory lending schemes and other scams.

http://www.hopenow.com

This Web site for the newly created HOPE NOW alliance

assists financially distressed homeowners in contacting

their mortgage lender and finding housing counseling

providers.

http://nw.org/network/neighborworksprogs/foreclosuresolutions/default.asp

The NeighborWorks® Center for Foreclosure Solutions,

an initiative of NeighborWorks® America, was created to

preserve homeownership in the face of rising foreclosure

rates. In conjunction with national nonprofit, mortgage

and insurance partners, the Center builds capacity

among foreclosure counselors around the nation, conducts public outreach campaigns to reach struggling

homeowners, and researches local and national trends to

develop strategic solutions. In cities and states with high

rates of foreclosure, the Center works with local leaders

to create sustainable foreclosure intervention programs.

The toll-free hotline number is 1-888-995-HOPE (1-

888-995-4667).

Related Web information for the foreclosure

avoidance initiative

http://www.foreclosurehelpandhope.org

http://www.995hope.org/

http://www.nw.org/nfmc

This Web site contains detailed information about the

National Foreclosure Mitigation Counseling Program,

administered by NeighborWorks® America.

Reverse Mortgages

http://www.hud.gov/offices/hsg/sfh/hecm/hecmhom

e.cfm

This is the HUD home page for FHA-insured Home

Equity Conversion Mortgages. The site contains links to

locate FHA-approved HECM lenders and identify FHAapproved HECM counselors, including participants in

the National HECM counseling network.

http://www.fha.gov/reverse/index.com

The site provides information on finding FHA-approved

lenders that offer HECMs, calculating closing costs, and

obtaining various resources to aid homeowners in the use

of the HECM program.

http://www.hecmresources.org/network.cfm

This site provides additional information on HECM

counseling services.

To find a HUD-approved housing counseling agency,

borrowers may call 1-800-569-4287 or visit

http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.c

fm.

http://www.fanniemae.com/homebuyers/pdf/findamortgage/mortgages/

Homekeeper_Fact_Sheet.pdf

The site provides a consumer Fact Sheet (August 2004)

with basic questions and answers about Fannie Mae’s

Home Keeper Mortgage® program. Interested consumers

may also call 1-800-7Fannie (1-800-732-6643) for

more information and a list of participating lenders.

http://www.aarp.org/money/revmort/

This site contains reverse mortgage information maintained by the American Association of Retired Persons

(AARP), including basic features of, borrower eligibility,

payment options, and related issues. 

Crime Prevention and the Elderly

Senior Housing Crime Prevention Foundation

http://www.shcpfoundation.org/

Senior Crimestoppers Program

http://www.seniorcrimestoppers.org 

Resource Directory

The following summary provides additional information for the articles in this newsletter. Please note that the OTS

makes no representations as to the accuracy of the information contained on these sites.

CommunityLiaison