Borrowers set to receive money under RBS settlement will be notified

RBS Financial Products Inc., a subsidiary of the Royal Bank of Scotland formerly known as Greenwich Capital Financial Products Inc., will pay $52 million to settle allegations that it securitized "presumptively unfair" residential mortgages, state Attorney General Martha Coakley said today.

The settlement is part of an ongoing investigation into the financing, purchase and securitization of what Coakley calls "unfair" home loans.

Of the $52 million due from RBS, $40.2 million will be used for principal reduction for more than 700 Massachusetts subprime borrowers, Coakley's office said. The loans, primarily ARMs, were securitized by RBS in 2006 and 2007 and feature high debt-to-income and loan-to-value ratios.

Nearly $9 million will be paid to the commonwealth and more than $2.6 million will be used to compensate entities, including municipalities, that are "acutely affected by foreclosures of the RBS securitized loans," Coakley's office said.

Last year, Coakley won a $102 million settlement from Morgan Stanley. In 2009, Goldman Sachs paid $60 million in a similar case.

Borrowers set to receive money under the RBS settlement will be notified by Coakley's office.

By Matt Brown

Housing Wins Higher FHA Mortgage Limits

The U.S. housing industry has scored a victory with House and Senate votes to raise the size of mortgages backed by the Federal Housing Administration to $729,750.

The measure split Republicans, many of whom supported retaining the lower limit of $625,500. As a result, efforts to restore the higher limit fell short until the Senate attached an increase to a package of spending bills that were passed yesterday by both the House and Senate.

The higher FHA limit is expected to become law after the president signs the spending measures, which he must do by the end of today to avoid a government shutdown.

“Restoring the higher loan limits for the FHA will provide homeowners and homebuyers with safe and affordable financing, while providing a much-needed boost to housing markets all around the country,” James W. Tobin, chief lobbyist for the National Association of Home Builders, wrote in a Nov. 16 letter to Speaker John Boehner, an Ohio Republican.

Lawmakers who backed higher limits said withdrawing federal support could further undermine a housing market still struggling to recover from the 2008 credit crisis.

The final compromise, which dropped a similar increase to loans backed by mortgage firms Fannie Mae and Freddie Mac, represents a mixed victory for the housing industry.

While the increase to $729,750 is expected to spur some additional homebuying, it’s not clear by how much. FHA loans make up a smaller share of the market than those purchased by Fannie Mae and Freddie Mac.

5.3 Million Homes

Still, the measure was fully embraced by trade groups for homebuilders and realtors. The National Association of Homebuilders has estimated that 5.3 million homes lost their eligibility for conforming loans when the higher limits expired on Oct. 1. Nearly 670 counties saw their loan limits decline, according to the National Association of Realtors.

On the other side were a number of interest groups that push for free-market policies and against government support to the housing market. Those groups, which include the Club for Growth and Heritage Action for America, play a large role in the House Republican conference and can influence campaign funding for the next election.

Republicans backed by the groups thought efforts to increase the loan limits had been defeated earlier this year, particularly when the White House announced support for allowing them to go back down to pre-crisis levels.

‘Completely Bizarre’

“This is completely bizarre that the Congress would be to the left of this president on housing finance,” Representative Patrick McHenry, a North Carolina Republican on the House Financial Services Committee, said in an interview.

House Republicans who opposed the provision seized on the FHA’s annual actuarial report released earlier this week, which said the agency has a 50 percent chance of needing to seek taxpayer aid to bolster its insurance fund.

The FHA, which provides liquidity by protecting lenders against borrower defaults, has increased its share of the mortgage market in the wake of the credit crisis. The agency, created in 1934 during the Great Depression, now guarantees a third of U.S. mortgages, according to the report.

The House-passed legislation, approved in a 298-121 vote, was opposed by 101 members of the House’s Republican majority, some of whom said they opposed the measure primarily because of the loan-limit increase.

Representative John Campbell, a California Republican who pushed for the increase, called the compromise on the provision “just a bad deal.” Campbell said he would have preferred that lawmakers boost the limit for Fannie Mae and Freddie Mac over raising the FHA limit.

‘Short-Term Fix’

“I’m glad something got done, but because they got it backwards, this will be a much more short-term fix than I would have hoped,” Campbell said in an interview.

=The Senate followed the House’s lead a few hours later, voting 70-30 to clear the measure for Obama’s signature. The provision was once again cited by several Republicans as a reason for their opposition.

“Raising the loan limits at FHA only, an unprecedented move, will simply drive more business into Ginnie Mae securities and put the FHA at even greater risk of losses to taxpayers,” Senator Bob Corker, a Tennessee Republican, said yesterday. “If we cannot even take this simple step, we risk crowding out the private sector for years to come.”

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net.



To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

15 Ways to Prepare Your Home for Winter

Convert to Gas

Nothing communicates home-loving coziness like a fire in the fireplace. Unfortunately, traditional woodburning fireplaces tend to lose more energy than they produce, pulling heated air out of the house and sending it up the chimney (and burning wood adds to air pollution). If you have natural gas or propane heating, consider having gas logs installed. A direct-vent system is best for new, air-tight homes; it pulls in air from outdoors, pushes it past the firebox, and sends the warmed air into the room. Vent-free systems require no chimney, flue, or outside exhaust. They're relatively inexpensive to operate, warm the room efficiently, and meet national standards for indoor air quality.

Call the Chimney Sweep

If gas logs aren't in your budget and you use your woodburning fireplace often during the winter, have it cleaned and inspected before winter. Burning wood releases volatile gases that cool and condense on the inside of the chimney, forming sticky, smelly, highly flammable creosote. Allow enough of it to build up, and you run a risk of a chimney fire. Also make sure the damper is working properly and that the chimney is capped with screening to keep out critters

Put the Ceiling Fan in Reverse

Check your ceiling fan for a switch that allows you to reverse the direction of blade movement to turn clockwise instead of counter-clockwise. Warm air rises, and the clockwise rotation of the blades forces the warm air down to where people benefit from it.

Wash the Windows

Yes, it's a tedious job, but washing the windows inside and out twice a year--spring and fall--rewards you with sparkling views, unobstructed light, and the opportunity to check for cracks and damaged caulking. Use a commercial window cleaner or make your own by mixing 1/4 cup of white vinegar with 1 gallon of water. Newspaper makes the best "cleaning rag" because it's absorbent and won't leave lint, but wear gloves to protect your hands from the newsprint.

Rearrange the Furniture

Changing the furniture arrangement is an easy way to give your rooms a new look and feel for the winter. Pull seating pieces close to the fireplace to create a cozier mood, and bring out soft chenille or fleece throws to ward off the chill. Set up a new display on the mantel to create a wintertime focal point--dark colors and layers of objects supply rich texture that adds increases the cozy factor. Some homeowners keep two sets of slipcovers, white for summer and a dark, warm color for winter.


Make Windows Airtight

According to the U.S. Department of Energy, 10 percent of the air that leaks out of a house exits through the windows. Caulk around window frames and apply weatherstripping between the sash and window frame to eliminate air leakage. Tension seal and magnetic types of weatherstripping are durable and effective for double-hung windows. For casement and sliding windows, apply self-adhesive V-strip weatherstripping to the side of a clean, dry sash or window jamb. Measure the length you need, cut the V-strip to fit, then peel off the paper backing while pressing the strip in place.


Put Up Storm Windows

Install storm windows to reduce air leakage year-round. You can find storm windows with vinyl, wood, or aluminum frames and glass or plastic panes. Glass is heavier but longer lasting and clearer than plastic, which scratches easily and yellows over time. Interior storm windows are generally mounted inside the window jambs or flush with the molding. They're easy to install but must be removed when you want to open the windows to let in fresh air. An exterior double-track or triple-track storm window is permanently installed on the outside of the window, and the lower half of the window moves in a separate track from the screen so you can lower or raise it to control air flow.


Clean the Gutters

Whether your gutters have become roofline planters like this one or have simply accumulated a season's worth of fallen leaves, get them cleaned out before winter rains and snows arrive. After scooping out leaves and debris, flush the gutters and downspouts with a strong stream of water from a hose. Make sure the gutters fit snugly against the house and repair any cracks or damage. Many companies offer leaf guards that claim to prevent leaves from collecting in the gutters, but most don't keep out dirt, debris, and seeds, so you'll still have to flush them out.


Check Smoke Alarms and Carbon Monoxide Detectors

Experts recommend replacing the batteries in smoke alarms twice a year, and if your smoke alarm is between 5 and 10 years old, replace it with a new one. There should be at least one smoke alarm on every level of your house and one in or near each bedroom. Safety experts recommend similar placement for carbon monoxide detectors--high on the wall, one on every level of the home, and near bedrooms. Where NOT to put them: within 15 feet of gas appliances, furnace, or fireplace because these give off small amounts of carbon monoxide when they're first turned on and would trigger false alarms.


An Easy Fix

Even though only 2 percent of air leakage is through electrical outlets and switchplates, every little bit counts, and insulating outlets is easy and inexpensive. Check a hardware store for outlet gaskets (also called insulation gaskets). To install them, turn off the electricity, remove the faceplate, pop out the perforated gasket, and press it over the outlet. Screw the faceplate back on, and you're ready to power back up. Look for UL-listed gaskets made from fire-retardant foam.

Have the Furnace Inspected

Call an HVAC professional to check the fan belt that runs the blower, vacuum out dust and debris, and oil the bearings if necessary. Buy enough filters to see you through the winter months and change them monthly--when filters become clogged with dust, the furnace doesn't operate efficiently and your energy bill goes up. Set the thermostat at 68 to save on energy costs, and consider replacing a manually controlled thermostat with a programmable one. This allows you to set the temperature at a comfortable level when you're in the house and cut it back to a cooler level when you're at work. Used properly, programmable thermostats can save up to $180 a year on heating and cooling costs.


Time to Go Tankless?

Conventional storage water heaters use energy to keep the tank full of hot water at all times; a tankless heater provides hot water only when you need it, which requires less energy thus saving you money. Whole-house tankless heaters are probably not cost effective for most homeowners--they cost more upfront than storage water heaters, and installation costs are also much higher and more complicated. Point-of-use heaters, however, are small and installed where you use them--at the kitchen sink or in the bathroom--and because they only need to furnish enough hot water for fixtures in that area, they can be efficient, cost-effective, and green. Gas-fired models deliver hot water at a faster rate than electrical models, which require upgraded wiring if they have to do much more than supply hot water to a bathroom sink.


Plug Hidden Leaks

About 30 percent of the cold air that leaks into your home comes through holes where pipes, vents, or electrical conduits run through the walls, ceiling, and floors. Check under sinks in the kitchen and bathroom and in the basement for gaps around pipes, and fill them in with an insulating foam sealant. Small gaps can be effectively sealed with caulk.

Protect Pipes from Freezing

To minimize the possibility of water freezing in your plumbing pipes causing them to burst, wrap each pipe in a blanket of foam insulation. Check hardware stores for these foam tubes, which have a slit on one side. Just cut the tube to the length you need, pull the slit open, and push the tube onto the pipe. If the slit doesn't have self-adhesive edges, use duct tape to secure it.


Add Insulation

Check the attic to see whether you need to add insulation -- experts recommend a depth of about 12 inches. Ultra Touch from Bonded Logic is an eco-friendly, formaldehyde-free insulation made from the scraps and waste left over from the manufacture of blue jeans. It's treated with a boron-based solution to prevent mold and mildew growth, discourage pests, and retard fire, and it won't irritate your skin during installation. Visit bondedlogic.com to find a retailer near you.

Better Homes  http://www.bhg.com/