mortgage columbus ohio
National Association of Mortgage Brokers Annual Convention
Cleveland, Ohio
mortgage columbus ohio



Thank you. Good morning. It is great to be here. Don't you think Jim has done an outstanding job as Convention Chairman already? And he's not done.

I am honored to be introduced with the 1950s theme. Jim must have done some homework about me, noticing my age. I turned 60 this year, which means I was in high school in the late 1950s, in Lyons, South Dakota. Last night, I was talking to my wife about coming here to talk to you and about the rock and roll theme. I still have a stack of 45s. I pulled out one of my favorites and got out my old record player, but it had deteriorated over time. I brought the record along to see if someone could play it for me.

This one happens to be "Rock Around the Clock" by Bill Haley and His Comets. How many of you remember the song? [sings]

We're going to do one more from Bill Haley. How many of you remember his next hit - See you Later Alligator? [sings]

I could go on like this. I wouldn't say you would rather hear me sing than talk, but it does bring back great memories.

I am very pleased to be here. I would like to recognize Joe Falk for his tremendous work as your president. He continues to push mortgage brokers to uphold the highest standards in the lending industry. I would like to congratulate Armand Cosenza on his new role as president of this association, and A.W. Pickel as incoming President-elect.

I appreciate the support Joe and his fellow officers have provided to Freddie Mac. Freddie Mac has always enjoyed a great partnership with the broker community through this association. Your support of Freddie Mac's mission, your support of our mortgage products and your support of our technology have played a key role in helping us expand homeownership across this nation.

I am pleased to be here today to thank you directly for all of your support. And I am honored to join Willie Newman and Senator D'Amato in opening the conference this morning. I had the good fortune to get to know Senator D'Amato when he chaired the Senate Banking Committee. He was an outstanding senator. His understanding of this business, of the mortgage columbus ohio market and housing has always impressed me. His enthusiasm and commitment to housing and the people of New York are evident in everything he does.

Certainly, Willie, the Senator and I know a few things about housing. When it comes to rock-and-roll, while I remember it first-hand, I had to do a little bit of research. Housing and rock and roll have a few more similarities than I thought.

They both gained national attention about 50 years ago. Some would say both experienced some deterioration in the 1970s. Over the last two decades, both have grown — in size and significance — to become American institutions.

Rock and roll, as you already know, began when Cleveland disk jockey Alan Freed began playing a new kind of music about 50 years ago. It quickly evolved into bands from around the world. Today, we associate rock and roll with a broad array of musicians — from Elvis and the Beatles to the Rolling Stones, and even Ozzie Ozbourne.

Homeownership has also changed significantly over the past 50 years.

When President Truman signed the Housing Act of 1949, the homeownership rate was just 55 percent. His goal, as expressed in the Housing Act, was "a decent home and suitable living environment for every family." Indeed, at that time a low-downpayment, conventional mortgage was a rarity. There was only one type of lender that provided conventional loans at than time — the savings and loan industry. The market was far less competitive and far less innovative in terms of the products provided.

Today, the homeownership rate stands at 67 percent, and the housing industry and housing finance system have evolved to include a broad array of mortgage products and financing tools. Competition brings out the best in everyone — you are a critical part of that.

Demand for both housing and rock and roll is stronger than ever, and both, I think, will continue to evolve and change in the years ahead as consumer demand changes. While I cannot comment on the future of America's music, I can provide some insight into the future of America's housing market — a market that stands today as the best in the world. I think it is bound to get better in the years ahead.

In fact, the entire housing market continues to outperform all expectations in the current year, following a record and on into the future of mortgage columbus ohio. .

mortgage columbus ohio, mortage rates are below 7 percent — actually about six and three-quarters, or even less. I believe low interest rates will continue. They are going to spur, conservatively, total lending nationwide of $1.5 trillion. Actually it could be $1.6 or $1.7 trillion — a little less than last year's record-shattering $2.1 trillion, but still an excellent year for mortgage lending.

Home sales also continue to be strong. They set a record in the first quarter of this year. Sales are expected to slow to a more normal rate for the remainder of the year, but the continuation of low interest rates should contribute to another outstanding year in home sales and housing construction.

Overall, housing fundamentals remain solid. While there may be some weakening in a few local markets, I think when you look nationally, there are a number of factors that are contributing to the continuation of this strong housing market, besides low interest rates and high housing affordability. Peoples' incomes continue to grow, and the inventory of unsold homes continues to be very low. With all of that, I think we can look forward to another excellent year.

The consistent performance of America's housing market has helped our nation build tremendous wealth and strengthened our economy.

Over the past two years, the increase in home prices has contributed to an increase in homeowners' equity by $1.3 trillion. For many households, the increase in net worth from gains in the value of their homes offset significant losses from the stock market during the same period, which amounted to more than $5 trillion over the past two years. Housing has proven to be a source of financial stability. As a result, consumers have remained confident enough to continue spending and investing.

In addition, last year borrowers refinanced homes in record numbers. All told, borrowers saved nearly $10 billion in monthly payments through refinancing their mortgages, and they took another $100 billion in cash out of their home equity — a relatively small amount given the gains they have experienced. This activity helped consumers leverage their wealth and contributed to the national economy.

In fact, the President as well as the Vice President remarked on this during the last few months. In remarks to the National Association of Home Builders earlier this month, Vice President Dick Cheney spoke about the importance housing brings to the national economy.

He said: "Housing and related industries account for about 14 percent of this nation's economy…. A healthy economy and a confident nation depend on a vigorous, growing housing sector — and this is one of the goals of our administration."

This week President Bush dedicated his entire radio address to his initiative to increase homeownership, which I am sure will get more attention over the next few weeks.

Certainly the numbers show just how vibrant our housing finance system is. However, all of us will be challenged to make the system even better to meet growing demands in the future.

Over the next decade, the nation's families are going to need $6 trillion in additional mortgage money. Today, there is about $6 trillion in mortgage debt outstanding. Over the next decade, that's going to grow from $6 trillion to roughly $12 trillion — that's a lot of money. Mortgage debt will double.

Not only will there be record numbers of borrowers this decade, but those borrowers will be more diverse than ever. Consider that there will be 15 million first-time homebuyers who will enter the market in this decade. Nine million of them will be minorities. Nearly one-third of new households will be of Hispanic background, and a majority of them will be immigrants.

Freddie Mac is committed to raising the capital necessary to finance this increase in mortgage lending. And we are committed to providing the products and technology to serve this growing and diverse generation of borrowers.

We continue to develop new securities, debt securities and mortgage-backed securities, to raise additional funds in the world's capital markets. And we search the globe to deepen the universe of investors in these securities. Five years ago, less than 10 percent of our borrowing was done overseas. Today, more than one-third of the debt we raise comes from overseas — money we make available to finance mortgages in communities across the nation.

In the decade ahead, Freddie Mac will continue to work with our partners to link Main Street to Wall Street. Broad sources of funding ensure that we can meet a variety of consumer needs and expand homeownership to serve underserved consumers.

We raise funds globally, and we work to deliver this money as efficiently as possible to our lenders. The widespread adoption of the Internet and technology is creating new opportunities for us to serve and reach more consumers.

Thanks to the online experience, today's homebuyers are much more savvy than they used to be. And consumers are more savvy thanks to the work you do. Consumers can now take virtual tours of homes for sale. They can compare mortgage rates and even lock in a rate online with some lenders. They are demanding faster and better service.

You are on the front lines. Mortgage brokers interact with these borrowers every day. You are the first to see new demands for financing. And you lead the industry in responding to consumer needs.

Freddie Mac is providing you with a variety of technology tools that make the lending process faster, simpler, fairer, and enable you to reach more borrowers in more communities. That is our vision for what we will continue to do in the future.

We've come a long way. In 1995, we introduced automated underwriting to the mortgage market. Our system is called Loan Prospector®. This technology has fundamentally changed the way mortgages are made.

Our automated underwriting system can now evaluate a loan for purchase and approve it in a matter of seconds — 15 or 20 seconds — about the time it takes to sign a traditional loan application.

In addition to speed, more importantly, Loan Prospector's increased predictive power helps us approve an increasing number of loans and helps up approve the vast majority of applications. We are able to improve our ability to evaluate the borrower, without increasing the risk involved in extending mortgage credit.

The speed and enhanced predictive power of this system is helping Freddie Mac purchase more loans made to a growing and diverse number of homebuyers, including minority and low-income borrowers. It is enabling lenders to expand into underserved segments of the market.

Loan Prospector also enables us to purchase a wider variety of mortgage products. For example, we can buy more low-downpayment loans and we can offer underwriting terms that are more flexible — higher qualifying ratios, for example — to meet the needs of more homebuyers.

Freddie Mac is also using the Internet to put the power of Loan Prospector in your hands when you need it — at the time you take the loan application. I was told one mortgage broker, Rene Salvatierra, used it on a Friday night to approve a borrower in Starbucks, and I'm sure many of you have similar stories. Brokers like Rene are the biggest users of our system.

In fact, more than 50,000 individual brokers — representing about 13,000 mortgage brokerage firms in all 50 states — use Loan Prospector today. And more are signing up every day.

This month our Loan Prospector automated underwriting system reached another major milestone — we processed our 20 millionth loan. It took over 6 years to process the first 10 million loans using this system and only another 17 months to process the next 10 million. We did it because of you — thank you!

Now, our focus is to leverage automated underwriting to simplify the rest of the origination process. We are enhancing our Loan Prospector web site to provide more business tools for you. These include third-party services, such as flood, title insurance and appraisals. In the future, you will be able to access a full suite of tools you need to approve, to price, to process, to close and to fund a loan. These enhanced capabilities will help originators close loans in hours, rather than weeks and eliminate steps in these processes.

We also are using technology to reach out to borrowers who face substantial barriers to homeownership. Last week, we unveiled a Spanish-language version of our homebuyer educational tools on the web to help increase homeownership among Hispanic families. We also recently introduced technology that helps housing counselors extend valuable homebuyer education to consumers in communities across the nation.

We are committed to helping families purchase homes they can afford and keep. As part of this commitment we want to maintain the highest standards for all mortgage loans we purchase. Of course, we expect the same high standards from our lender partners. We refuse to do business with lenders who engage in predatory practices and who do not report, for example, full-file credit data to credit repositories each month.

Earlier this year we announced that we will no longer invest in subprime mortgages that have a prepayment penalty that exceeds three years. We want borrowers who display a record of timely payments to be eligible for lower-cost mortgages, which requires that their credit reports are up to date to reflect satisfactory payment experience. Then if they want to refinance, the costs are minimized.

Finally, we are using education to stamp out predatory lending practices and help borrowers keep their homes. I commend your leadership for developing and adopting a code of conduct that combats predatory practices. And I encourage you to continue to provide leadership to the mortgage industry and broker community on this issue.

Freddie Mac values the role you play in expanding homeownership.

This is the third year that we have recognized brokers who provide outstanding service through our Annual Service Awards at this conference. Today at noon, Freddie Mac will announce this year's grand-prize winner.

The mortgage industry has a history of innovating to meet consumer demands. You have a history of innovating to meet consumer demands. Fifty years ago there was no Freddie Mac; fifty years ago there were very few mortgage brokers and there was no National Association of Mortgage Brokers. We both evolved out of consumer needs, and we both contribute to the world's best housing finance system.

During the next 50 years, our industry must continue to innovate, and must continue to serve evolving demand in a more diverse market.

Freddie Mac is pleased to be your partner in meeting this goal. We will continue to search the globe for financing to meet this demand. And we will continue to leverage technology to deliver this capital more efficiently to you in your communities.

We will work the National Association of Mortgage Brokers to ensure this industry continues to be as vibrant, competitive and efficient in serving communities in the years ahead. If past history is any indication of future success, Freddie Mac and America's mortgage brokers are well positioned to make the world's best housing finance system even better. I look forward to seeing that happen.

Thank you.
- posted by Mark Pane @ 6:44 PM 0 comments

 
dallas mortgage texas
dallas mortgage texas

Housing Affordability:
Outlook Improving Along the Border
Toby Cook

Federal Reserve Bank of Dallas
dallas mortgage texas

In recent years the U.S. home-ownership rate has reached historic levels. The 66.8 percent recorded in 1999 is the highest since the statistic was first collected in 1965. Texas experienced a similar trend in 1999, posting the highest home-ownership rate since 1984. The most recent statistics available for dallas mortgage texas Texas–Mexico border communities show home-ownership rates comparable to those of Texas as a whole. In 1990, Texas' 60.9 percent rate was only slightly above El Paso's 58.7 percent and several points below Brownsville's 64.4 percent.

However, studies suggest that a substantial percentage of border residents spend an excessive proportion of income on housing (30 percent of income is widely considered acceptable). According to a 1998 report from the Texas Comptroller of Public Accounts, housing is considered affordable to only one in three residents along the Texas–Mexico border. A study by Jorge Chapa of the University of Texas reported that from 1980 to 1990 the percentage of households paying excessive housing costs rose sharply in several border counties. Cameron County saw an increase of 42 percent and El Paso County 23 percent. The study projected the number of households paying excessive housing costs would continue increasing through 2000 and beyond.

This article discusses trends in housing affordability along the Texas–Mexico border during the 1990s, compares affordability levels among four border communities and suggests possible reasons for any variation.

Affordability Analysis

To determine the level of housing affordability along the border, we compare the monthly mortgage payment on the median-priced home with the monthly payment affordable to a household earning the area median income. We perform this comparison for the Brownsville, El Paso, Harlingen and McAllen metropolitan statistical areas (MSAs) for the years 1992–99. [1] In accordance with industrywide standards, we assume 30 percent of monthly gross income to be an affordable housing payment. We calculate monthly gross income from annual median incomes established by the Department of Housing and Urban Development.

Using the annual median sales price for a single-family residence, we calculate the mortgage payment for a median-priced residence. We assume a 30-year term, the average annual mortgage interest rate, the average annual homeowner's insurance premium rate and the average statewide property tax rate. For comparative purposes, we make two calculations for each MSA for each year. One assumes a 20 percent down payment and the other 5 percent. When the latter is assumed, we add a calculation for private mortgage insurance to the formula. [2]

Housing Affordability

In recent years, purchasing a house along the border has generally become more affordable (Chart 1). In the early 1990s, buying the median-priced house was impossible in three of the four markets examined unless a purchaser made a significant down payment, roughly 20 percent or more. By the end of the 1990s, households earning the median income could afford the mortgage payment on the median-priced house when making only a 5 percent down payment in two markets and were just a few dollars short in the other two.

Table 1 shows affordability of a median-priced home in 1992 and 1999 assuming a 5 percent down payment. In 1992, the mortgage payment on the median-priced house in El Paso was $682—$22 above what was affordable to a median-income household. By 1999, the situation was very different: A median-income household could afford $853 for a mortgage—$145 more than the monthly payment on the median-priced house.

In contrast, the mortgage on the median-priced house in McAllen and Harlingen was not affordable to households earning the median income in 1999. In both communities, the monthly amount a household could afford to spend on housing was about $15 below the payment on the median-priced home. However, like El Paso, both communities experienced an increase in affordability.

dallas mortgage texas
Table 1
Affordability of Median-Priced Home, 1992 and 1999
1992 1999 Percentage point change in afford-
ability 1992–99
Mortgage payment Affordable housing payment Affordable payment as percentage of mortgage payment Mortgage payment Affordable housing payment Affordable payment as percentage of mortgage payment
Brownsville $497 $553 111 $620 $673 109 -2
El Paso 682 660 97 708 853 120 23
Harlingen* 659 563 85 688 673 98 13
McAllen 605 518 86 703 685 97 11
Texas 751 910 121 927 1,145 124 3

NOTES: * Harlingen data begin in 1995. Calculations assume 5 percent down payment.
SOURCES: Department of Housing and Urban Development; author's calculations. See Note 2 for mortgage payment calculation.

In Brownsville, a household earning the median income in 1999 could afford more for a mortgage than was necessary for the median-priced house. However, as Table 1 shows, the median-priced house was already affordable to median-income households in 1992 and was actually less affordable in 1999.

With the exception of Brownsville, increases in housing affordability in the MSAs examined exceeded the increase in affordability for the entire state. Clearly the border region has made positive gains in this arena.

Determinants of Affordability

Many factors contribute to housing affordability. Declining interest rates and the 1997 increase in the Texas homestead property tax exemption both boosted housing affordability throughout the state. However, the varying rates of affordability among the border MSAs suggest other factors are also in play. This section explores possible reasons for the changes in housing affordability along the Texas–Mexico border and looks at circumstances that may be responsible for the differing affordability rates in the four border MSAs.

Income

Much of the improvement in housing affordability along the border has occurred because the increase in income levels has outpaced the rise in home prices. As shown in Table 2, the three MSAs that recorded greater housing affordability had income growth larger than housing price increases. In Brownsville, the only community that did not see an increase in affordability, income growth was slower than sales price growth.

dallas mortgage texas
Table 2
Median Home Sales Price and Median Income, 1992 and 1999
Median sales price Median income
1992 1999 Percent change 1992 1999 Percent change
Brownsville $50,100 $68,600 37 $22,100 $26,900 22
El Paso 68,400 77,900 14 26,400 34,100 29
Harlingen* 66,800 75,800 13 22,500 26,900 20
McAllen 60,800 77,800 28 20,700 27,400 32
Texas 75,200 101,000 34 36,400 45,800 26

* Harlingen data are for 1995 and 1999.
SOURCES: Texas Real Estate Center; Bureau of Economic Analysis.

From 1992 to 1999, the median household income in El Paso grew 29 percent, more than double the 14 percent increase in the median house price. McAllen also posted a large gain in median family income—32 percent from 1992 to 1999. But unlike in El Paso, the median house price also rose dramatically, increasing 28 percent. In Brownsville, the 37 percent increase in median house price significantly outpaced the 22 percent increase in income. Harlingen experienced a 20 percent rise in income and a 13 percent rise in house prices for 1995–99.

Population Growth

The rapid income growth explains much of the increased housing affordability. However, the equally rapid rise in housing prices has dampened affordability in some communities. For example, from 1992 to 1999 income levels climbed dramatically in both El Paso and McAllen; however, because of McAllen's large increase in median home prices, its increase in housing affordability significantly trailed El Paso's.

The faster increase in median house prices in McAllen and Brownsville may be partly caused by their population boom. A 1998 Census Bureau report ranks McAllen and Brownsville the fourth and 14th fastest growing MSAs in the country. Rapid population growth is likely to increase demand for houses and, hence, put upward pressure on prices.
New Home Construction

The volume of new construction also may affect affordability. In El Paso, for example, greater housing affordability is due to not only income growth but also the relatively minimal housing cost increases resulting from greater housing production. The number of single-family building permits is increasing in all four MSAs (Table 3), but the permit value has gone up only slightly during the period analyzed. This may indicate a proportional increase in the construction of less expensive homes.
Table 3
Single-Family Building Permits, 1992–99
Metropolitan statistical area
Brownsville El Paso McAllen
1992 1,308 2,270 3.230
1993 1,486 2,296 5,565
1994 1,694 2,323 3,955
1995 1,642 2,259 3,761
1996 1,729 2,347 4,287
1997 1,602 2,316 4,155
1998 1,926 3,039 5,219
1999 2,017 3,472 5,069
Change 1992–99 54% 53% 57%
NOTE: Brownsville and Harlingen are in the same reporting area.
SOURCE: Texas Real Estate Center.

Research Model

To quantify the effects of income, population growth and new home construction on new home prices, we perform a regression analysis using data for each of the four MSAs. [3] To receive a building permit, a builder must record the estimated cost of improvements with the issuer. This makes it possible to obtain the average annual permit value, which is the dependent variable. Permit values are regressed on the annual number of single-family building permits, annual per capita income, population estimates and a trend line. [4] We would expect increases in both population and income to result in higher average permit values, while increases in the number of permits would correlate with decreases in permit values. We would expect controlling for income and population to result in a downward trend in permit values.

To quantify the effect of construction volume on house prices, we perform a second regression analysis on annual average single-family home sales price. [5] We expect the number of permits to correlate negatively with home sales price but to a lesser degree. This is because the economies of building on a larger scale should lower the price of new home construction, which, in turn, would lower existing home prices through expanded competition.

Results

The first regression analysis tests the relationship between the volume of new construction and the cost of new homes. An increase in the number of single-family building permits is associated with a decrease in permit values (Table 4). For each additional building permit issued, the permit value declines by 0.35 percent. As expected, an increase in personal income leads to an increase in permit value. However, when accounting for personal income and population, the declining trend line indicates an overall decrease in permit values.
Table 4
Permit Value Regression
Coefficient Standard error t statistic
Number of permits –.352 .068 –5.14
Population –.15 .145 –1.031
Personal income 1.056 .303 3.485
Trend –.165 –.035 –4.655

The second regression analysis tests the relationship between new home construction and housing prices while controlling for population and income. A greater supply of housing, reflected as an increase in building permits, should result in lower prices. However, rising income and population should raise the demand for homes and push prices higher.

Table 5 shows that population correlates positively with house price, as predicted. This supports the earlier finding that housing prices are rising faster in communities with dramatic population growth, such as Brownsville and McAllen, than in border cities with slower population growth. Nick Mitchell-Bennett of Brownsville Community Development Corp., the city's largest homebuilder, confirms this conclusion: "The issue is no longer finding buyers; the problem is building to keep up with demand."
Table 5
Home Sales Price Regression
Coefficient Standard error t statistic
Number of permits –.009 .026 –.358
Population .273 .055 4.907
Personal income –.238 .115 –2.062
Trend –.118 .013 –8.72

Unexpectedly, the coefficient for personal income is negative. For an additional dollar of personal income, the average house price decreases by 0.24 percent. However, by removing El Paso from the model, the coefficient for personal income becomes positive. El Paso dominates the results because of its relatively large size. In addition, the city has had one of the largest increases in income but the lowest increase in housing price.

The coefficient for permits is not statistically significant in this model. However, removing the trend line from the model results in a statistically significant coefficient. For every single-family building permit issued, the average sales price falls by 0.1 percent, less than a third of the decrease associated with permit volume and permit value. This indicates that the rapid rise in housing construction is having a greater impact on the prices of new homes than on existing ones.

This finding may be a result of greater supply of starter homes. According to Bob Bowlen, chief executive officer of Tropicana Homes in El Paso, developers are building to an emerging niche. "We shifted to the starter market three to four years ago," he says. Pam Rodriguez, vice president of community lending at Texas State Bank in McAllen, adds, "Developers have realized there is a great need for this type of housing."

Our econometric findings are consistent with the housing affordability picture presented in Chart 1. The negative trend in both regressions supports the prediction that housing is becoming more affordable. The increased capacity of developers has led to a less expensive housing stock. "The building industry in El Paso has been capable of meeting increased demand and delivering more affordable homes," says Tropicana Homes' Bowlen.

Conclusion

With the exception of Brownsville, housing in the border communities studied became more affordable during the 1990s. Of the three communities in which housing affordability improved, all outpaced the increase in affordability for the state as a whole. Additionally, house prices along the border grew more slowly than in Texas as a whole. The rapid rise in single-family construction contributed to the relatively slow increase in border housing prices as developers began focusing on the starter-home market. Rapid increases in income also explain much of the gain in housing affordability. With income growth outpacing housing price increases, border residents have relatively more income available for housing.

About the Author

Before leaving the Bank, Cook was a community affairs specialist at the Federal Reserve Bank of Dallas.

Notes

The author would like to thank Pia Orrenius for help with research.

1. Data for Harlingen are only available beginning in 1995. Data for El Paso begin in 1990, but comparisons begin with 1992 data. Laredo is not included in the analysis because the median single-family home sales price is not available.

2. Annual median sales price from Texas Real Estate Center; average annual mortgage interest rate from Federal Housing Finance Board Monthly Interest Rate Survey; average annual homeowner's insurance premium rate from Texas Department of Insurance; statewide average property tax rate from Texas Comptroller of Public Accounts; private mortgage insurance from FHA Premium Reconciliation Group Procedures Manual: FHA Risk-Based Monthly Premium. Property tax rate is a statewide average for state and local governments and school districts in 1998; historical data are unavailable.

3. For data used in regression, Brownsville and Harlingen are in the same reporting area.

4. Average annual permit value and annual number of single-family building permits from Texas Real Estate Center; annual per capita income from Bureau of Economic Analysis; population estimates from Census Bureau.

5. Average single-family home sales price from Texas Real Estate Center.
- posted by Mark Pane @ 12:49 PM 0 comments

 
Is it ever possible to have my Stafford Loan discharged (canceled)?
Yes, in certain circumstances. A discharge releases you from all obligations to repay the loan. A complete list of cancellation provisions is given below.

Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—because the school closed, for example). Cancellation also is not possible because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.

For more information about discharge, Direct Stafford Loan borrowers should contact the Direct Loan Servicing Center. FFEL Stafford Loan borrowers should contact the lenders or agencies holding their loans.

DIRECT LOAN AND FFEL DISCHARGE/CANCELLATION SUMMARY

Cancellation Conditions Amount Forgiven Notes
Borrower's total and
permanent disability1
or death 100% For a PLUS Loan, includes death but not disability of the student for whom the parents borrowed.
Full-time teacher for five consecutive years in a designated elementary or secondary school serving students from low-income families Up to $5,000 of the aggregate loan amount that is outstanding after completion of the fifth year of teaching. A borrower might qualify for loan forgiveness under the Direct and FFEL Consolidation Loan programs. If so, only the portion of the consolidation loan used to repay Direct Stafford Loans or FFEL Stafford Loans qualifies. For Direct and FFEL Stafford Loans received on or after October 1, 1998, by a borrower with no outstanding loan balance as of that date. At least one of the five consecutive years of teaching must occur after the 1997-98 academic year. (To find out whether your school is considered a low-income school, click here.
Bankruptcy (in rare cases) 100% Cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship.
Closed school (before student could complete program of study) or false loan certification 100% For loans received on or after January 1, 1986
School does not make required return of loan funds to the lender Up to the amount that the school was required to return For loans received on or after January 1, 1986
Child care provider (demonstration project only—limited funds). A.A. or B.A. in early childhood education required. Must have worked for two consecutive years in eligible child care facility serving lowincome community. Up to 100% For Direct and FFEL Stafford Loans received on or after October 1, 1998, by a borrower with no outstanding loan balance as of that date. For more information, click here. Or, call 1-888-562-7002.
- posted by Mark Pane @ 8:17 AM 0 comments