Tag Archives: Home Affordable Refinance Program

NEW Government Ruling Devastating

Fannie, Freddie: the two government entities leader or housing regulator Edward DeMarco said this last Tuesday there will be no benefit to principle reductions of troubled borrowers who are upside down and has ordered all firms or institutions to not allow any help that is provided in the guidelines of the HAMP (Home Affordable Modification Program) and HARP (Home Affordable Refinance Program). He stated: “we concluded that the potential benefit was too small and uncertain, relative to the known and unknown costs and risks”. THIS IS DEVASTATING!!!

Treasury Secretary, Timothy Geithner noted that in the agency’s own analysis, that Fannie  and Freddie could save $3.7 billion by participating in the administration’s housing programs (HAMP & HARP), the taxpayers would save $1 billion. My commentary is that the institutions once again are controlling this country and not the government. The Obama administration, lawmakers on Capitol Hill, and housing advocates argue that principle reduction is an essential tool to help the 5 year crisis that is still going strong due to millions or about a quarter of the nation’s homeowners are under water, representing excessive mortgage debt of about $700billion!! This decision could burst the bubble that was going down in size due to the workout programs in place that have temporarily bandaged the real estate market, but now with no real help in the near future, the average homeowner who is on the fence will bail or walk away from their home. Coupled with the fact that many state laws have provisions protecting homeowners through the end of this year, I expect an onslaught of upside down homeowners to short sale their homes to take advantage of salvaging incentives currently being offered by most banks.

DeMarco, in his statement noted that only a small percentage of homeowners would strategically default on their mortgage, while most advocates would encourage it, so the savings would literally disappear for the agencies and the taxpayer. I say this is Chicken Little-type thinking and he is playing this game to not allow further losses to the institutions, who I believe are running the show!! Further, he also stated that the institutions investors would be spooked over this reduction program causing an increase in mortgage costs in the future. Another statement that shows the banks rule!!

In conclusion, the gains that have been made in the current real estate market are clearly at risk now, and will no doubt cause an increase of activity in sales and foreclosures in the near future, resulting in values stagnating, to possible reductions more likely. You can view more on this recent development here: http://www.fhfa.gov/webfiles/24113/pfstatement73112.pdf

Your comments are appreciated. What are your thoughts on this recent real estate news?

Low Rates, High Obstacles to Refinancing Mortgage

As interest rates have slid over the past couple of years, Gabriel Bousbib of Englewood, N.J., refinanced his 15-year mortgage not once, but twice-cutting his interest rate in two steps from about 4.6 percent to 3.375 percent.

He’s one of a number of homeowners who refinanced just a year or two ago, but decided it was worth considering again as mortgage rates hit record lows-now averaging around 4 percent for a 30-year loan.

refinancing your home“When you’re quoting rates in the high 3s, people are saying, ‘It’s worth it to me,'” says Steve Hoogerhyde, executive vice president at Clifton Savings Bank.

“My monthly savings are going down a few hundred dollars; it adds up over 15 years,” said Bousbib, a financial services executive. “And if rates keep going down, I would refinance again.”

Refinance applications have more than doubled over the past year, though they’re not as high as in previous refinancing booms because it’s harder to qualify in the current atmosphere of tighter credit standards, according to the Mortgage Bankers Association. With the volume of home purchases still low, refinancing accounts for about 80 percent of recent activity.

Although the old guideline used to be that you should consider refinancing only when rates drop at least 2 percentage points, the new wisdom is that it can be worthwhile even with smaller drops.

“For most people, if you can shave three-quarters of a percentage point off your interest rate, it’s worth looking at,” says Greg McBride, an analyst with Bankrate.com, a personal finance website.

For homeowners who plan to stick with the same loan term and want to lower their monthly payments, the math is straightforward. Find out how much it will cost to refinance, figure out how much you’ll save each month and then how long it will take to break even. If you can save enough to offset the refinancing costs within a year or two-or even longer if you expect to stay in the house for a number of years-it’s worth considering.

Though low-interest rates are eye-poppingly low, the refinancing climate has changed from the easy-money days of five years ago. Generally, to get the best rates, homeowners need a 740 FICO credit score, well above the median score of 711. They also usually need at least 10 to 20 percent equity in the property. A recent expansion in the federal Home Affordable Refinance Program should allow refinancing this year by more so-called underwater borrowers – those who owe more than their homes are worth.

Lenders are also demanding much more documentation – including pay stubs, tax returns and bank statements – than they did five years ago, at the insistence of government regulators as well as Fannie Mae and Freddie Mac, which buy mortgages from lenders.

“You have to have a taste for doing paperwork,” says Keith Gumbinger of HSH Associates, a Pompton Plains, N.J., company that tracks mortgage data. “You’re going to be asked for lots of documents. No one loves the process to begin with, and in today’s environment, it’s even less palatable.”

These stricter requirements are simply a return to the kind of underwriting standards that prevailed before lending standards slackened a few years back, leading to the housing bust and foreclosure crisis, McBride says.

“We’re in this mess because money was too easy to get,” he says.

Refinancing costs roughly $3,000, according to several mortgage companies. That covers costs like an appraisal, title insurance, application fees, attorney’s fees and recording the mortgage. Some lenders also offer low- or no-cost options, which they can do by either adding the closing costs to the mortgage amount or charging a slightly higher interest rate.

Bousbib, for example, took a no-cost refinance with Equity Now, a New York-based lender that also lends in New Jersey. “It didn’t cost me a penny,” he says. Equity Now says it charges a slightly higher interest rate on no-cost loans.

Lowering the monthly payment is not the only reason people are refinancing. Many are shifting from a 30-year loan to shorter terms, said Matthew Gratalo of Real Estate Mortgage Network in River Edge, N.J. He has worked with clients in their 40s who hate the thought of carrying a mortgage into retirement.

“They’re looking ahead and saying, ‘I don’t want to pay a mortgage forever; can I get this done in 15 years? Can I be done with this and have it paid off?’ ” Gratalo says.

“Certainly shortening the term makes a lot of sense because you can cut years of mortgage payments,” says Carl Nielsen of Mortgage Master Inc.’s Wayne office.

Nielsen, for example, recently talked to a customer with a $375,000, 30-year mortgage at 4.5 percent. The customer is considering a 20-year mortgage at 3.75 percent. His monthly payments would go from $1,900 to about $2,223, but by shortening the life of the loan, he’ll save more than $150,000 in interest payments.

“That’s kind of a no-brainer,” says Nielsen.

Sources: Greg McBride, Bankrate.com ©2012 The Record (Hackensack, N.J.), Distributed by RISMedia and MCT Information Services.

New Modification Law & Avoiding Foreclosure

A new law that will be implemented on November 15, 2011 is yet another slap in the face to the American Homeowner regarding modifications.

Making Home AffordableThe basic eligibility requirements for an enhanced HARP (Home Affordable Refinance Program) loan are as follows:

  • Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to MakingHomeAffordable.gov’s page on “Look up your loan“.
  • Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
  • Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
  • Current loan-to-value (LTV) ratio must be more than 80%.
  • Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.

More information is available from the Federal Housing Finance Agency (FHFA) on the agency’s website: www.fhfa.gov.

The reason why HARP is not good, is the same basic reason that HAMP (Home Affordable Modification Program) and the traditional modification is as follows:

It is strictly voluntary with all lenders; even though they say they participate.  Of course, there are factors with the seller or borrower that have an affect on being put in a modification plan that eliminate many from it.  This problem could be avoided if the banks would just lower the loan amount to the fair market value and a greater percent of people would have been able to keep their homes.  Even a future shared equity with the lender would have been acceptable if the property was sold for a profit in the future. Few banks are offering this program as well.

In conclusion, it is obviously important that we talk ASAP to go over your situation. I have several associates waiting to help: accountants, attorneys, and credit repair company.  If you’re moving on, getting back on track with your credit, staying in your home with an extended time without payments due in order to recoup finances, and most importantly receiving thousands from your bank at closing are all opportunities within your grasp!  I am just a phone call away!

John | (619) 890-3648

Namaste!

Why you can’t get the lowest mortgage rates

Five reasons near-record low rates are out of reach for some

CHICAGO (MarketWatch) — Mortgage rates are near historical lows, but the rates lenders are quoting you aren’t as eye-popping as those you see in the news.

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Why is that?

First, remember that mortgage rates are moving constantly, and rate surveys are capturing rates from past points in time. For example, Freddie Mac’s weekly survey collects rate data over the course of a week. Bankrate.com’s survey collects rate data every Wednesday…By the time results are released, they’re already outdated.

There are other reasons your rate might be higher. Below are five of them.

mortgage rates1. You’re not paying points

Average rates in Freddie Mac’s survey include average discount points paid for the mortgage. But not everyone is willing to pay points.

For the week ending Oct. 27, rates on the 30-year fixed-rate mortgage averaged 4.1%, but that rate required an average 0.8 point to get it. A point is 1% of the mortgage amount, charged as prepaid interest.

Unless you’re going to live in your home for a very long time, paying points often doesn’t make sense…

2. Your borrower characteristics mean price adjustments

A credit score on the low side will prevent you from getting the lowest rates. Low levels of home equity will also mean a pricier mortgage rate.

That’s thanks to loan level price adjustments from Fannie Mae and Freddie Mac that have been making it tougher for borrowers to get the best rates for the past few years…

3. Your property type means higher rates

For condo-unit mortgages, you need a 75% loan-to-value ratio, or a 25% equity position, to get the best rates, said Christopher Randall, vice president, secondary marketing, at the Real Estate Mortgage Network, a mortgage lender.

And if your mortgage is for a vacation home or investment property, you can also expect to pay a higher rate, McBride said…

4. You don’t have recent proof of income

For the self-employed — who don’t have pay stubs as proof of recent income — the most recent tax returns are what a lender will look at before giving you a mortgage. If business has improved after your past tax return, that’s not going to be of any help as you try and get a mortgage today…

5. Your lender isn’t hurting for business

There can be a big disparity in what rates are offered from lender to lender, Findlay said. And it may have to do with how many mortgages they’ve been originating lately.

“Some that are lacking volume will tend to be more competitive,” he said. “Those that have enough volume may say we’re going to keep rates high.”

But the rate isn’t everything, Randall said. When shopping for mortgages, borrowers need to focus on comparing their monthly payments. “People are drawn to the interest rate… but you have to look deeper. Review the documentation,” Randall said.

For instance, it’s possible for someone to get an offer of a very low rate on a mortgage backed by the Federal Housing Administration — that loan also may come with a higher insurance premium, Randall said. That person may be better off taking a conventional mortgage with lower priced private mortgage insurance, even if their interest rate is a little higher, he said…

Read the article in full by going to MarketWatch.com.