Archive for March, 2012

Obama Refi Plan: 580 FICOs Okay, So Are 140% LTVs

 | Comments Off on Obama Refi Plan: 580 FICOs Okay, So Are 140% LTVs

President Obama is urging Congress to pass a bank tax, funneling the money over to the Federal Housing Administration which will then refinance non-GSE borrowers who are under water on their loans.

Wednesday morning the White House released certain details of its latest refi plan, opening up the initiative to borrowers with a minimum credit score of 580 and loan-to-value ratio of up to 140%. But there is one catch: these mortgagors must be current on their existing loan.

For loans with LTVs above 140%, lenders would have to write down the principal before refinancing, according to a White House fact sheet released to the media.

This plan will “help millions of responsible homeowners who make their payments on time but find themselves trapped under falling values or wrapped in red tape,” President Obama said at a rally in Falls Church, Va., Wednesday morning.

The White House estimates FHA will need $5 billion to $10 billion to fund this new refi program for private mortgages and create a separate mortgage insurance fund.

“This will help the FHA better track and manage the risk involved and ensure that it has no effect on the operation of the existing [FHA] Mutual Mortgage Insurance Fund,” a White House fact sheet says.

To get the program off the ground, Congress will have to pass legislation that authorizes FHA to refinance higher LTV loans along with the proposed bank tax to fund the program.

The President calls the tax the “Financial Crisis Responsibility Fee,” noting that it will be imposed on the “largest institutions based on their size and the riskiness of their activities.”

Washington insiders consider the bank tax a “non-starter” in the Republican-controlled House of Representatives.

Enhanced by Zemanta

HAMP Modifications May Get a Boost

 | Comments Off on HAMP Modifications May Get a Boost

Mortgage servicers continue to modify 25,000 loans a month under the government’s HAMP program, but that pace could pick up later this summer as new changes to the effort kick in.

To date, servicers have completed roughly 930,000 modifications under the Home Affordable Modification Program with 760,000 homeowners still current on those loans.

Recently unveiled changes could open the door for 1.5 million struggling homeowners (and real estate investors) to be eligible for a HAMP modification, according to analysts at Keefe, Bruyette & Woods.

The Treasury is working on guidance to allow modifications of single-family loans on rental properties for the first time.

The new guidance will relax HAMP’s debt-to-income cutoff, reflecting borrower obligations to make payments on second liens and medical bills. HAMP currently excludes borrowers with mortgage payments that are less than 31% of their income.

Treasury also is increasing incentive payments to investors, including Fannie Mae and Freddie Mac — when they agree to reduce the principal amount on a delinquent loans.

KBW managing director Bose George is skeptical the GSE regulator will allow principal reductions on Fannie/Freddie loans. However, principal reductions would make more underwater borrowers eligible for a HAMP modification.

Treasury wants to issue the new HAMP guidelines this month, but stronger modification results might not be seen until August or September.

“Treasury expects that homeowners may be evaluated under the new program beginning in May for trials starting June 1,” the department said in releasing its December report on HAMP activities Monday.

The new HAMP report shows 79,300 borrowers are currently in payment trials. In December, 23,300 borrowers completed the three-month trials and were granted a permanent modification. In November, servicers completed 26,900 permanent HAMP modifications

Enhanced by Zemanta