Posts Tagged ‘Fannie Mae’

NEGATIVE EQUITY REFINANCING

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The Home Affordable Refinance Program (HARP) is now available to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 100%. Under the HARP Program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed HARP loan.
The HARP Program and HARP 2.0 are available now.
For a full description of this great program and to see if your loan qualifies go to http://www.harploan.org/faq.html
Here are some recent statistics to illustrate the success of HARP 2:
o. One in 7 of all refinances in the 1st quarter of 2012 was through HARP.
o. The number of refinances in the 1st quarter was double that for the last quarter of 2011 driven by a sharp increase in those with above 105% Loan to Value (LTV)
o. FHFA officials attribute the increase to the removal of the loan-to-value (LTV) ceiling for borrowers who refinance into fixed-rate loans and the elimination — or lowering — of fees for certain borrowers.
o. In March, there were nearly 80,000 HARP refinances, a quarter of them on loans with LTVs greater than 105 percent.
o. More than 4,400 loans with LTVs greater than 125 percent were refinanced since the beginning of the year; over half these loans were refinanced in the states of California, Florida, and Arizona.
• The number of loans refinanced through HARP in the first quarter of 2012 nearly doubled compared with the number of loans refinanced through HARP in the fourth quarter of 2011, driven by a sharp increase in the number of loans refinanced above 105 percent LTV.
• In March, there were nearly 80,000 HARP refinances, a quarter of them on loans with LTVs greater than 105 percent.
• More than 4,400 loans with LTVs greater than 125 percent were refinanced since the beginning of the year; over half these loans were refinanced in the states of California, Florida, and Arizona.

HAMP Modifications May Get a Boost

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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

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Inside Job. Must see movie. Very Interesting

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If you truly want to understand how our economy got into it’s current mess, who’s responsible, and where they are now this is a must movie.

It does a great job of pulling together the threads and showing the whole cloth.

Down Payment Gift Funds

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Fannie Mae, the most important rule maker in the mortgage business, has released this new guideline.
  
“If a borrower receives a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, the gift is considered the borrower’s own funds and may be used to satisfy the minimum down payment, as long as both individuals will be living in the property.   

This change improves and clarifies how gift funds can be counted when qualifying for a mortgage. This can be the difference between being able to buy that 1st home, and having to continue renting.   

  Thanks to Mario Basura of Broadview Mortgage http://www.Broadviewmortgagecorp.com/MarioBasura for this update. 

    

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Higher interest rates likely Soon??

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The Federal Reserve (the Fed) took aggressive steps during 2009 and early 2010 to drive mortgage interest rates down in order to encourage more people to buy homes and revive the real estate industry.

To understand how they did this we need to know what actually controls mortgage interest rates for the home buyer.

 It is the price of Mortgage Backed Bonds (MMB’s)and NOTHING else. The bulk of these are created by Fannie Mae and Freddy Mac who buy your mortgage from the Bank or Mortgage Broker who originally made it. They then package hundreds of mortgages together as a Bond and sell it off to private investors (Pension and Insurance companies are typical buyers). The proceeds from the sale are used to buy new mortgages from the Banks and Brokers. This virtuous circle is the motor that drives the Real Estate market.

The Private Investors stopped buying when they realized that a lot of the individual mortgages inside the Bonds were badly designed (Sub-Prime) and payments from were less reliable than they had been told.

When investors stop buying MMB’s the Mortgage Lenders have no money to lend and the Real Estate Market freezes up.

One solution would have been to increase the interest rate on new mortgages in order to offer a higher rate to the investors to compensate for the higher risk. In normal times this is how the market works. In the current circumstances the Investors were not going to buy at any price.

In early 2009 the Fed came to the rescue to avoid a total shut down of the housing market. They began buying these MMB’s in huge numbers and aaccepted very low interest rates. This restored the supply of money available to make new mortgages at historically low rates, and stabilized the whole residential real estate industry.

These Fed purchases have been completed and the challenge now is to attract Private Investors back as buyers for MBB’s. They are there, but will not accept the low rates that the Fed did. Therefore the interest rates paid to get a mortgage will have to go up.

Potential Buyers need to be getting serious if they want to take advantage of these historically low rates.

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