Help for Homeowners…..Finally

Posted: October 26, 2011 in Uncategorized
Tags: , , , ,

If you read my blog post back on October 14th, I mentioned how I would fix the current refinancing problem and the reasons there was a problem to begin with.  Well, I didn’t have a crystal ball, but it looks like our government has come up with a workable solution for homeowners who are underwater with their appraised value.  The highlights are below:

Highlights included:

  • Geared towards borrowers who refinance into lower amortization periods.
  • Allowing LTVs to 125% and above.
  • Eliminating new appraisals where there is a reliable estimate of value.
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by the FNMA and FHLMC.  (This was the primary reason most investors did not offer LTVs above 105% on the current HAMP programs.)
  • Extending the end date for HARP until Dec. 31, 2013.

Loans eligible for the new plan:

  • Loans that were originally sold to FNMA or FHLMC before May 31, 2009 with an LTV of 80% or above.  If you are unsure who purchased your loan, below are the links for Fannie Mae and Freddie Mac.

Implementation Dates:

FHFA is the agency that regulates both Fannie Mae and Freddie Mac, but both Fannie and Freddie have not released any additional information on HARP Phase II.  Per the news release, they will “issue guidance with operation details…by November 15”, and at this time we should have a better idea how these changes will affect their current DU Refi Plus and LP Open Access programs.  Delivery of these loans to the agencies is not expected to be available until the first quarter of 2012.   

Pricing:

There will be an adjustment to your new interest rate due to the increased risk of a higher LTV (loan to value).  However with the reps and warranties fees being lowered or waived, quality borrowers, historically low rates, and loan level adjustments that benefit borrowers in shorter term mortgages; most lenders are optimistic pricing will be reasonable.  Initially expect a wide variance of market prices as lenders estimate where pricing should be until the first HARP security is actually priced in the first quarter of 2012.

 This could be awesome news for about 5 million households who could benefit from this program.  As more details come to light, I will continue to provide updates.

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