Government Refinance Assistance

In his State of the Union address this evening President Obama announced plans for a new refinance program that is reportedly going to be targeted to borrowers who are having trouble taking advantage of the government-backed refinance programs already in place. We get the following from a WSJ article on the subject:

President Barack Obama called on Congress during Tuesday’s State of the Union address to approve new legislation that would give all homeowners who are current on their mortgages the opportunity to refinance at record low mortgage rates, officials said Tuesday.

Administration officials declined on Tuesday to outline the mechanics or costs of the program, and they said those details would be spelled out in the legislation in the coming days. “Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief,” Mr. Obama said. ” No more red tape. No more runaround from the banks.” …

Unlike the existing program, which was unveiled in 2009, the latest proposal wouldn’t limit such opportunities to borrowers whose loans are already backed by mortgage giants Fannie Mae and Freddie Mac, which guarantee about half of all outstanding loans.

While details on the new program are forthcoming, there are several very useful refinance programs already in place. Contact us in the sidebar to learn more about the available programs.

As we begin 2012 interest rates on mortgages are testing new lows. Borrowers with excellent credit and plenty of equity are seeing 30 year fixed rates below 4%. Rates are not quite that low in cases where credit is less than excellent or when there is little or no equity in the home but even in those cases the rates are astonishingly low right now.

Contact us in the sidebar to learn more about the government-backed refinance programs that are available and to get an estimate.

Here are the links to the recently released HARP 2.0 guidelines.

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf
http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1122.pdf

In short, here are the changes these guidelines describe:

- Starting December 1, 2011 authorized lenders were able to begin the loan application process for borrowers who have Fannie/Freddie mortgages with a current loan to value greater than 125%. HOWEVER those HARP 2.0 loans cannot be approved until March 2012 at the soonest because the Fannie/Freddie approval software will not be updated until then. So the soonest a HARP 2.0 loan with an LTV of more than 125% could actually close is probably April of 2012.

- For Freddie Mac loans, if the first mortgage is less than 80% of the value the home the first and second mortgage combined cannot be more than 105% of the current value of the home. (There will probably be price breaks for these loans though).

- There is apparently no change to the eligibility dates so people who got their current Fannie/Freddie loan after May of 2009 appear to not be eligible for HARP 2.0 still.

- There is no mention of changes to the mortgage insurance rules. The official guidelines of HARP 1.0 allowed for MI to transfer already but we do not know of any authorized lenders or MI companies that allowed that. We will have to wait and see if there is more incentive for lenders and MI companies to allow it with the new program.

The other questions yet to be answered over the coming months are:

1. How many authorized lenders will participate in the HARP 2.0 program? There are no requirements for lenders to participate.
2. What will the pricing be for these high LTV HARP 2.0 loan? (Probably significantly worse than loans with lower LTV’s)

So while these guidelines shed some light on the new program there are a lot of questions still to be answered. Stay tuned.

Contact us in the sidebar to learn more about which government-backed refinance programs might work for your family.

While interest rates on mortgages have been relatively low ever since the federal government began compressing rates in 2009, mortgage interest rates have been especially low since about August of 2011. The recent dip in rates was due to both global economic factors and actions from the Fed. As we enter 2012 mortgage interest rates remain near all time lows. When you combine the especially low rates with the government-backed refinance programs like the FHA and VA streamline programs and the new HARP 2.0 program that will become operational in the next few months, now is a terrific time to look into a government backed refinance.

Contact us in the sidebar to learn more about the government-backed refinance programs that might help your family as we launch into a new year.

Fannie Mae reportedly has removed its “ability to pay” requirements from the HARP 2.0 guidelines. That means that families that have suffered from reduced income over the last few years might be able to qualify for the HARP 2.0 program. The program will still require no recent 30 day late payments on mortgages but the income qualifying requirement that tripped up so many people may be going away. This change is especially good news for borrowers who are self employed and have had trouble proving income in recent years. Here is an excerpt from a recent HousingWire article on the subject:

Lenders are no longer required to determine a borrower’s ability to repay a loan when underwriting mortgages for inclusion in Fannie Mae’s HARP 2.0 refinancing channel.

Barclays Capital made that conclusion in its securitized products research report Wednesday.

Barclays said Fannie Mae is adjusting its seller guidelines for HARP 2.0 after discovering the “borrower ability to pay clause” is preventing a large chunk of underwater mortgages from entering the program.

Under the changes, the ability-to-pay clause is no longer considered an underwriting requirement for Fannie’s HARP 2.0 program. Instead, Fannie Mae now stipulates that no debt-to-income calculation is required for these refinancings as long as the borrower’s payment does not increase by more than 20%, according to Barclays Capital.

While the HARP 2.0 program won’t be fully operational for a month or two please contact us in the sidebar now to see if you can qualify for it or another government-backed refinance program.

With interest rates near record lows and new government-backed refinance programs being announced many Americans have considered looking in to a refinance. If you are among those people thinking about looking into a refinance, getting started in December has some practical advantages. The most important of these advantages is quite simple: shorter lines. Because of all the distractions from the holidays fewer refinances tend to be originated in December. The result is that the wait times for things like processing and underwriting tend to be much shorter. Starting the refinance process in December and closing the new loan in January is a great way to save time and get extra attention during your refinance process.

Contact us in the sidebar today to learn more about available programs, get an estimate, and possibly get the ball rolling for a January refinance.

The wave of bad economic news from Europe has served to help keep mortgage interest rates near record lows here in the US. As worldwide investors seek safe havens for their money the yield on the 10 year treasury note has remained low which in turn is keeping mortgage interest rates stunningly low by historic standards.

Contact us in the sidebar to see which government-backed refinance programs can best help your family.

Beginning on Thursday December 1, 2011 applications for the HARP 2.0 program can technically be started. We say “technically” because as of now no authorized lender has implemented the program.

As we have discussed in the past, the HARP 2.0 program only applies to loans that are currently backed (invested in) by Fannie Mae or Freddie Mac. In addition the Fannie/Freddie loan must have been funded prior to May of 2009 to qualify for the HARP program. For the millions of loans that meet those requirements the HARP 2.0 programs is designed to allow homeowners to refinance to a lower rate without having to add private mortgage insurance (PMI) even when the loan is more that 80% of the current value of the home. The HARP 1.0 program allowed borrowers to refinance up to 125% of the current value of the home but the HARP 2.0 will do away with that 125% limit. In addition the HARP 2.0 will reportedly be available to borrowers who are currently paying PMI on their Fannie/Freddie loan.

Fannie and Freddie have announced that they will not have their underwriting software updated until March of 2012. As a result the bulk of the HARP 2.0 loans will not be able to be closed until then. What remains to be seen is if some lenders will be willing to manually underwrite HARP 2.0 loans before then. We will monitor the situation and report on any announcements regarding that here.

In the meantime we recommend you fill in the contact form in the sidebar to see which government-backed refinance programs apply to your situation.

In 2008 the loan limits on FHA mortgages were increased to allow more borrowers across the country qualify for FHA loans. On October 1st of this year those loan limit increases expired and reverted back to their original levels. After several weeks of debates in congress a bill reinstating those higher loan limits through the end of 2013 was passed and that bill was signed into law by President Obama on Friday. While this change will not affect a huge number of people, it will open up FHA loans to more Americans. To learn what the loan limits are in your county see this web site. (Note: it might take a few days for the new limits to be updated there.)

If you have an FHA loan now or would like to learn more about refinancing into an FHA loan contact us in the sidebar.

The details of the new changes to the HARP program are reportedly going to be released on or before Tuesday November 15th. The release of the operational details is a crucial step in the roll out of the so-called HARP 2.0 program. However the program will probably not be functional on the ground level for several weeks after that.

Please note that the federal government does not lend directly to consumers with this program. Rather the HARP program is outsourced through authorized lenders so the actual implementation of the new program requires those lenders to be ready to originate and fund loans under the new program. Fully implementing new programs like this generally takes weeks or even months.

Contact us in the sidebar to learn if you are a candidate for the HARP 2.0 program or other government-backed refinance programs and to be connected with an authorized lender.

After hitting record lows at the end of September mortgage interest rates climbed slowly but steadily through most of the month of October. Rates increased in October in large part due to the news that Europe had worked out a temporary fix to their debt problems. But as October came to a close the European debt crisis hit a new snag which in turn led investors worldwide to purchase more US bonds which in turn is improving mortgage interest rates again. The excellent rates combined with the recently announced of an expansion of the Home Affordable Refinance Program (HARP) make now an excellent time to look into an government-back mortgage refinance. Contact us in the sidebar to learn more.

Widely anticipated changes to the Home Affordable Refinance Program (HARP) were announced this morning. The updates include several but not all of the changes most borrowers have been hoping for. Among the changes are the following:

1. There is no longer a 125% loan to value limit to the program. Going forward HARP loans can theoretically work for any loan backed by Fannie Mae or Freddie Mac regardless of how underwater the home is.

2. A full appraisal will not be required in all cases. Reports are that in some cases an automatic valuation system may be used.

3. Mortgage insurance providers have reportedly agreed to automatically transfer mortgage insurance coverage to the new loan. If this is true it will be a huge change because previously borrowers with mortgage insurance were not able to participate in the HARP program.

Unfortunately, the cut off dates for eligibility were not changed so any loans taken out after May of 2009 are still not eligible for the program.

The FHFA said the operational details for the program will be available by November 15th 2011. That probably means that the new program won’t be up and running with most authorized lenders until December. The question yet to be answered is how many authorized lenders will choose to participate in the new version of the program in the months to come. But assuming several authorized lenders do participate there is no denying that removing the 125% limit and the allowing borrowers with mortgage insurance to participate will open the program to vastly more borrowers.

Contact us in the sidebar to learn more about the HARP program and other government-backed refinance programs that are available.

The Wall Street Journal reported earlier this week on a new plan to help more underwater homeowners refinance to lower interest rates despite owning more on their home than the current market value. We get this from the article:

The plan under consideration would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments, according to people familiar with the matter. Such borrowers typically aren’t able to refinance because they lack equity in their homes. The plan would apply only to mortgages owned by the banks. It isn’t clear how many of those borrowers would qualify for help. Around 20% of all U.S. mortgages are owned by U.S.-chartered commercial banks; the majority are held by investors in mortgage-backed securities.

The concept is still very short on details and seems to only apply to a fairly narrow range of people. But at least it is a sign that regulators a serious about opening new programs up for underwater borrowers who currently are not able to take advantage of the HARP program or FHA streamline program. We’ll keep you posted as more news on this subject comes out.

In the meantime contact us in the sidebar to see which programs you might already qualify for. While rates are up slightly from the lows reached near the end of September they are still hovering near all time lows.

In conjunction with the Obama administration announcing intentions to revamp and revitalize some of the government-backed refinance programs that are now in place, several US senators recently sent a letter to regulators urging improvements as well. We get this from a recent HousingWire report:

A group of 13 senators sent a letter to regulators Tuesday, pressing for a plan to boost mortgage refinancing for more homeowners as soon as possible. Such a plan is being widely-discussed admittedly, and now the lawmakers are ready to see some action.

“Time is of the essence and we urge you to act quickly and aggressively to ensure that responsible homeowners receive the full benefit of these lower rates,” the senators said in the letter to Treasury Secretary Timothy Geithner, Department of Housing and Urban Development Secretary Shaun Donovan, Federal Housing Finance Agency Acting Director Edward DeMarco, and National Economic Council Director Gene Sperling.

While a letter from senators might be more show than substance, it does help show there is wide support for upgrades and changes to the HARP programs and other government-backed refinance programs. With any luck regulators will announce the changes and upgrades soon. As soon as changes are announced we will report on them here.

In the meantime, contact us in the sidebar to learn more about the government back refinance programs that are already available while rates are still hovering near all time lows.

A few weeks ago President Obama hinted at a new mortgage refinancing plan his administration was cooking up. Most speculations since then have been that the new plan would be an expansion of the Home Affordable Refinance Program (HARP) to make it available to even more borrowers than the current version of the program. Treasury Secretary Tim Geithner recently said more that would indicate a new plan will be announced soon. We get these quotes from a recent Wall Street Journal blog post:

“My sense is, based on what I’ve seen…it’s going to be meaningful enough to make a difference,” Mr. Geithner said at a Senate Banking Committee hearing…

“They are looking at a range of things and you’ll see more details in a couple of weeks,” Mr. Geithner said.

Stay tuned. It sounds like the changes will be announced in the next few weeks.

In the meantime, rates continue to test new lows this month. Contact us in the sidebar to learn more about the refinance programs that could help you.

Freddie Mac recently reported that mortgage interest rates last week were the lowest since they started tracking rates in the 1970′s. While rates raised a bit again this week there is speculation that the all time lows could be tested again in October in response to the Fed buying mortgage backed securities starting in October.

Contact us in the sidebar to learn more about the government-backed refinance programs that are available.

The Fed announced a new plan today that will likely compress mortgage interest rates even further. Here is an excerpt from a HousingWire piece on the subject:

The committee also said “to help support conditions in mortgage markets” it will reinvest principal payments from agency debt into agency mortgage-backed securities.

That’s a departure from the Federal Reserve’s previous practice of reinvesting those proceeds into Treasuries and appears to be an effort to lower mortgage rates.

The purchase program, to be completed by the end of June, will involve longer-term Treasury securities with remaining maturities of six years to 30 years, and will be financed through the sale of shorter-term Treasuries with maturities of three years or less.

“This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said in a statement following its two-day meeting.

Contact us in the sidebar to learn about which programs could help your family.

More than a week after President Obama announced in a speech before congress that he wanted to make it easier for American home owners to take advantage of the record low interest rates we are seeing on mortgages now there have yet to be any concrete policy changes. Rumors are that the changes will be to the Home Affordable Refinance Program (HARP) with the goal of making it easier for many more home owners to qualify for that program. We’ll keep you post on news as it breaks.

In the meantime, contact us in the sidebar to learn more about the government-backed refinance programs you might already qualify for.

As expected, part of President Obama’s recently revealed jobs plan was a plan to make it easier for more Americans to refinance their mortgages to the historically low interest rates we have been seeing in the last month or so. The president outlined his plan last night and it looks like main idea is to make it easier to qualify for the already existing Home Affordable Refinance Program (HARP). Here are some quotes from a Reuters article on the topic:

President Barack Obama said on Thursday he is seeking to broaden U.S. homeowners’ access to mortgage refinancing in a plan to help the ailing housing market and put money back in the pockets of borrowers needing help locking into record low rates.

“We’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” …

The White House officials said the U.S. Treasury was having talks with both Fannie Mae and Freddie Mac and their regulator — the Federal Housing Finance Agency — on ways to broaden refinancings. The aim is to is to “remove the barriers that exist in the current refinancing program.” …

The refinancing initiative under consideration by the Obama administration would need final approval from the acting head of the Federal Housing Finance Agency, Edward DeMarco. Those close to DeMarco say he is acting as an independent regulator with the goal of conserving the assets at Fannie and Freddie, a position he has staunchly defended before lawmakers since the two firms were taken over by the government three years ago.

The encouraging news is that the Obama Administration does not appear to need the approval of the Republican-led congress to make access to the HARP program easier. Rather the administration mostly needs to persuade the independent head of the FHFA Edward Demarco that their plan is sound.

We’ll keep you posted on the progress of this new initiative. In the meantime, contact us in the sidebar to see which government-backed refinance programs you already qualify for.

As investors all over the world become increasingly nervous about world economic conditions more and more are buying up US treasury bonds as a safe haven for their money. That in turn is reducing the yield on US treasury bonds which in turn has continued to compress mortgage interest rates. The end result is that rates on government-backed mortgages are at astonishingly low rates this month.

Contact us in the sidebar to learn more details on the programs and rates connected with government-backed refinances. Dips in interest rates this steep normally don’t hold for long.

There has been a lot of speculation that President Obama will include a new mortgage assistance program as part of his speech this evening. We get this from a recent MarketWatch article:

President Barack Obama may suggest changes to a struggling housing refinance program to try to double the participation in the program and help kick start the economy in his speech before Congress on Thursday night, regulatory analysts said. …

The Federal House Finance Agency, which regulates Fannie and Freddie, may be considering a number of approaches to expand the participation of both lenders and so-called “underwater” borrowers of Fannie and Freddie-backed mortgages who owe more than their homes are worth. However, regulatory observes insist that all these approaches increase costs to taxpayers and damages mortgage investor confidence.

Of course whatever he pitches probably won’t make it past congress so on the ground level it likely won’t make much immediate impact. But it will be interesting to see what the plans are anyway.

The fairly recent changes in the way the FHA handles its mortgage insurance requirements have made the upfront costs of getting an FHA loan less expensive while making the monthly costs are higher. To recap, the one-time upfront mortgage insurance premium to get into an FHA loan dropped from 2.75% to 1%. On a $200k loan that is nearly a $4000 reduction in fees. However, the ongoing mortgage insurance (MI) fees on FHA 30-year fixed loans went up from .55% per year to 1.15% per year. So on that $200k loan the monthly MI went from about $92 per month up to $191 per month.

But with FHA 15 year mortgages the rules are different. With FHA 15 year mortgages the upfront fee remains 1% but the ongoing mortgage insurance is 0.25% per year for loans where the loan-to-value (LTV) is 90% or less. (This means the loan is 90% of the appraised value of the home or less). When the loan-to-value is more than 90% the mortgage insurance is .50%. So on that $200k loan the monthly MI fee would be $41 for lower LTV loans and about $82 for higher LTV loans. With the average rates on an FHA 15 year loan below 4% lately a 15 year loan might be worth looking into.

As an example:

A $200k 30 year fixed loan with PMI at a 6% rate (not an uncommon loan a few years back) would have a very similar monthly payment as the same loan at a 15 year 4% fixed rate with low PMI. But over the life of the 15 year loan the borrower would save more than $160k in interest payments alone when compared to the 30 year example. And that is not to mention thousands in saving in PMI payments and the fact that the home would be paid off twice as quickly.

15 year loans aren’t for everybody but they can be a terrific choice for many families. Contact us in the sidebar to look into your options on this subject.

This afternoon the Fed made the unusual pledge to keep its lending rates at record lows for a full two years more. This action was undoubtedly spurred by the recently faltering US economy. The Fed seems to want to bring some confidence and stability back into the market.

Early results were encouraging. Not only was there a rally in the stock market, mortgage interest rates dipped pretty substantially mid-day. If you have considered lowering your interest rate now is the time to get a quote on one of the government-backed mortgages programs. Contact us in the sidebar for guidance on getting an estimate.

Over the weekend S&P lowered the credit rating of the United States from AAA to AA+. As a result stocks have taken a beating over the last few days. Yet despite this announcement from S&P, mortgage interest rates on government-backed mortgages have dipped even further this week. Part of the reason for that is that mortgage interest rates usually follow the yield on the 10 year treasury note and the yields on those T-notes has continued to drop.

While decreasing values on Wall Street is not a good thing, it has not been a bad thing for mortgage interest rates for now. Contact us in the sidebar this week to learn which government-backed refinance programs could help your family while rates remain near 50-year lows.

VA Loans are mortgages that are available to the families of US military veterans. For folks who are eligible, VA loans have some terrific benefits. Here are some of the positives of refinancing into VA loans:

- You can get up to 100% of the current value of your home. This is true even when the the refinance is rolling in a first and second mortgage (unlike HARP and FHA loans)
- There is no monthly mortgage insurance fee associated with VA loans (unlike FHA loans)
- Rates on VA loans tend to be quite low
- Overall lender fees on VA loans tend to be lower than other loans

Having said that, there is an upfront funding fee associated with VA loans. For that reason refinancing into a VA loan is not always the best option even for borrowers with VA eligibility. Still in some cases refinancing into a VA loan is an excellent solution.

Contact us in the sidebar to learn more about refinancing into a VA loan as well as the other government-backed loan programs that are available.