mortgage news and opinion for past, present and future clients

November 15th the changes to the program that allows borrowers who are underwater to refinance (HARP) were announced. The changes have been making headlines for a while and we were all sitting on the edge of our chairs waiting to hear how the government was finally going to intervene to help struggling home-owners. The announcement, in my opinion, was anti-climactic.

The most notable changes are the following:

• The limit of 125% loan-to-value has been removed
• The rates for new loan terms of 20 years and shorter should be a lot better
• The rates for new loans of greater than 20 years will have better rates (but not as good as 20 year rates)

The trouble that I see is that a) it’s still a voluntary program for the banks and MI companies and b) they still aren’t fixing the problem. Officially, yesterday was the first day that I could take applications for new-and-improved HARP refinances. Unfortunately, the pricing changes that are going to lower rates aren’t going into effect until JANUARY 3RD! Oh, and by the way- the changes to the maximum loan-to-value don’t go into effect until MARCH 2012! Oy vey.

Also, we’re just now getting “guidance” from the big banks about whether or not they’re going to participate in the program and how they’re going to augment the guidelines. We just got word from several of our banks stating that they are delaying implementation of all changes until March.

So, I know you’ve been hanging on, waiting for someone to come along and help, but the government and banks are saying to you, “Just wait a little longer.”

The Federal Housing Finance Agency (FHFA) just released a letter detailing some of the elements of the program enhancements. If you don’t know, HARP (Home Affordable Refinance Program) is a program that allows home-owners who are currently underwater to refinance their loans. It’s been a miserably ineffective program so far. The guidelines are currently limited to the extent that the people that really need the help can’t really get it. Don’t get me wrong- it’s been a great tool for a lot of people. I’ve used it to reduce many people’s payments in the last few years- but the reality is that most of them could already afford their payment. I was just using the program to save them money (a worthy and noble cause, to be sure).

The trouble with the program is that it’s too limited. Good sense might make the arguement that if you reduce someone’s mortgage payment that’s struggling with being underwater that they will be in a better position to afford their home and not be foreclosed on. Duh.

Many factors have been major speed-bumps. They range from things like: having mortgage insurance and the MI company not participating, being too underwater, having a second mortgage and the list goes on.

Here are a few of the changes that are announced:

• Removing the ceiling of 125% LTV for Fannie and Freddie Loans
• Eliminates the need for a full appraisal if a reliable AVM is provided (automated valuation model)
• Eliminating some risk-based fees from FNMA and FHLMC for refinancing into shorter-term loans

There will be more details released on November 15th.

In my humble opinion, the glaring problem that is not yet addressed and the way I read the letter will not be is that the program is voluntary for lenders, servicers and mortgage insurers. So far that’s been the biggest problem- not all banks and MI companies are playing ball. It’s time for everyone to get in the game. I think that HARP should be required for anyone who wants to continue to do business with Fannie and Freddie. They provide over $5.7 TRILLION in funding for the US mortgage markets. They are the big gorilla and should throw some weight around.

Here is a link to the letter

Geithner says administration to move forward on refi plan.

Check out this article from housingwire.com. There’s been some rumors that the govt. is trying to amend the HARP program so that many of the people that don’t qualify for the program in it’s current form can get some relief.

IT’S ABOUT TIME!

The inaugural issue of our company newsletter was delivered to my office today and I was surprised to see that I was one of the top loan officers in the company. There were plenty of LO’s that funded more than me, but in a company of over 300, I feel great to be among the top producers.

Of course, it isn’t a solo effort. Tracy Howard, my processor, is an integral part of my team and I appreciate all of her help! Wow, I feel like I’m giving an awards speech. Rest assured, I know it’s not that big of a deal. I just want to say thanks to Tracy, my referral partners and all of my wonderful clients. It was a nice boost to my day to see my name in print.

I received an email from Ken Wiseman of AXA Advisors today that I thought was interesting. Ken is a trusted financial adviser and I recommend his services without reservation. The debate over the debt ceiling has been dominating the news lately and if you’re like me- it makes you a little uneasy. It’s been playing havoc with mortgage rates and investments across all markets. There seems to be more posturing than progress in DC and that’s just not going to get the job done.

Take a look at his email by following the link. It explains a bit about what’s going on and why we should relax a little. While you’re at it, call or email me or Ken and we’ll make sure you’re doing what’s necessary to retire in style and on time.

Click Here to See the Full Document

Here’s how to reach Ken

Ken Wiseman
(206) 956-6248
Email Ken
http://www.kencwiseman.com

AXA Advisors, LLC
10500 Ne 8th Street
Suite 1600
Bellevue, WA 98004