Posted by GOLDGIRL/CA on 10/13/11 2:30pm
Msg #400422
Article today could mean more refis coming ....
Market watchers have their eyes peeled for word from Washington that officials will relax the rules of a government refinancing program to allow underwater homeowners with loans backed by Fannie Mae and Freddie Mac to take out new mortgages with lower interest rates.
President Obama promised when he announced his Jobs Act that a new and improved Home Affordable Refinance Program (HARP) would soon be unveiled to help more borrowers take advantage of today’s rock-bottom interest rates.
That was more than a month ago, and the administration had reportedly been weighing the idea for at least several weeks before that – long enough for the Congressional Budget Office to conduct an extensive analysis of a supposed government-led refi program and release its cost assessment a day before Obama made his announcement.
Lawmakers are growing impatient. A bipartisan group of 16 senators sent a letter this week to the heads of the Federal Housing Finance Agency (FHFA), Treasury, HUD, and the National Economic Council, calling on them “to take immediate steps to lower the barriers that have kept borrowers trapped in higher interest loans.”
The group of senators, led by Barbara Boxer (D-California), Johnny Isakson (R-Georgia), and Robert Menendez (D-New Jersey), wrote, “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 pressed for changes that would eliminate loan-to-value (LTV) ratio caps – a move they say would provide the most at-risk borrowers an alternative to simply walking away from their mortgage.
They also advocated for getting rid of loan-level price adjustments. The senators argue that these up-front, risk-based fees make a refinance less affordable, reduce the benefit to the borrower, and cannot be justified on loans on which Fannie and Freddie already bear the risk.
The lawmakers’ are also appealing to junior lien holders. They say an effective program will have to ensure that second lien holders do not stand in the way of a refinance.
“All of these changes can be accomplished administratively and we urge that you take immediate steps to do so,” the senators wrote to administration officials. “We also support efforts to address other hurdles that have limited the success of current refinance programs, including representations and warranties, mortgage insurance, and high lender origination fees.”
The lawmakers note that long-term interest rates last week hit an all-time low of 3.94 percent. They say there are nearly 19 million loans guaranteed by Fannie Mae and Freddie Mac paying interest above 5.0 percent that could benefit from a refinance.
“Any changes to existing programs must enable as many of these borrowers as possible to refinance and to do so at rates comparable to those received by any other current borrower who has not suffered a drop in home value,” the senators wrote.
In President Obama’s speech to Congress and the American public last month, he said a revamped refi program that allowed homeowners to alleviate some of their mortgage debt could “put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.”
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Reply by JanetK_CA on 10/13/11 6:04pm
Msg #400451
Good article - and thanks for sharing! It'll be interesting to see what happens.
BTW, it's probably a very good idea to properly attribute credit to the source when quoting an article intact like this. Theoretically, at least, it could cause you trouble to not do so, and it's usually helpful to know the source of information.
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