In a recent issue of California Real Estate, Linda A. Kirios, Esq (Counsel to the California Association of Realtors, presents commercial educational programs throughout California and practices commercial Real Estate)answered the question: I have heard that the anti-deficiency legislation in California has been expanded. Can you shed soe light on that?
Cut and paste for her answer:
http://www.onlinedigitalpubs.com/publication/?i=89118&p=11
Thursday, January 19, 2012
Thursday, December 15, 2011
Report says California may have turned the corner - Are you a believer?
The website SignOnSanDiego.com ran the story below that makes one want to believe that maybe more than just the job market is improving. Read the article and you be the judge ...
California may finally have turned the corner into recovery, with the job market slated for slow but steady growth over the next two years, according to a report released today by UCLA's Anderson Forecast.
"Have we turned the corner in the Golden State? Perhaps we have," wrote UCLA senior economist Jerry Nickelsburg. "The last two months have yielded both job growth in excess of the U.S. rate and job growth which is widespread throughout the state."
It was the second time in two days that a Southern California think tank has predicted increased job growth in the state. On Tuesday, Chapman University in Orange issued a similar report, predicting slightly higher growth than UCLA. (To see the Union-Tribune's article on the Chapman report, click HERE.)
The UCLA report notes that since July, job growth throughout each major region of California has outpaced the national average. San Diego County, Orange County and Ventura grew at an average rate of 2 percent, compared to the U.S. average of 1 percent.
"In coastal California export and technology growth has been the key to recovery," Nickelsburg wrote. "A resurgence of investment and exports in 2012 will continue to drive the coastal economies."
On the other hand, the forecast warns that the U.S. and international outlook is so weak that it is doubtful that the growth will be robust enough to chop down the unemployment rate anytime soon, especially in the Inland Empire and the Sacramento region. As a result, the unemployment rate will likely not dip below 10 percent until late 2013 or early 2014, and it could be 2016 before it returns to pre-recession levels.
And partly because of the continuing problems in the job market, the report projects that the downturn in the housing market will continue, with no dramatic growth in home construction - a key growth engine for the inland areas of the state - until 2013.
"The end of a recession does not mean 'recovered from a recession,'" Nickelsburg wrote. "It only means the contraction has ended. The pain remains real and persistent until solid and sustained gains occur."
=========================================================
After reading the story you should have an opinion. While the article only referenced one specific region in California (Coastal) it mentioned the driving force in gains there but no mention of the other state regions. This might tend to make one attribute the recent employment gains to seasonal hiring however only time will awnser that.
California may finally have turned the corner into recovery, with the job market slated for slow but steady growth over the next two years, according to a report released today by UCLA's Anderson Forecast.
"Have we turned the corner in the Golden State? Perhaps we have," wrote UCLA senior economist Jerry Nickelsburg. "The last two months have yielded both job growth in excess of the U.S. rate and job growth which is widespread throughout the state."
It was the second time in two days that a Southern California think tank has predicted increased job growth in the state. On Tuesday, Chapman University in Orange issued a similar report, predicting slightly higher growth than UCLA. (To see the Union-Tribune's article on the Chapman report, click HERE.)
The UCLA report notes that since July, job growth throughout each major region of California has outpaced the national average. San Diego County, Orange County and Ventura grew at an average rate of 2 percent, compared to the U.S. average of 1 percent.
"In coastal California export and technology growth has been the key to recovery," Nickelsburg wrote. "A resurgence of investment and exports in 2012 will continue to drive the coastal economies."
On the other hand, the forecast warns that the U.S. and international outlook is so weak that it is doubtful that the growth will be robust enough to chop down the unemployment rate anytime soon, especially in the Inland Empire and the Sacramento region. As a result, the unemployment rate will likely not dip below 10 percent until late 2013 or early 2014, and it could be 2016 before it returns to pre-recession levels.
And partly because of the continuing problems in the job market, the report projects that the downturn in the housing market will continue, with no dramatic growth in home construction - a key growth engine for the inland areas of the state - until 2013.
"The end of a recession does not mean 'recovered from a recession,'" Nickelsburg wrote. "It only means the contraction has ended. The pain remains real and persistent until solid and sustained gains occur."
=========================================================
After reading the story you should have an opinion. While the article only referenced one specific region in California (Coastal) it mentioned the driving force in gains there but no mention of the other state regions. This might tend to make one attribute the recent employment gains to seasonal hiring however only time will awnser that.
Tuesday, December 6, 2011
Freddie's New Loan Modification Option
Freddie has a new rogram "Standard Modification" This program is for borrowers ineligible for a HAMP modification or may have defaulted on a HAMP or toher modification.
The program is designed to reduce one's mortgage princiapl AND monthly payments by at least 10% each ensuring the [ayments are more affordable.
How do you qualify? Are you 60 days late (past due) or prove you are in imminent danger of default, demonstrate an eligible hardship and provide verification of income. If you tried to modifiy previously you know the requirements: paystubs, bank statements, etc...
Best of Luck!!!
The program is designed to reduce one's mortgage princiapl AND monthly payments by at least 10% each ensuring the [ayments are more affordable.
How do you qualify? Are you 60 days late (past due) or prove you are in imminent danger of default, demonstrate an eligible hardship and provide verification of income. If you tried to modifiy previously you know the requirements: paystubs, bank statements, etc...
Best of Luck!!!
Foreclosure's impact on our heath
Recently a study by economists discovered that an increase in foreclosures may be associated with increases in medical visits. Reasearchers at Princeton and Gerogia State universities focused on Arizona, Florida, New Jersey and California - some of the states hardest hit by the foreclosure crisis.
They found that an increase in the number of foreclosure was associated to increases in medicals visits for anxiety and suicide attempts, hypertension and a broad array of stress-related physical complaints. Within the 20-49 age group, an increase of 100 foreclosures corresponded to a 7.2% increse in emergency room visits, 8.1 increase in diabetes realtes visits, 12% more anxiety realted vists and 39% more suicide attempts.
The researchers were clear to point out that foreclosures aren't necessarily teh direct cause of health problems, that stress could be linked to financial troubles preceding the los of a home.
They found that an increase in the number of foreclosure was associated to increases in medicals visits for anxiety and suicide attempts, hypertension and a broad array of stress-related physical complaints. Within the 20-49 age group, an increase of 100 foreclosures corresponded to a 7.2% increse in emergency room visits, 8.1 increase in diabetes realtes visits, 12% more anxiety realted vists and 39% more suicide attempts.
The researchers were clear to point out that foreclosures aren't necessarily teh direct cause of health problems, that stress could be linked to financial troubles preceding the los of a home.
Friday, November 25, 2011
PROGRAM CHANGES BRING HOPE FOR MANY TO REFINANCE
The government's expanded refinance program for underwater homeowners, dubbed HARP 2, looks better than expected for both borrowers and banks.
The Obama administration announced the broad outlines of the plan on Oct. 24. Fannie Mae and Freddie Mac filled in most of the details in guidance bulletins issued late Tuesday.
The new program greatly reduces or eliminates the risk-based fees Fannie and Freddie charge on many loans and virtually eliminates the chance that lenders will have to pay for losses on loans that go into default if they made underwriting mistakes. It also vastly streamlines the underwriting process.
Many borrowers won't qualify for the new program, but those who do could find it much easier and possibly cheaper to refinance than those who don't. Although lenders can begin taking applications Dec. 1, it could take several months before the new loans are made. Fannie Mae said it won't begin buying certain types of refinanced loans until March.
To qualify, your existing loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. Your loan balance must be more than 80 percent of your home's market value. You can have no late payments on your existing mortgage in the past six months and no more than one late payment in the past 12 months. You are ineligible if you previously refinanced through HARP.
They've eased up on the qualifying factors over the HARP program.
The new program improves on the existing HARP refi program by letting borrowers refinance into a new fixed-rate loan no matter how much they owe. The existing program caps the new loan at 125 percent of the home's market value.
You can also refinance into a new adjustable rate loan that has a fixed rate for at least the first five years, but in this case your new first mortgage cannot exceed 105 percent of the home's value.
The new program greatly reduces or eliminates the fees Fannie and Freddie charge on loans based on risk characteristics such as the borrower's credit score and loan-to-value ratio. On a riskier loan, these fees sometimes exceed 3 percent of the loan balance and make refinancing uneconomical for many borrowers.
Under HARP 2, the fees will be capped at 0.75 percent on most loans and will be zero on fixed-rate loans with a term of 20 years or less.
In most cases, borrowers won't have to pay for a new appraisal (Fannie or Freddie will use their automated in-house appraisals) or have any particular debt-to-income ratio or credit score.
Borrowers who refinance through their existing loan servicer generally won't have to document their income or assets or have a particular credit score or debt-to-income ratio. The lender will only have to verify that one borrower on the loan has a job or other source of income, but not the amount of income.
If they refinance through a new lender, they will have to meet additional underwriting requirements, but not as many as people who are refinancing through traditional routes.
Effects on Second Mortgages.
Borrowers can have a second loan on the house of any amount and still qualify, as long as the holder of the second mortgage resubordinates it to the new loan. Most of the big lenders have agreed to do so, but there is no guarantee they or others will. "It's going to be case by case," says Brad Seibel, director of residential lending with Fremont Bank.
If borrowers have mortgage insurance on the existing loan, they must maintain it, but they should be able to transfer that insurance to the new loan at the old premium rate, according to Freddie Mac. The big mortgage insurers have agreed to allow this, but again there is no guarantee all will.
It's a big plus if they do. Normally refinancers must take out a new policy at today's rates, and rates have gone up significantly in the past few years. The higher cost has discouraged some homeowners from refinancing.
Although the original HARP program let homeowners take out a new loan of up to 125 percent of the home's value, many lenders were unwilling to make them up to that limit because if the borrower defaulted, the lender might have to pay for losses if they made any underwriting errors. And no lender wanted to run that risk on a deeply underwater home.
The new program, in many cases, will virtually eliminate the risk that lenders will have to pay for losses on either the existing or the refinanced loan under HARP 2. This could be a big incentive for lenders to refinance loans, especially ones they already own.
FBR analyst Edward Mills said the details on the liability waiver and the fee reduction were both better than he was expecting.
But there are still many questions about the program, such as what interest rates banks will charge, whether they will impose additional fees or underwriting requirements beyond what Fannie and Freddie require and whether investors will be willing to buy securities backed by these new HARP 2 loans.
Most lenders I spoke to said they are eager to make the new loans, but are still digesting the extremely complex details. (You can read Fannie's guidance at sfg.ly/uFNuOj and Freddie's at sfg.ly/tUqbdp.
Mills says the program will definitely reach the government's target of refinancing 1 million loans, and possibly even 2 million.
There will be losses for some but seemingly only to profits
While borrowers will clearly benefit, the losers will be investors who own the guaranteed loans that are refinanced. They will be repaid, but will have to reinvest their proceeds, probably at a lower rate. These investors include Fannie and Freddie, the U.S. Treasury and the Federal Reserve - in other words, U.S. taxpayers.
The hope is that taxpayers as a whole will benefit if homeowners who lower their monthly payments under the program spend some of their savings (thus boosting the economy) and become more likely to stay in their underwater homes and not default.
The Obama administration announced the broad outlines of the plan on Oct. 24. Fannie Mae and Freddie Mac filled in most of the details in guidance bulletins issued late Tuesday.
The new program greatly reduces or eliminates the risk-based fees Fannie and Freddie charge on many loans and virtually eliminates the chance that lenders will have to pay for losses on loans that go into default if they made underwriting mistakes. It also vastly streamlines the underwriting process.
Many borrowers won't qualify for the new program, but those who do could find it much easier and possibly cheaper to refinance than those who don't. Although lenders can begin taking applications Dec. 1, it could take several months before the new loans are made. Fannie Mae said it won't begin buying certain types of refinanced loans until March.
To qualify, your existing loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. Your loan balance must be more than 80 percent of your home's market value. You can have no late payments on your existing mortgage in the past six months and no more than one late payment in the past 12 months. You are ineligible if you previously refinanced through HARP.
They've eased up on the qualifying factors over the HARP program.
The new program improves on the existing HARP refi program by letting borrowers refinance into a new fixed-rate loan no matter how much they owe. The existing program caps the new loan at 125 percent of the home's market value.
You can also refinance into a new adjustable rate loan that has a fixed rate for at least the first five years, but in this case your new first mortgage cannot exceed 105 percent of the home's value.
The new program greatly reduces or eliminates the fees Fannie and Freddie charge on loans based on risk characteristics such as the borrower's credit score and loan-to-value ratio. On a riskier loan, these fees sometimes exceed 3 percent of the loan balance and make refinancing uneconomical for many borrowers.
Under HARP 2, the fees will be capped at 0.75 percent on most loans and will be zero on fixed-rate loans with a term of 20 years or less.
In most cases, borrowers won't have to pay for a new appraisal (Fannie or Freddie will use their automated in-house appraisals) or have any particular debt-to-income ratio or credit score.
Borrowers who refinance through their existing loan servicer generally won't have to document their income or assets or have a particular credit score or debt-to-income ratio. The lender will only have to verify that one borrower on the loan has a job or other source of income, but not the amount of income.
If they refinance through a new lender, they will have to meet additional underwriting requirements, but not as many as people who are refinancing through traditional routes.
Effects on Second Mortgages.
Borrowers can have a second loan on the house of any amount and still qualify, as long as the holder of the second mortgage resubordinates it to the new loan. Most of the big lenders have agreed to do so, but there is no guarantee they or others will. "It's going to be case by case," says Brad Seibel, director of residential lending with Fremont Bank.
If borrowers have mortgage insurance on the existing loan, they must maintain it, but they should be able to transfer that insurance to the new loan at the old premium rate, according to Freddie Mac. The big mortgage insurers have agreed to allow this, but again there is no guarantee all will.
It's a big plus if they do. Normally refinancers must take out a new policy at today's rates, and rates have gone up significantly in the past few years. The higher cost has discouraged some homeowners from refinancing.
Although the original HARP program let homeowners take out a new loan of up to 125 percent of the home's value, many lenders were unwilling to make them up to that limit because if the borrower defaulted, the lender might have to pay for losses if they made any underwriting errors. And no lender wanted to run that risk on a deeply underwater home.
The new program, in many cases, will virtually eliminate the risk that lenders will have to pay for losses on either the existing or the refinanced loan under HARP 2. This could be a big incentive for lenders to refinance loans, especially ones they already own.
FBR analyst Edward Mills said the details on the liability waiver and the fee reduction were both better than he was expecting.
But there are still many questions about the program, such as what interest rates banks will charge, whether they will impose additional fees or underwriting requirements beyond what Fannie and Freddie require and whether investors will be willing to buy securities backed by these new HARP 2 loans.
Most lenders I spoke to said they are eager to make the new loans, but are still digesting the extremely complex details. (You can read Fannie's guidance at sfg.ly/uFNuOj and Freddie's at sfg.ly/tUqbdp.
Mills says the program will definitely reach the government's target of refinancing 1 million loans, and possibly even 2 million.
There will be losses for some but seemingly only to profits
While borrowers will clearly benefit, the losers will be investors who own the guaranteed loans that are refinanced. They will be repaid, but will have to reinvest their proceeds, probably at a lower rate. These investors include Fannie and Freddie, the U.S. Treasury and the Federal Reserve - in other words, U.S. taxpayers.
The hope is that taxpayers as a whole will benefit if homeowners who lower their monthly payments under the program spend some of their savings (thus boosting the economy) and become more likely to stay in their underwater homes and not default.
Thursday, November 17, 2011
Congress decides in favor of Borrowers
Today, the vote is in to return the FHA loan limits to the previously set amounts which expired on october 1st. Read the complete Wall Street Journal story below:
U.S. lawmakers moved Thursday to increase the maximum size of loans that can be guaranteed by the Federal Housing Administration, even as a top Obama administration official expressed doubt about the need for the change.
A spending bill passed by Congress increases to $729,750 the maximum size of a mortgage that can be backed by the FHA, which guarantees loans to buyers with down payments as low as 3.5%. The Senate voted to approve the bill Thursday evening, after the House voted earlier in the day.
Some Republicans in the House and Senate were upset by the move, arguing that it contradicts a goal of both parties to reduce the U.S. government’s role in propping up the housing market. “I am just absolutely so discouraged at Congress in lacking the courage to deal with this issue,” said Sen. Bob Corker (R., Tenn.).
An earlier version of the legislation in the Senate would have increased loan limits for mortgage finance companies Fannie Mae and Freddie Mac as well, but that was stripped out due to opposition from House Republicans.
The loan limit fell to $625,500 on Oct. 1 in expensive markets like New York, San Francisco and Washington. They declined in around 250 counties for Fannie and Freddie, and around 600 counties saw FHA limits drop. In some cases, the FHA loan limits fell below those of Fannie and Freddie.
Carol Galante, the Obama administration’s nominee to lead the FHA, told Senate lawmakers that the administration continues to support reducing the limits.
“We maintain that it is appropriate to take a step back on the loan limits,” Ms. Galante told Senate lawmakers. However, she noted that because housing markets around the country remain weak, “there are reasonable people who may want to see us continue to stay in the business.”
The move by Congress will give borrowers seeking loans between $625,500 and $729,750 in pricey markets two options. They can take out “jumbo” loans that carry higher interest rates than those backed by Fannie and Freddie and require down payments of at least 20%. Or, they can take out an FHA loan, which allows for lower down payments but charges insurance premiums that add to borrowers’ costs.
Housing industry lobbyists pushed for Congress to reinstate the higher limits for Fannie, Freddie and FHA, citing concerns that any steps to raise borrowing costs might be too much for fragile housing markets to bear. Another Republican criticism of the action is that it would primarily benefit affluent neighborhoods.
“This means that taxpayers will be subsidizing the purchase of expensive homes by wealthy buyers,” said Sen. Richard Shelby (R., Ala.).
However, Sen. Robert Menendez (D., N.J.) said that restoring the loan limits will benefit the housing market at a time when it is weak. Doing so, he said, “won’t cost taxpayers a dime” and will benefit the housing market in many other parts of the country besides those cities.
The move by Congress came after an annual independent audit found the FHA’s cash reserves are now so depleted that there is close to 50% chance the agency could run out of money and require a taxpayer bailout in the next year.
In the past four years, as private lenders have pulled back from the mortgage market, the FHA’s market share has swollen. It backed one third of mortgages used to finance home purchases last year, up from around 5% in 2006. The FHA doesn’t make loans but insures lenders against defaults on mortgages that meet its standards.
U.S. lawmakers moved Thursday to increase the maximum size of loans that can be guaranteed by the Federal Housing Administration, even as a top Obama administration official expressed doubt about the need for the change.
A spending bill passed by Congress increases to $729,750 the maximum size of a mortgage that can be backed by the FHA, which guarantees loans to buyers with down payments as low as 3.5%. The Senate voted to approve the bill Thursday evening, after the House voted earlier in the day.
Some Republicans in the House and Senate were upset by the move, arguing that it contradicts a goal of both parties to reduce the U.S. government’s role in propping up the housing market. “I am just absolutely so discouraged at Congress in lacking the courage to deal with this issue,” said Sen. Bob Corker (R., Tenn.).
An earlier version of the legislation in the Senate would have increased loan limits for mortgage finance companies Fannie Mae and Freddie Mac as well, but that was stripped out due to opposition from House Republicans.
The loan limit fell to $625,500 on Oct. 1 in expensive markets like New York, San Francisco and Washington. They declined in around 250 counties for Fannie and Freddie, and around 600 counties saw FHA limits drop. In some cases, the FHA loan limits fell below those of Fannie and Freddie.
Carol Galante, the Obama administration’s nominee to lead the FHA, told Senate lawmakers that the administration continues to support reducing the limits.
“We maintain that it is appropriate to take a step back on the loan limits,” Ms. Galante told Senate lawmakers. However, she noted that because housing markets around the country remain weak, “there are reasonable people who may want to see us continue to stay in the business.”
The move by Congress will give borrowers seeking loans between $625,500 and $729,750 in pricey markets two options. They can take out “jumbo” loans that carry higher interest rates than those backed by Fannie and Freddie and require down payments of at least 20%. Or, they can take out an FHA loan, which allows for lower down payments but charges insurance premiums that add to borrowers’ costs.
Housing industry lobbyists pushed for Congress to reinstate the higher limits for Fannie, Freddie and FHA, citing concerns that any steps to raise borrowing costs might be too much for fragile housing markets to bear. Another Republican criticism of the action is that it would primarily benefit affluent neighborhoods.
“This means that taxpayers will be subsidizing the purchase of expensive homes by wealthy buyers,” said Sen. Richard Shelby (R., Ala.).
However, Sen. Robert Menendez (D., N.J.) said that restoring the loan limits will benefit the housing market at a time when it is weak. Doing so, he said, “won’t cost taxpayers a dime” and will benefit the housing market in many other parts of the country besides those cities.
The move by Congress came after an annual independent audit found the FHA’s cash reserves are now so depleted that there is close to 50% chance the agency could run out of money and require a taxpayer bailout in the next year.
In the past four years, as private lenders have pulled back from the mortgage market, the FHA’s market share has swollen. It backed one third of mortgages used to finance home purchases last year, up from around 5% in 2006. The FHA doesn’t make loans but insures lenders against defaults on mortgages that meet its standards.
Saturday, September 10, 2011
Refinancing while underwater
Like so many homeowners across the country, you can start to sense a feeling of helplessness when attempting to refinance a loan which is higher than the current value of your home ... yes, you are underwater and looking for a fresh breath. Here's some info you may find helpful in your endeavor.
“A lot of people have been sitting and not doing anything,” said Cari Sweet-Kostoplis, a senior mortgage banker at Atlantic Home Loans in Lincoln Park, N.J. But they may qualify to refinance their loans through a variety of programs aimed at avoiding late or partial payments or foreclosure. “I don’t think a lot of people are aware that they have this option,” said Jeff Kinney, the vice president for innovation and development of Fannie Mae, who oversees refinancing activity. Because interest rates remain low, he said, refinancing may bring their payment “to a level that is sustainable to them and put money in their pockets.”
In the New York region, according to Zillow.com, some 17.1 percent of single-family homes right now are considered underwater, which means the owners owe more on the mortgage than the home is worth. (The national average of underwater properties is 28.4 percent.)
Those looking to refinance through programs offered by Fannie Mae and Freddie Mac, the government buyers of home loans, will first need to find out who holds or services their mortgage so they can determine whether they qualify. On their Web sites, both agencies provide links that show whether a particular address is in their portfolio.
Be careful, though, if you own an apartment. “Sometimes the system doesn’t recognize the unit” number, said Matt Hackett, the underwriting manager of Equity Now, a direct mortgage lender based in New York.
If your loan is owned by Fannie or Freddie, you may qualify for the Home Affordable Refinance Program, or HARP. Some 2.5 million to 3 million homeowners may be eligible to use HARP, according to government estimates — provided, among other things, that they have not been late on their payments more than once in the last 12 months.
Instead of the 80 percent loan-to-home-value required in most initial mortgages today (the remaining 20 percent comes from your down payment), HARP loans offer up to 125 percent, to cover the home’s shrunken value. That means a home appraised at $500,000 could warrant a loan of up to $625,000, if the owner’s income was sufficient to repay it, instead of the maximum $400,000 in most conventional mortgages.
Federal Housing Administration loans also have refinancing options. One of them, the F.H.A. Short Refinance option, requires the lender to write down at least 10 percent of the remaining balance of the loan and the homeowner to be current on payments, among other requirements. Still other programs are available for people who have lost their jobs.
If your loan is held by a bank or has been bundled up and sold to an investment group, your options may be more limited. “It is case by case,” Mr. Hackett said. You may need to call around to locate other lenders willing to refinance underwater loans.
Lenders like Atlantic Home Loans have started offering loans with lender-paid mortgage insurance, and will refinance at 95 percent of the value, Mrs. Sweet-Kostoplis said. She added that one of her clients reduced her mortgage payment by $850 a month when the rate came down to 4.5 percent from 6.7 percent.
When you meet with your mortgage officer, Mrs. Sweet-Kostoplis advised, don’t hide anything in your financial situation. “The mortgage person is on your team” and wants to help you stay in your home, she said. If you need help sorting out your options, HUD lists agencies and counselors whose advice is generally free.
Fannie Mae also has a broader umbrella, called Refi Plus, that can be used by people whose mortgages finance second homes and income properties. The programs have flexibility; most of them run through June 30, 2012.
Given where rates are, your immediate action could ring you the results you are looking for ... so pick up the phone and Good Luck to you.
“A lot of people have been sitting and not doing anything,” said Cari Sweet-Kostoplis, a senior mortgage banker at Atlantic Home Loans in Lincoln Park, N.J. But they may qualify to refinance their loans through a variety of programs aimed at avoiding late or partial payments or foreclosure. “I don’t think a lot of people are aware that they have this option,” said Jeff Kinney, the vice president for innovation and development of Fannie Mae, who oversees refinancing activity. Because interest rates remain low, he said, refinancing may bring their payment “to a level that is sustainable to them and put money in their pockets.”
In the New York region, according to Zillow.com, some 17.1 percent of single-family homes right now are considered underwater, which means the owners owe more on the mortgage than the home is worth. (The national average of underwater properties is 28.4 percent.)
Those looking to refinance through programs offered by Fannie Mae and Freddie Mac, the government buyers of home loans, will first need to find out who holds or services their mortgage so they can determine whether they qualify. On their Web sites, both agencies provide links that show whether a particular address is in their portfolio.
Be careful, though, if you own an apartment. “Sometimes the system doesn’t recognize the unit” number, said Matt Hackett, the underwriting manager of Equity Now, a direct mortgage lender based in New York.
If your loan is owned by Fannie or Freddie, you may qualify for the Home Affordable Refinance Program, or HARP. Some 2.5 million to 3 million homeowners may be eligible to use HARP, according to government estimates — provided, among other things, that they have not been late on their payments more than once in the last 12 months.
Instead of the 80 percent loan-to-home-value required in most initial mortgages today (the remaining 20 percent comes from your down payment), HARP loans offer up to 125 percent, to cover the home’s shrunken value. That means a home appraised at $500,000 could warrant a loan of up to $625,000, if the owner’s income was sufficient to repay it, instead of the maximum $400,000 in most conventional mortgages.
Federal Housing Administration loans also have refinancing options. One of them, the F.H.A. Short Refinance option, requires the lender to write down at least 10 percent of the remaining balance of the loan and the homeowner to be current on payments, among other requirements. Still other programs are available for people who have lost their jobs.
If your loan is held by a bank or has been bundled up and sold to an investment group, your options may be more limited. “It is case by case,” Mr. Hackett said. You may need to call around to locate other lenders willing to refinance underwater loans.
Lenders like Atlantic Home Loans have started offering loans with lender-paid mortgage insurance, and will refinance at 95 percent of the value, Mrs. Sweet-Kostoplis said. She added that one of her clients reduced her mortgage payment by $850 a month when the rate came down to 4.5 percent from 6.7 percent.
When you meet with your mortgage officer, Mrs. Sweet-Kostoplis advised, don’t hide anything in your financial situation. “The mortgage person is on your team” and wants to help you stay in your home, she said. If you need help sorting out your options, HUD lists agencies and counselors whose advice is generally free.
Fannie Mae also has a broader umbrella, called Refi Plus, that can be used by people whose mortgages finance second homes and income properties. The programs have flexibility; most of them run through June 30, 2012.
Given where rates are, your immediate action could ring you the results you are looking for ... so pick up the phone and Good Luck to you.
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